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Bitcoin (Virtual Currency) Tax Example

Lisa Church

January 26, 2020

For individuals, basic currency transactions like exchanging dollars for euros while traveling generally have no tax implications. However, the IRS treats virtual currencies like Bitcoins (also called cryptocurrencies) as property, not as true currencies. As a result, many transactions with virtual currencies result in capital gains (or losses) that must be reported on your tax returns. The...

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IRS Audit Overview

Lisa Church

January 19, 2020

This blog provides guidance for taxpayers who are undergoing an IRS audit. It includes an overview of how audits are conducted as well as a strategy for preparing for the audit.

 

The IRS website defines an Audit as: “An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is...

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'Tis the Season for Important Tax Paperwork

Lisa Church

January 11, 2020

The IRS has confirmed that the individual tax filing season will start on Monday, January 27, 2020 and the deadline to file 2019 tax returns and pay any taxes owed is Wednesday, April 15, 2020.

Although the IRS systems open for processing on January 27, you do not have to wait until then to begin preparing for your tax return.

 

Keeping your records organized will...

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Tax Planning if you have Irregular Income

Lisa Church

January 4, 2020

If your income varies from year to year – for instance, if you change jobs often or get a significant part of your income from the gig economy – tax planning can get complicated. Certain activities that increase your tax bill during higher-income years might have little impact during lower-income years. Similarly, an expense that results in a sizable tax deduction during a...

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Education Tax Credits (AOTC vs LLC)

Lisa Church

January 1, 2020

The IRS offers two important tax credits for higher education expenses: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). You may claim both credits on the same tax return, but not for the same person. For example, you might claim the AOTC for your college-age dependent children and the LLC for your spouse.

 

If two or more members of your...

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2020 Retirement Plan Limits are up $500

Lisa D. Church

December 22, 2019

IRS limits for individual contributions to employer-sponsored retirement plans are increasing in 2020. If you are an employee who participates in 401(k), 403(b), the Thrift Savings Plan for civil and uniformed service members, or most types of 457 plans, you may contribute up to $19,500 in 2020, up from $19,000 in 2019. The catch-up contribution limit for employees 50 years of age or older...

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Tax Rules for Cryptocurrency

Lisa Church

December 15, 2019

If you use or hold cryptocurrency, also called virtual currency, you need to exercise special care. Challenges arise from the fact that the IRS classifies all virtual currencies as property, not as currency in the usual sense. As a result, any transaction involving cryptocurrency might involve a capital gain or loss that must be reported to the IRS.

Potentially taxable...

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New Social Security Number Scam (IRS Impersonators)

Lisa Church

December 7, 2019

Be on guard as Con artists continue to come up with new ways to impersonate the IRS and scam taxpayers out or their money and/or private information. Recently, the IRS issued a warning about a new scam in which callers use intimidation tactics to extort money from taxpayers.

 

The scammer claims that the call recipient has overdue taxes and threatens to suspend or cancel...

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New IRS Per Diem Rates (Effective 10/1/2019)

Lisa Church

November 30, 2019

The IRS recently raised the per diem rates for employee travel expenses, which are effective October 1, 2019. Within the Continental U.S., the new basic daily rates are $297 for high-cost regions (of which $71 is allotted for meals), and $200 for low-cost areas (with $60 for meals). The "incidentals only" per diem, which covers expenses like tipping bellhops, remains at $5 for all...

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Our new website (from: www.yourtaxdiva.com to: www.waterfronttax.com)

Lisa Church

Waterfront Tax & Accounting is excited to announce the recent launch of our firm’s new website. We’ve been working very hard to enhance our website and give our firm a fresh look. We’ve also continued to research and identify the latest and greatest technologies to improve the services we provide and ensure we continue to meet your needs.

 

Take...

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QBI Tax Deduction for Self Employed

LIsa Church

November 15, 2019

If you are a freelancer or otherwise participate in the “gig economy”, you may be able to claim a new tax deduction under the Tax Cuts and Jobs Act (TCJA). The Qualified Business Income (QBI) Deduction applies to self-employment earnings (basically, any income you receive in a setting where you are not classified as an employee). Under the provision, individuals may be able to...

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Tracking Utilities for Home Office Expense

Lisa Church

November 10, 2019

If you plan to claim a deduction for Expenses for Business Use of Your Home (home office expense) on your tax return, you need a reliable method to calculate your deductible utility costs. IRS rules require that you separate utility expenses that apply to only the residential portions of your home (such as cooking gas or electricity used by your refrigerator) from those that pertain to the...

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Higher Education Tax Tip

Lisa Church

October 6, 2019

If you or any of your dependents are enrolled in a higher education program this fall, you may qualify to claim one or more credits on your 2019 tax return.

 

The American Opportunity Tax Credit (AOTC) is a credit of up to $2,500 for a student pursuing a degree or certified credential at a college or vocational school. You may claim the credit for up to...

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Age Limited Child Tax Deductions

Lisa Church

September 29, 2019

Several key tax credits end when a dependent child reaches a specified age. Here is a quick summary of the age rules for three of the most important tax credits for parents, as well as the most important exceptions:

 

Child and Dependent Care Credit: Child must be under 13 years of age (12 years old or younger), OR live with you more than half the year...

