Martin Cantu, EA - Tax Consultant - Tax Relief Services Blog

So many investors and entrepreneurs like to use the Limited Liability Company (LLC) format for entity planning.  I refer to LLCs as a Swiss Army Knife because it is so flexible and adaptable to so many situations. Corporations are still a viable and proper choice for many, especially with the flexibility provided by Sub S elections. The Series LLC now deserves special consideration as way to reduce entity costs, both initially and over the long run. Here's why.  What is a Series LLC? Its an LLC that allows you to form multiple series entities via one entity; protect the equity of one series entity against the liabilities of another series entity; and have a different set of owners for each series entity. This is a Swiss Army knife on steroids! Let’s review the most common reasoning behind choosing such a structure. We’ll assume an individual real estate investor, married with 2 children, living in Texas. He owns 3 properties. Property 1 is a small 6-unit apartment...

Some taxpayers may benefit from the credit for other dependents Taxpayers with dependents who don’t qualify for the child tax credit may be able to claim the credit for other dependents. The maximum credit amount is $500 for each dependent who meets certain conditions. These, include: Dependents who are age 17 or older. Dependents who have individual taxpayer identification numbers. Dependent parents or other qualifying relatives supported by the taxpayer. Dependents living with the taxpayer who aren’t related to the taxpayer. The credit begins to phase out when the taxpayer’s income is more than $200,000. This phaseout begins for married couples filing a joint tax return at $400,000. A taxpayer can claim this credit if : They claim the person as a  dependent  on the taxpayer’s return. They cannot use the dependent to claim the child tax credit or additional child tax credit. The dependent is a U.S. citizen, national or resident alien. Taxpayers can claim ...

You hopefully read our recent post on the Taxpayer's Bill Rights. Well, the flip side to that coin is the power of the IRS to regulate how taxpayers must report item, or comply with the law. Congress has given the IRS wide latitude in deciding how to enforce reporting and compliance of various items. Like an ambivalent parent, sometimes the IRS says "you (the taxpayers) must report (fill in the blank) in this manner." Just like a parent with a young child, sometimes the requirement is "I mean it", other times its "I really mean it.", and others "I triple mean now!!!".  The lesson here goes back to something we preach over and over - the key to success in an audit is preparation and then more preparation. Don't get into a situation where you are rushed into an audit. Review the document request, speak with the auditor, review the client files. Candidly speak with the auditor about your plans. Consider amending a return if needed b...

Here is some information put out by the #IRS on the Affordable Care Act, and your duties under the Act.  The Individual Shared Responsibility Payment – An Overview Starting January 2014, you and your family must either have health insurance coverage throughout the year, qualify for an exemption from coverage, or make a payment when you file your 2014 federal income tax return in 2015. Many people already have qualifying health insurance coverage and do not need to do anything more than maintain that coverage in 2014. Qualifying coverage includes coverage provided by your employer, health insurance you purchase in the Health Insurance Marketplace, most government-sponsored coverage, and coverage you purchase directly from an insurance company. However, qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage that only covers a specific disease or condi...

Lots of news this week about the #IRS' lean resources and what that means to customer service. Yes wait times are high - higher than most any other customer service business. Yes, their computer systems are antiquated leaving each representative to re-verify the same information over and over again. This wastes at least 25% of each phone call, if not more.  I do wish there was one way to verify your power of attorney for a client. I do wish their computer systems were faster. I do wish I could call ahead for a virtual appointment. Maybe we'll get that in the future. But I have to praise the telephone work of the IRS representatives I speak to from across the country. I find them to be helpful, understanding, and cheerful. This does not mean our conversations are "love-fests", but you have to a willingness to cooperate on both sides to reach an agreement. As an advocate for my clients, this is essential to moving their case on to resolution so they can get on ...

So you received the dreaded Notice of Garnishment. What do you do now? The first thing you need to understand is that by the time you received the notice, the garnishment has been acted upon. It will quickly be followed by a notice from your payroll department confirming the garnishment, the amount taken by the IRS and the amount you are left with. The amount taken reflects a mathematical calculation, leaving you a very small amount to get by with through the new payroll period.  Garnishment is the same as a slap in the face - designed to get your attention. It is the ultimate call to action.  Candidly, by the time I get involved its usually too late to get the amount taken released by the IRS. The analogy I use is that the "toothpaste is out of the tube".  At this point your goal is to establish a line of communication with the IRS. Then, you can work to  stop the garnishment by setting up a payment agreement, providing financial agreement, or somet...

