Uber drivers – employees or independent contractors? (What’s the significance anyway?)

March 10, 2016 Shamsey Oloko Leave a comment Audit, Business Expense, Business Expenses, Deductions, Employment Taxes, Expenses Deductions, FICA, Income Tax, Independent Contractor, New York Income Tax, News, Representation, Taxable Income

By now everyone is familiar with Uber. And in case you’re not, Uber is an online taxi dispatch company that uses its own mobile app that allows its customers to submit a trip request on their smartphones for drivers who then pick up riders using driver-owned vehicles.

Uber’s business is built on an independent contractor (IC) model, which in Uber’s case means that ideally, Uber drivers receive no benefits, use their own vehicles, and pay all expenses for gas, maintenance, and insurance. Twenty to twenty-five (20 to 25) percent of driver earnings are paid to Uber as a fee to use its service. Some estimate that this contractor model can save businesses up to 30% on labor costs.

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Is The $1,100,000 Limitation On Mortgage Debt For Purposes Of Determining Deductible Interest Expense Applied On A Per-Taxpayer Or A Per-Residence Basis?

March 9, 2016 Shamsey Oloko Leave a comment Expenses Deductions, IRC Section 163, Mortgage Interest Deduction, News

Issue

Is the $1,100,000 limitation on mortgage debt for purposes of determining deductible interest expense applied on a per-taxpayer or a per-residence basis?

Related Tax Rules or Regulations

Internal Revenue Code Section 163(h)(3) allows a deduction for qualified residence interest on up to $1,000,000 of acquisition indebtedness and $100,000 of home equity indebtedness. Should your mortgage balance (or balances, since the mortgage interest deduction is permitted on up to two homes) exceed the statutory limitations, the mortgage interest deduction is limited to the amount applicable to only $1,100,000 worth of debt.

Case Study

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New Highway Bill Gives IRS New Collection Tools

March 8, 2016 Shamsey Oloko Leave a comment Civil Liabilities, Civil Penalties, Collection Activities, Criminal Liabilities, Innocent Spouse Relief, News, Settlement, Tax Evasion, Tax Fraud

In December 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST). Provisions included in this bill authorize the State Department to deny or revoke passports for individuals with delinquent tax debt of more than $50,000. The bill also resurrects the IRS private debt collection program and requires the IRS to use third-party entities to collect tax debt under limited circumstances. The IRS contracted with private debt collection agencies from 2006 to 2009, but then at the end of this period insisted it could more efficiently collect the debt itself, thus ending the private program.

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Tax Benefits Of MyRAs and ABLEs

March 7, 2016 Shamsey Oloko Leave a comment Education 529 Plans, myRAs and ABLEs, Qualified Disability Expenses, Roth Thrift Savings Plan

In 2015, taxpayers were introduced to two new tax-friendly savings accounts that are designed for individuals who don’t earn an abundance of income, including low-income families which have members that are both young and disabled. ABLE (Achieving a Better Life Experience), and myRA (my Retirement Account) savings accounts were made available in January and November 2015, respectively. Let’s look at the benefits of the myRA first.

myRA

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Proving Education Tax Break Eligibility In 2016

March 4, 2016 Shamsey Oloko Leave a comment Education Tax Credit, Form 1098-T, Hope Credit, Lifetime Learning Tax Credit, Qualified Education Expenses, Tax Credit, The American Taxpayer Relief Act of 2012

The American Taxpayer Relief Act of 2012 extended the American Opportunity Tax Credit (AOTC) through December 31, 2017. This tax credit assists with the cost of higher education expenses such as tuition, course materials and other certain eligible fees for four years, which differs from the Hope scholarship credit because the credit may be claimed for four years instead of the two allowed under the Hope credit.

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Congress’ Extension Of Expired Deductions

March 3, 2016 Shamsey Oloko Leave a comment Charitable Contributions, Deductions, Expenses Deductions, Local Income Tax, Mortgage Insurance Premiums, State Sales Tax, Tax Cuts for America Act of 2015, The American Taxpayer Relief Act of 2012, The Tax Relief Extension Act of 2015

As 2016 starts to move forward, Congress seems especially less likely to agree on legislation extending all the tax breaks that have currently expired. S. 1946, Tax Relief Extension Act of 2015, generally provides for a two-year extension while the Tax Cuts for America Act of 2015, H.R. 1808, has only seven tax provisions, and the bill would extend those benefits for only 2015 retroactively.

In recent tax years, taxpayers have faced a great deal of uncertainty in determining whether they can continually and regularly depend on tax incentives to help them lower their taxes. At the beginning of 2013, Congress enacted the American Taxpayer Relief Act of 2012, which extended 51 provisions for two years retroactively through the beginning of 2012 and through 2013.

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What Is The United States Tax Court And What Happens When The Tax Court Hears A Case?

March 2, 2016 Shamsey Oloko Leave a comment Appeals, Audit, Civil Liabilities, Civil Penalties, Criminal Liabilities, Fraudulent Return, News, Punitive Damages

The United States Tax Court is a federal trial court established by Congress under Article I of the U.S. Constitution, section 8. The Tax Court specializes in adjudicating disputes over federal income tax, generally prior to the time at which formal tax assessments are made by the Internal Revenue Service. The U.S. Tax Court is not an agency of, and is independent of, the executive branch. The U.S. Tax Court is the only forum in which taxpayers may file a case without having first paid the disputed tax in full. Tax Court judges are appointed for a term of 15 years, subject to presidential removal for actions related to neglect, inefficiency, or malfeasance.

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Marvel Entertainment And Cancellation Of Indebtedness Income

March 1, 2016 Shamsey Oloko Leave a comment Debt Cancellation, Debt Forgiveness, Income, News, Taxable Income

Issue

Under the tax code, when cancellation of indebtedness income excluded from gross income results in a reduction of combined net operating losses, and a business entity can carry forward this reduction to offset income in following tax years, must this net operating loss be reduced at the combined entity level or at the individual entity level?

Related Tax Rules And Regulations

Internal Revenue Code Section 108

Facts

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Should Donald J. Trump Release His Tax Returns?

February 29, 2016 Shamsey Oloko Leave a comment Audit, Charitable Contributions, Donald J. Trump, Income Tax, News, Representation

In this most interesting presidential election primary season, many different issues have dominated the news. Perhaps no candidate has dominated the airwaves more than Donald J. Trump, the leading candidate in the Republican primaries. Unsurprisingly, Mr. Trump has made a number of controversial statements, antagonizing a variety of groups and countries alike. It is no surprise then that Trump is again in the center of the latest controversy – the release of his tax returns.

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Top Tax Cases Of 2015: Bhutta v. IRS – Treaties And How They Affect Income Of Foreign Nationals

February 29, 2016 Shamsey Oloko Leave a comment Civil Liabilities, Civil Penalties, Filing Status, Income, Tax Treaty, Taxable Income

Legal System.

Issue

How can treaties between the United States and other countries affect the income of foreign nationals in the United States?

Facts

Bhutta, a citizen of Pakistan and a foreign medical school graduate, entered the United States in 2009 to participate in an internal medicine residency training program. During the three-year residency training program, for which he received an annual salary, Bhutta treated patients, with supervision; conducted and presented research; and supervised and trained third- and fourth-year medical students. His supervising and training of medical students consisted of having the medical students observe him during “rounds”, preparing the students for monthly examinations, and evaluating the students monthly.

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