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Receiving a Chapter 7 discharge can be an exciting time because it is a fresh start ahead. You are no longer personally liable for those personal debts existing at the time you filed your Chapter 7 Bankruptcy. But be beware of one snag in the machinery – the IRS. If an IRS federal tax lien existed at the time you filed your bankruptcy case, that federal tax lien may survive your Chapter 7 discharge. Even…
JOE BIDEN Individual Tax Rate: Taxpayers with taxable income above $400,000, increase tax rate to 39.6%. Itemized Deductions: Cap the tax benefit of itemized deductions at the 28% rate. Capital Gains/Dividends: Long-term capital gains (20%) tax increase to 39.6% (top ordinary income rate) for those with incomes greater than $1M. Tax Credits: Increase the Child Tax Credit to $8,000 ($16,000 for two or more children). Education/Student Loans: Special tax exclusion for student loan forgiveness. Corporate:…
A quick summary of the Featured Blog Article, IRS: Cage the Crypto Kraken. In that article, it is argued that an IRS cryptocurrency tax amnesty program is the best course of action now and the fairest outcome for taxpayers. Most notably, it points out that Millennials, early twenties to thirties, comprise by far the largest population of taxpayers engaging in cryptocurrency transactions; and as such, the least experienced taxpayers. Because of this, and because…
This legislative season, NC expanded its sales and use tax reach to many transactions involving digital assets, and importantly, expanded the statute of limitations on “proposed” sales and use assessments. Effective June 30, 2020 and applies to assessments not barred by the statute of limitations prior to such date Failure to Pay Trust Taxes – N.C. Gen. Stat. § 105-241.8(b)(2a) is added and provides “[i]f a taxpayer, as a trustee, collects taxes on behalf of…
For tax season 2020, there is a new cryptocurrency disclosure question on IRS Form 1040. And if you ever wondered whether the IRS is really taking cryptocurrency taxation seriously – the crypto question appears on the new 1040 before naming your Dependents. Expect to answer this question honestly: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” Crypto tax enforcement is here. In…
On October 2nd, 2020, Proposed Regulations concerning the “Achieving a Better Life Experience” Act of 2014, or ABLE accounts, became Final. ABLE accounts help people with disabilities and their families save for and pay for disability-related expenses. The contributions to ABLE accounts are not deductible, but distributions are tax free to the designated beneficiary, so long as they are used to pay for qualified disability expenses. Qualified disability expenses include housing, transportation, health, prevention and…
In the world of cryptocurrency, the much publicized Coinbase Summons by the IRS just got more teeth to it. The “John Doe” Summons served on Coinbase – seeking information of records and documents regarding US persons conducting virtual currency transactions – covered some nearly 9 million transactions and nearly 15,000 account holders. Initially, Coinbase refused to comply but the Summons was eventually upheld. When the Summons was challenged by an account holder, in Gratkowski,…
If you are a crypto user and you buy and sell and use cryptocurrency for the purchase of goods, you should keep an eye on one particular piece of legislation. The bill was proposed by Congresswoman Suzan DelBene (D-WA-1). She introduced H.R. 5635, Virtual Currency Tax Fairness Act of 2020, on January 16, 2020. It is a proposed bill that excludes up to $200 of gain for tax purposes from the sale of virtual…
The saga of the IRS Letters with “bad” deadline dates continues. The IRS letters were supposed to include inserts advising taxpayers of new deadline dates superseding the incorrect dates on the face of the letters. However, whoops…, many of those inserts did not find their way into the IRS letters at all. To remedy this, a supplemental Letter 544-C (Procedure Adjustment Letter) was generated on August 6, 2020 and mailed on August 7, 2020, advising…
To avoid taxpayer (and IRS) confusion come next tax filing season, IRS Announcement 2020-12 advises lenders that taxpayers should not receive Form 1099-C’s in connection with the discharge of indebtedness of payroll loan forgiveness under the CARES Act. The filing of an Information Return (1099-C) could result in a taxpayer receiving an IRS Letter CP2000 for underreporting. IRS Letter CP2000 is issued when income information on file with the IRS does not match the information…