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taxes

03.01.2016

Small businesses have a big task in deciphering IRS requirements for health care act

By Nathan Vinson, Attorney English, Lucas, Priest and Owsley, LLP If you own a small business, offering health insurance to your employees is likely one of your biggest headaches. There are an incredible number of options for health insurance, including the use of health savings accounts. Some small businesses have never offered it for those reasons, and because the costs of it can send a company’s expenses through the roof. It’s understandable – and until recently, it was entirely legal. Employees could go elsewhere for insurance, such as through a spouse’s work or purchase it privately. But the Affordable Care Act changed all of that. The Act mandates that businesses offer health insurance to employees and their dependents. The rules were phased in over time (but they’re here now), and it’s only for those businesses that hit certain thresholds. An excellent Associated Press article recently outlined all of the thorny problems for small businesses. You can read that here. Read More

11.27.2015

Tax moves to make by the end of 2015

By Nathan Vinson Attorney, English, Lucas, Priest and Owsley, LLP We’re about five weeks out from January 1, 2016. Yes, really. That means if there are financial moves you intended to make this year to save on your 2015 tax bill, you need to get going. I’ve outlined here a brief checklist to get you started. Read More

11.10.2015

New IRS audit guide targets entertainers’ tax bills

By Nathan Vinson Attorney, English, Lucas, Priest and Owsley, LLP If you are working in the entertainment industry, the IRS has your tax returns in its sights. In a new “Entertainment Audit Technique Guide,” the IRS recently instructed its auditors to closely examine tax returns from those in the entertainment business.  Auditors will be scrutinizing deductions claimed on tax returns for expenses which, according to the guide, entertainers have historically been “aggressive or abusive” in taking. The IRS wants to reign in these perceived industry norms to ensure that the entertainers are legitimately entitled to the claimed deductions. In tax parlance, the expenses giving rise to deductions must be “ordinary and necessary.” As the guide puts it, “The distinction between ordinary/necessary and extravagant must be more clearly drawn.” Those in the entertainment business can include, but are not limited to, comedians, musicians, singers, songwriters, actors, producers and those involved behind the scenes. The IRS wants to see that the deductions entertainers are taking are substantiated with legitimate receipts and records, and that the expenses truly are business-related (i.e. “necessary”). Read More

10.21.2015

How you document your charitable donations matters to the IRS

By Nathan Vinson, Attorney English, Lucas, Priest and Owsley, LLP Almost everyone makes charitable donations of some kind, and many of us expect to deduct the value of those donations from our income when our taxes are being prepared. While it’s not a primary motivator for most who give to charity, it certainly helps spur some giving and motivates some to meet charitable obligations prior to the end of the calendar year. Here are a few tax rules to keep in mind when making charitable donations of property (i.e. noncash donations), as federal tax law and regulations require certain documentation of gifts depending on the value of the gifts.  In tax parlance, these rules are called “substantiation” requirements. For gifts under $250, minimal documentation is required to claim a tax deduction. While it is generally required that the taxpayer obtain a receipt from the charitable organization, the taxpayer is excused from doing so if getting a receipt is “impractical.” An example that the tax regulations use is dropping off property (i.e. clothing) at a charity’s unattended drop site (i.e. a Goodwill drop box after store hours).  In that instance, taxpayers are required to retain in their own records (but not submit to the IRS) documentation containing: the name and address of the charity; the date and location of the donation; a description of the property, including its value; the fair market value of the property contributed and the method used to determine the fair market value; and possibly other documentation. As you can see, it may just be simpler to get the receipt! Read More