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Taxable Events that must be reported to IRS (but are commonly overlooked)

Lisa Church

September 12, 2019

In addition to traditional income sources like employee wages and business profits, there are a number of other activities and transactions that the IRS classifies as potentially taxable. It is important to consider all of these “taxable events” when you prepare your returns.

 

Some of the most commonly overlooked taxable events include:

- Investment...

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Teacher Education Expense Deduction

Lisa Church

September 8, 2019

During this hectic back-to-school period when classroom expenses are most likely to occur, it is important to remember to save your receipts if you are educator.

 

If you are a teacher, principal, counselor, or classroom aide who works at least 900 hours a year in a state-accredited school (grades K-12), you may qualify for the Educator Expense Deduction. This IRS rule...

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Sept & Oct Tax Deadlines

Lisa Church

September 1, 2019

The following are tax deadlines due in September and October:

 

September 16th is the deadline for the third quarter installment for individuals & corporations paying estimated taxes throughout the year.

 

September 16th is the deadline for Forms 1120S (S Corporations) & 1065 (Partnerships) for S Corporations and Partnerships that requested a...

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Rent a Bed In Your Home

Lisa Church

August 25, 2019

Firms such as Airbnb have made bedroom rentals more common than just a few years ago. Depending on the length of the rentals and the people to whom you rent, the tax code treats your bedroom rental as one of the following:

1) A tax-free activity.

2) A bedroom rental that you report on Schedule C of your Form 1040.

3) A bedroom rental that you report on Schedule E of...

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Business Meals Q&A

Lisa Church

August 20, 2019

Here’s good news for business meals:  The Tax Cuts and Jobs Act (TCJA) removed the “directly related and associated with” requirements from business meals. The net effect of this change is to subject business meals once again to the pre-1963 “ordinary and necessary” business expense rules.  You are going to like these...

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Business or Hobby

Lisa Church

August 15, 2019

If you derive income from any activity where you are not an employee, from occasional dog sitting to playing guitar for tips at your local coffee shop, then the IRS requires you to classify the activity as either a hobby or a business on your tax returns. Importantly, this decision must be based on IRS rules governing what constitutes a business, not on how you personally view the activity....

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Standard Mileage vs Actual Vehicle Expense Deduction

Lisa Church

July 28, 2019

If you use your car, van or truck for business purposes, you may be able to claim a vehicle expense deduction on your tax return. You may either use the standard mileage rate or report the actual expenses associated with business uses of the vehicle. Actual expenses include gas, repairs, insurance and depreciation. Each expense must be prorated based on how much you use the vehicle for...

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SCAM IRS Debt Collectors

Lisa Church

July 20, 2019

The IRS began a program in 2015 where they may assign certain cases of overdue tax debts to private debt collectors. If this happens to you the IRS will give you (and your tax representative) written notice that your account is being transferred to the private collection agencies.

 

Watch out for scam phone calls from those who pretend to claim to collect for the...

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What is Uncollectable Status and How to Obtain it (Tax Resolution Topic))

LIsa Church

November 24, 2018

I’ve written several blog posts on how IRS collection works and the different options available to you such as installment agreements and offers-in-compromise but there’s one option of which you may not be aware:  UNCOLLECTIBLE.

 

The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax filings and to...

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Payroll Tax Debts and Personal Liability (Tax Resolution Topic)

Lisa Church

November 22, 2018

I recently did a blog post on the importance of making estimated quarterly tax payments if you’re self-employed.  I’d like to take this a step further for those of you who are not only self-employed but you also have employees.  (And if you ARE an employee, you’re going to want to make sure that your employer is doing this!)

 

The focus of my...

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Importance of Paying Estimated Taxes (Tax Resolution Topic)

Lisa Church

November 20, 2018

One HUGE difference between being an employee and being self-employed is the need to pay estimated taxes throughout the year.  Stay with me for the details!

 

The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax filings and to represent them before the IRS and the states with their tax collection issues.  A...

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New IRS Streamlined Installment Agreement (Tax Resolution Topic)

Lisa Church

November 18, 2018

Did you know that you can enter into an installment agreement with the IRS without having to provide any of your financial information or any supporting documents?  It’s true!  And I can show you how. 
 
The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax filings and to represent them before...

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Why You don't want to be a Non-Filer (file you tax return even if you can't pay the taxes) (Tax Resolution Topic)

Lisa Church

November 14, 2018

Did you know that the IRS penalty for not FILING your Federal income tax return is 10 times greater than the penalty for not PAYING your income taxes?  Yep…seriously.  The IRS offers many different options to taxpayers to help them resolve their tax debt but you’ve got to file those returns!  The focus...

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How IRS Collection Works (Expanded with more Details) (Tax Resolution Topic)

Lisa Church

October 13, 2018

As tomorrow is the due date for individual tax returns on extension, I wanted to expand on my previous blog post on how IRS collection works.  Whether you live in Severn, MD or Anne Arundel County, MD or anywhere else in the world, the IRS collections process works the same.  The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax...

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How IRS Collection Works (Initial Overview) (Tax Resolution Topic)

Lisa Church

October 6, 2018

Whether you live in Severn, MD or Anne Arundel County, MD or anywhere else in the world, the IRS collections process works the same.  The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax filings and to represent them before the IRS and the state with their tax collection issue. 

 

The collection process is...

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