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Claiming Summer Camp Expenses On Your Tax Returns

Leave a comment Child and Dependent Care Credit, Child Tax Credit, Tax Credit

Keeping children busy and entertained during the summer months when school is out is no easy task for parents. One alternative is sending the youngsters to summer camp, which is typically not a small expense. However, tClaiming Summer Camp Expenses On Your Tax Returns

During the school year, working parents have the luxury of not having to find someone to care for their younger children during normal school hours. In this case, children only need care during the hours between the time school ends and when a parent arrives home from work, which may be two to three hours at the most. However, during the summer this changes when school end and parents must find day-long care for their children. Many parents send their kids to camp during the summer to solve this problem. Is there any tax relief for parents in this situation?

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What Is A 501(C)(6) Organization?

Leave a comment Non-profits

While I.R.C. § 501(c)(3) organizations must advance a charitable purpose such as religion, education or public assistance, I.R.C. § 501(c)(6) nonprofit associations typically help small businesses advance their industry or business community. To qualify for the tax exemption allowed under § 501(c)(6), a nonprofit’s entire earnings must be reinvested into the organization and may not benefit any individual member or shareholder.

The Tax Code provides that certain types of organizations qualify as § 501(c)(6) organizations, including business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues, not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

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Christine C. Peterson, et al. v. Commissioner of IRS – Retirement Payments May Be Deferred Compensation

Leave a comment Nonqualified Deferred Income, Self-Employment Tax

In a case of first impression, the Eleventh Circuit Court of Appeals held that payments from a Mary Kay retirement program to one of its retired salespersons were earnings subject to self-employment tax. This holding was based upon the fact that the plan under which the payments had been made was amended by Mary Kay to comply with the new tax rules under I.R.C. § 409A. (Peterson v. Commissioner No. 14-15773 (11th Cir. May 24, 2016). The IRS considered the payments as nonqualified deferred income from a § 409A plan, therefore subject to the provisions of § 409A, and assessed the Petersons a hefty bill for unpaid self-employment tax.

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How Your Job Hunt Could Lower Your Taxes

Leave a comment Child and Dependent Care Credit, Child Tax Credit, Earned Income Tax Credit (EITC), Job Search Expenses, Tax Credit

For taxpayers seeking a new job in their same line of work, a tax deduction for some job search expenses may be available. First and foremost, these expenses must be related to a job search in a taxpayer’s current occupation, as expenses related to a search for a job in a new occupation may not be deducted. If an employer or third party provides reimbursement for the expense, it may not be deducted.

Here are some expenses that may be deducted:

  1. Employment and job placement agency fees;
  2. Costs of preparing, copying and mailing résumés to prospective employers;
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Can New York State Audit My Federal Tax Return?

Leave a comment Audit, New York State Tax, New York State Tax Law

Can the state of New York audit a federal tax return? Well, there’s nothing to prevent it from doing so. Often, a New York taxpayer may claim a state tax refund based upon the result of some calculation on the taxpayer’s federal tax return. Then, a New York state auditor questions the result and decides to inquire further by auditing the taxpayer’s state and federal return. At the Thorgood Law Firm, we’ve been seeing such audits occur much more frequently in the last few years.

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Laws That Limit The IRS’ Power To Levy

Leave a comment Collection Activities

Taxpayers with debts for back taxes have rights which are contained within the Internal Revenue Code. These laws limit the power of the IRS to collect and levy. These laws grant taxpayers rights that protect them from the collection enforcement powers of the IRS. Taxpayers should ensure that they invoke the protections of these laws to the fullest by retaining an experienced and knowledgeable tax professional.

Here are the most important collection laws that limit the IRS’ power to levy:

*Internal Revenue Code § 6330 and § 6331(d)

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Receipt Of Stock In A Demutualization

Leave a comment Capital Gains, Capital Losses

Demutualization is the process in which a member-owned business becomes owned by  shareholders. Traditionally, Insurance companies have used the word “mutual” in their name (i.e., Liberty Mutual) indicating mutually-held ownership by their policy holders as a group, rather than ownership by shareholders. These policyholders possess ownership rights such as voting and distribution. Recently, a strong trend has emerged for such companies to demutualize, converting to a shareholder-held ownership base.

Typically, policy holders are offered shares or money in exchange for ownership rights. Demutualization increases the profit potential of shareholders who can sell or trade their stock, in contrast to mere ownership rights, which cannot be sold or traded. The term “demutualization” no longer applies to just insurance companies but  also to the process by which any member-owned organization becomes shareholder-owned.

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