Just a quick note to you to remind everyone that the earlier I can get into the game for you, the quicker we can have some success. Tax problems bear a remarkable resemblance to cancer, something many people can relate to and understand more than cancer. Not to trivialize cancer - its a horrible disease and my prayers go out some many friends, clients and family members that deal with this disease. Just like cancer, early in means early success. The later it goes the harder it gets to extricate yourself from the mess. It really paints you into a box and leaves you with few options. Yes, the medicine can be tough, but once you get past that you'll find the road open up with more choices and the added benefit of relief. We can help you with #IRSgarnishments, #IRSlevies, #IRSaudits and other tax issues. Take the first step and give us a call today. #AustinTaxHelp #SATaxHelp

The IRS recently announced how it handle same-sex marriages as a result of the Supreme Court cases interpreting the Defense of Marriage Act. Here are a few bullet points on the IRS position. Keep in mind that as with all IRS rules and regulations, this new pronouncement is a two edge sword. That is to say, you may have reporting errors if you don't follow the rules. Ironically, this aspect of the new position is truly Equal Opportunity and Equal Treatment - be careful of what you want as you might get it! Here are the point: 1.   Under these new rules, same-sex marriages that are valid in the state where they were performed will be recognized for all federal tax purposes, even if the couple is domiciled in a state that does not recognize their marriage.  2.   These rules apply to income taxes, estate and gift taxes and payroll taxes related to employee benefits. 3. Here is an example of "gotcha" from Uncle Sam - As a result, beginning with the ...

Sometimes events coincide and you have one of those "Ah ha" moments. Well, I had last week. Let's set the scene. Recently the IRS launched an initiative against small business where the IRS questions if the small business has reported all of their income. The IRS sends out letters with the heading "Notification of Possible Income Under reporting."  It notifies the business owner "your gross receipts may be under reported" and says they must complete a form "to explain why the portion of your gross receipts from non-card payments appears unusually low." The Forbes article goes into more detail about the initiative, and the response from the business community . This on the heels of a report that the IRS is using social media as a way to monitor the spending habits of suspected tax cheats. Now the third leg of the stool - I spoke with a colleague recently who recounted how the Texas Comptroller's Office BART unit instigated a sal...

Hey Eagle Ford workers - don't let the IRS garnish your paychecks! Taking action now - not later - right now, insures that you can keep more of that hard earned overtime dollars. The IRS does not care how many hours you put in or that it was over 100 degrees while you were putting in your time. Here are a couple of things that we can do to help - so keep them in mind: 1. While we can't stop the garnishment immediately, I can have the IRS fax your payroll office a notice to stop the garnishment. 2. The IRS will issue this notice as soon as you've entered into a payment agreement. 3. You must file any back year tax returns before you can enter into an installment agreement. We deal with this all of the time and have a plan of action for you to take care of this issue painlessly. The biggest service we provide to you is getting this huge gorilla off your back. The sooner you act, the sooner you can begin to enjoy more of your paycheck. Call San Antonio Tax Attorn...

#IRS #Taxes #TexasComptroller We're seeing a number of clients having problems with the Texas Comptrollers Office for state due on businesses that were shut down years ago. While the taxpayer may have viewed the business as shut down, the Comptroller did not. What starts out small grows huge - if only our 401k's grew as fast. The scenario is something like this: 1. Business incorporates and obtains a sales tax permit. 2. Business goes kaput, is shut down, but corporation and sales permit stay active. 3. No reports filed - the Comptroller prepares substitute returns for a couple of years. 4. Taxpayer moves, ignores certified mail from the comptroller, summons, etc. Judgment is taken, including the substituted returns where no actual sales are made. 5. Taxpayer finds out about the judgment years later, after the debt has grown ten-fold. 6. Comptroller refuses to negotiate on the amount due, leaving you between a rock an a hard place - an not able to get that house...

Members of the U.S. Armed Forces receive several tax benefits. Special tax rules apply to military members on active duty, including those serving in combat zones. These rules can help lower your federal taxes and make it easier to file your tax return. Here are ten of those benefits: 1.  Deadline Extensions.   Qualifying military members, including those who serve in a combat zone, can postpone some tax deadlines.  2.  Combat Pay Exclusion.  If you serve in a combat zone, you can exclude certain combat pay from your income.  3.  Earned Income Tax Credit.  You can choose to include nontaxable combat pay as earned income to figure your EITC.  4.  Moving Expense Deduction.   If you move due to a permanent change of station, you may be able to deduct some of your unreimbursed moving costs. 5.  Uniform Deduction.  You can deduct the costs and upkeep of certain uniforms that regulations pro...

