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Minneapolis Tax Law Blog

4 FAQs about moving, starting a new job and tax consequences

Getting a new job is an exciting prospect. For some, this requires moving to a new area and potentially selling an old home. These are big life changes that often come with a number of questions, some of the more common follow.

Are there any tax benefits to moving for work? In some cases, the answer is yes. Moving expenses may qualify for a tax deduction. There are certain criteria that must be met in order for the move to qualify for a deduction. 

Win big at the casino in MN? Don’t forget about Uncle Sam’s cut.

Winning big at a casino is cause to celebrate. But, before celebrations get too out of hand, be sure to keep in mind that a chunk of those winnings will go to Uncle Sam. A failure to pay these taxes can result in an audit, which could lead to penalties and fees that may exceed the winnings. 

Entrepreneurs can use this tip to maximize their bottom line

Entrepreneurs are go getters. These business men and women have that extra grit that’s needed not just to get ahead in the business world, but to forge their own path. As such, these canny business experts are always looking for new ways to maximize their bottom line. One news source that is dedicated to this group, Entrepreneur, recently published a piece with some advice on how to mitigate costs and maximize a business’ bottom line.

One of the top tips: Self-employed entrepreneurs should avoid irking the Internal Revenue Service (IRS). 

Undefeated boxing legend dukes it out with IRS

It’s the fight of the century! The Internal Revenue Service is taking on undefeated fighting champion Floyd Mayweather. The arena: tax court. The odds: heavily in favor of the IRS.

Unfortunately, this fight is looking like one that the IRS may win without even having to throw a figurative punch. The federal agency has accused boxing legend Floyd Mayweather of failing to pay taxes for several years. Even more surprising? The multi-million dollar champion is having problems making his payments.

Am I accountable if my tax preparer does something wrong?

There is an old adage – ignorance of the law is no defense. The same might be said about ignorance of what others do on your behalf.

There is no denying that the responsibility of meeting possible tax obligations can be an onerous thing. And it is also true that as one's assets and businesses become more complex, tax burdens increase.

Claiming nonprofit charity status: Are you ready for an audit?

How important is the nonprofit sector to the economy? Pretty important, if you gauge things by data compiled by a variety of organizations. In Minnesota alone, nonprofits are estimated to be responsible for the employment of more than 14 percent of the workforce. Nationally, estimates are the sector contributes close to $890 billion to the overall economy.

When you see figures like that, you appreciate why the IRS might want to consider keeping a close eye on the players in this market. Tax-exempt status isn't something the government grants blindly. If an audit shows that a charitable organization failed to operate in the public interest, it could mean loss of status and trigger tax disputes that require spending scarce resources.

Tax court clarifies conflict in tax code clauses

Business expenses are deductible. That’s the general rule in the U.S. tax code. However, not every expense is always 100 percent deductible, and where exceptions exist there can be room for disagreement.

Differences of opinion can trigger audits by the IRS, which can lead to taxpayers receiving notices of deficiency. Negotiation and compromise often resolves the issues, but when tens of thousands of dollars are at stake, sometimes a trip to U.S. Tax Court proves necessary.

Should the goodwill of a business be a taxable interest?

When you think about the sale of a business, you typically think about the assets of the business being sold to another party in exchange for a sum of money. Of course, the sale would be a taxable event for the seller, as he or she could realize a windfall in the transaction.

In the process of selling the assets of a company, some sellers also include the goodwill of the company in the price tag, so that the new owners can take full advantage of the relationships that have been built through the years with the company. However, this type of goodwill has not been included in the taxable interest the company’s assets garner; even though the IRS believes that it should.

Tax debt collection: What once was old is new again

There are so many sayings that seem to apply to our topic today. There's the one in the headline. There's also, once bitten, twice shy. And how about, the definition of insanity is doing the same thing over and over again and expecting a different result.

Back in April, word came down that the IRS had started turning over unpaid tax obligations to four private collection companies. As we noted in a post more than three years ago, Congress opted for such a strategy on two separate occasions in recent decades. It didn't work well either time and many expressed concern that this new effort wouldn't be any better. It seems they may be right.

Rely on IRS.gov FAQs at your peril

If you have questions about immigration to the United States, you go to USCIS.gov, the official website for the Citizenship and Immigration Services. They have a Frequently Asked Questions area you can turn to and hopefully get straight answers to specific questions. The same goes for most of the major departments.

As important as the Internal Revenue Service is, something similar would seem logical to expect from that agency. Think about it. The IRS is the financial engine of the U.S. government. It might be fair to say that tax issues affect more individuals directly than any other aspect of government activity. Sadly, though, if you depend on information from an IRS.gov FAQ site to be a shield through an IRS dispute, you could be sadly disappointed. Better to enlist an experienced attorney.

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