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Los Angeles Tax Law Blog

Finish the year strong: 3 tax tips to use before the New Year

The New Year is less than a month away. There are some important tax steps to take before that first bit of confetti falls. Three of the more general examples include:

  • Donations. Charitable giving is often deductible. Donations made with a credit card are deductible even if the credit card bill is not paid until after the New Year. As long as the donation is charged before 2018, the IRS states that the transaction is likely deductible. 

Levies and the IRS: Definition, process and remedies

The Internal Revenue Service (IRS) has a number of tools to gain payment. A taxpayer that is accused of failing to meet his or her tax obligations could become the victim of one of these tools. Examples include a levy, garnishment, lien, seizure or other collection matter.

Those who are struggling with tax obligations can benefit from a basic understanding of these processes. The following information focuses specifically on the levy process. 

Tis the season for charitable donations…and tax breaks?

Ringing bells and shiny red buckets are just one of the many opportunities that may result in an increase in charitable donations over the holidays. Monetary contributions to charities can lead to more than just a warm heart, if done wisely they can also lead to a tax break.

Charitable donations and taxes: Three tips

I got a letter from the IRS. What now?

There are pieces of mail that bring joy and others that bring a bit of fear. Likely one of the most common examples of a letter that would result in concern to the recipient is a letter from the Internal Revenue Service (IRS).

Why would the IRS send a letter? There are a number of reasons the IRS may contact a taxpayer. The letter could be a request for additional information or could notify an impending audit.

Should you use self-directed IRAs for your business?

As a business owner, you already understand the importance of building wealth. While many are building wealth through traditional means (i.e. Roth IRAs, 401k plans), most are unfamiliar with the concept of self-directed IRAs. Moreover, they don't know how a self-directed IRA can be beneficial in growing one's business.

With that, this post will briefly explain self-directed IRAs. 

Three things that could trigger an IRS audit

The Internal Revenue Service (IRS) cannot closely review every tax filing. As a result, there are a number of ways the agency determines which filings will warrant a closer review. To help filter out allegedly questionable returns, the agency often uses Compliance Programs.

What are Compliance Programs? Compliance Programs refer to specific areas of tax law that the IRS will choose to focus on for a given year.  

How to negotiate an IRS offer in compromise (OIC)

The offer in compromise is a special avenue presented by the IRS that allows you to pay a part of your delinquent taxes, and be forgiven for the rest.

The OIC is a real thing, and it has helped many thousands of besieged taxpayers to get right with the IRS. In recent years the IRS has made the OIC easier to do. Why is the government willing to take a fraction of what they are owed? They do it because the alternative is that you will file for bankruptcy, and they will get nothing.

What businesses should know about tax deductions

With December coming next week, the holiday season will be in full swing and businesses of all sizes will be solicited by charitable organizations for donations. The proverbial benefits to making these types of donations are that a needy group will benefit, and the business making the donation will benefit with a tax break.

While this remains a common thought, it may not always be the case. This is because the only corporate entity that is able to receive a deduction after making a cash charitable contribution is a C corporation. For those who are sole proprietors and S corporations (including LLCs who choose to be taxed as S corporations), charitable cash donations are listed on Schedule A of their tax returns. As such, a benefit will be realized if deductions are itemized and are more than the standard deduction allowed. 

Would you prefer a larger tax refund or a bigger paycheck?

The middle of November is not a very popular time to talk about tax refunds; unless, of course, you closely follow politics and are anticipating substantial change through tax reform. Nevertheless, it is still important to think about your tax return during this time of year in terms of the interest free loans that you may be giving to the federal government because of the withholdings from your regular paycheck.

It is a common norm that taxpayers who have too much withheld in taxes through their monthly (or weekly) paychecks stand to receive a refund after they file their annual return. This brings about a highly debated question: is it better to receive an income tax refund or a larger paycheck?  

Critical employee classification questions for businesses

As businesses hire temporary employees (or agencies) to complete end-of-year work, it is critically important for such workers to be properly classified. Classification mistakes can lead to host of taxes and penalties.

Knowing the difference between employees and independent contractors (for tax purposes) is largely based on how much control the employer exerts over the employee in the completion of the work assigned. While this may seem like a straightforward distinction, it can become a complicated issue for those unfamiliar with the factors the IRS uses to determine the difference. They include, but are not limited to, the following:

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