10.11.2015

Change beneficiaries on your accounts when you change your will

By Elizabeth McKinney, Attorney English, Lucas, Priest and Owsley, LLP Many people believe that if you have a will, that document controls who receives every asset you own. But that’s not necessarily true. A will or other similar documents, such a trust, can dictate who gets most assets, but beneficiary designations for certain assets, such as 401(k)s and life insurance, as well as transfer on death or payable on death designations on bank or brokerage accounts, supersede that. Those accounts should be reviewed periodically, but particularly after a major life change such as a death or a divorce. For example, if you change your will to indicate your new spouse should receive your assets after your death, as you probably should, but you didn’t change the beneficiary for your Individual Retirement Account (IRA), your ex could end up with the proceeds of that account, much to the surprise of your new spouse.  Most people set up those accounts and never revisit the information attached to it, which is where problems come in. Read More

09.24.2015

IRS may lower threshold for reporting gambling winnings

By Nathan Vinson, attorney English, Lucas, Priest & Owsley, LLP The IRS is considering changing the way it taxes gambling payouts. Since 1977, the IRS has required those who won $1,200 or more from slot machines or $1,500 or more from Keno to report and pay taxes on those winnings. We wrote about this rule earlier this year as it pertains to horse racing, a subject near and dear to Kentucky hearts. After nearly 40 years of this practice, the IRS is considering changing that limit to $600, and casino gaming operators aren’t pleased. Read More

09.17.2015

FBAR filing date changed for 2016

If you have a financial account in a foreign country with $10,000 or more in it, you are required to report the amount to the IRS once a year. The deadline for filing IRS Form 114, the Foreign Bank Account Report (i.e. the “FBAR”), has always been June 30. Recent legislation that President Obama signed into law, the Surface Transportation and Veterans Health Care Choice Improvement Act, had a provision to also change the FBAR due date. In addition to changing the date to April 15, which is more in line with other common due dates for various types of tax returns, there is a six-month extension available, making that deadline October 16. But just like other tax filing deadlines, you must request the extension. The new rule also waives any penalties for someone new to the process who is filing for the first time, a generous provision that will help anyone confused by the rules for FBAR filing. If you’d like to read the IRS guidance on FBARs, you can find it here. Read More

09.01.2015

Attorney Beth McKinney joins ELPO as partner

Attorney Beth McKinney joins ELPO as partner Read More

08.14.2015

Moving South doesn’t mean you outrun high estate taxes

By Nathan Vinson, Attorney English, Lucas, Priest and Owsley Ah, Florida. It calls to retirees like the mythical siren calls to sailors. Warm weather, year-round golf, palm trees on every corner, not a flake of snow and the promise of lower taxes bring the 60-plus set to our Southern-most state at record rates. In fact, Florida is now the nation’s third most populous state. The Journal of Accountancy notes that 19 states impose an inheritance tax on top of other federal taxes. Both Kentucky and Tennessee have an inheritance tax, although Tennessee will eliminate its inheritance tax in 2016. This means if you inherit property from an estate of someone who moved to Kentucky or Tennessee and passed away in either state, you might be giving a portion of those proceeds from the estate to the respective state government – if the proceeds are above certain thresholds and, at least in Kentucky, depending on your relationship to the deceased. What complicates matters is that governments in some states seem highly suspicious of those who move away. Some put families who have inherited an estate through rigorous paperwork to try to get out of paying estate taxes in that state. Read More

07.03.2015

How to select a qualified tax preparer

By Nathan Vinson Attorney, English, Lucas, Priest & Owsley, LLP Tax season is behind us (ahh, it feels nice to type this…) but it’s never too early to remind folks what to look for in a tax preparer – particularly given the news out of the U.S. Department of Justice earlier this year. The U.S. Department of Justice banned a Kentucky man from preparing tax returns for life after auditing several of his clients’ returns. He offered a service in which he would go to the home of a client and prepare their tax returns on the spot, but he filed fake deductions, including using his own relatives as dependents on their returns and falsifying letters from churches indicating that people had donated money that they had not. He is banned from preparing taxes for life, and rightly so. The Internal Revenue Service takes incidents like this very seriously and has taken a necessary step to help keep the tax preparation industry free of con artists. Read More