Here are three tips from the IRS Audit front line: 1. Business Owners, reconcile your total bank deposits with reported income. This is request number one on the auditor's list. Help yourself out and have this list ready when you receive your audit notice by making it part of your tax return supporting documents. 2. Travel Logs - use a calendar, excel spreadsheet and a mapping tool such as Google Maps to document regular trips and the distance per Google maps. This is an easy sign off by the auditor. 3. Credit Cards - the best comment I heard from an auditor is to treat credit cards like another bank account. Account for each charge as a separate item. Not all charges may be deductible, just like a business bank account. Hope this give you a heads up on your tax return and audit planning. Have questions on your return or IRS audit? Contact tax attorney Martin Cantu .

Great article in the Austin American Statesman about an IRS whistle-blower and his attempts to point out the huge cost to taxpayers on ITIN numbers. The article is chock full information on a number of items - the ITIN program itself; how fraudsters and maybe even drug cartels are using loopholes costing taxpayers huge amounts of money; how the whistle-blower process works. But in light of the ongoing Tea Party fiasco, the more interesting thing is how the IRS works on a personal level. I often tell clients that no two tax cases are the same, primarily because the IRS seems to have different "tracks" to handle cases.  Their computer systems handles cases differently. Add the human touch, and you the process gets even trickier. This article describes how IRS workers are evaluated and how one case can get lost in a volume of cases. This is great example of why its sometimes best to "kick the can down the road". The two examples also explain why a number of othe...

1099s are a road map into your financial situation. The IRS uses 1099s as a road map to track any number of financial transactions in which you participate. For example: Non-employee compensation; Rents; Sale proceeds; Forgiveness of debt; Interest earned and paid; stock and commodity transactions. The IRS uses a matching program to verify whether you included these items in your return. Sounds simple enough, but often times the system is blind. For example, it cannot located sums included with other amounts, say in gross rents. It will not deduct basis or expenses from the amounts. It cannot tell if the forgiven debt was for homestead or investment property. All of these situations are a critical part of your tax calculation in a given year. Here's the kicker - the IRS may not send you an inquiry for years. So your left digging in your records to justify an expense 3 years ago, or to figure out how you calculated your gross income. The IRS can also use it on a going ...

Independent Contractor v. Employee. This fight has been going on between the IRS and the business for as long as anyone can remember. Even cities are not safe from scrutiny. Safe Harbors, amnesty programs, voluntary classification program - the IRS refuses to recognize independent contractors that are used on a routine basis. Lets review a couple of things on this issue: The IRS has preference for classification of workers as employees for tax collections purposes. More and more workers are working at a number of different jobs for multiple employers, and many from home - this is the new economy. Many states are now interested in classifying workers as employees - we recently saw a case with the Texas Workforce Commission that classed workers as employees independent of an IRS involvement. Obamacare is right around the corner - employers will adapt to get under the 50 employee threshold.  Employers, better gear up for a fight on this issue. Document your files. Revi...

This information brought to you by the Law Office of Martin Cantu and San Antonio Tax Help . Are you a parent? Here are eight tax benefits for parents 1. Dependents. In most cases, you can claim a child as a dependent even if your child was born anytime in 2012.    2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your children that were under age 17 at the end of 2012.  3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work or look for work.  4. Earned Income Tax Credit. If you worked but earned less than $50,270 last year, you may qualify for EITC. If you have qualifying children, you may get up to $5,891 dollars extra back when you file a return and claim it.  5. Adoption Credit.   6. Higher education credits.  7. Student loan interest.  8. Self-employed health i...

Here is some information on how to determine your tax filing status. For more information or other tax related questions, place contact the Law Office of Martin Cantu or sataxhelp.com. Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. Some people may qualify for more than one filing status. Here are eight facts about filing status you'll need to know so you can choose the best option for your situation. 1. Your marital status on the last day of the year determines your marital status for the entire year. 2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligatio...

Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits. Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012. The law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 201...

Six Year-End Tips to Reduce 2011 Taxes Here are six tax-saving tips for you to consider before the calendar turns to 2012: 1. Make Charitable Contributions – If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn't paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible. 2. Install Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new win...