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Internet-based currencies are a popular investment/payment vehicle. They also require disclosure or reporting on the tax return but many ignore their accounts.
With the removal of job expenses under tax reform I have seen this scheme just like I predicted after the new tax laws were passed. It’s summed up in one really lame statement I heard:
“I make myself a 1099 worker by filing exempt from tax withholding for my W2 job and then claim all my travel expenses on a Schedule C, Self Employment Form. All my friends do it!!”
This is a good study showing that the majority of business are not “evil” corporations who pay no tax, but that they are owned by individuals, who pay a substantial portion of the income taxes in the US
A good recent article
U.S. Treasury’s Mnuchin says tax refunds are flat from last year
By Susan Thomas and Jason Lange
WASHINGTON (Reuters) – Tax refunds to Americans so far in 2019 are flat compared to the same period last year, U.S. Treasury Secretary Steven Mnuchin said on Thursday.
Mnuchin, who was speaking at a hearing in the U.S. House of Representatives on Trump’s 2020 budget proposal, did not provide specifics on the dollar value of refunds made this year.
“Tax refunds are flat on last year”, he said.
Previously released Treasury data has showed the government has refunded $142.4 billion to taxpayers this year through March 1, down 3.5 percent from a year earlier. The average refund made, at $3,068, was 0.7 percent higher than a year earlier.
A soft trend for tax refunds could present a messaging challenge for the Trump administration, which has been touting a tax cut enacted last as a major boost to household finances.
While tax rates have fallen for most households, for some Americans their annual rebate is a palpable interaction with the tax code.
Mnuchin said refunds should actually fall when tax obligations fall. Many Americans pay more taxes than they owe over the course of the year. If they were able to estimate exactly what they owe and instructed employers to withhold just that, they would not get a refund at the end of the tax year.
“The fact that refunds are the same means in essence that people did not adjust their holding enough to take advantage of the tax act”, Mnuchin said, referring to the tax law enacted last year. “Because taxes are down refunds should be down.”
Since many of our clients are multi-state professionals, we go out of our way to stress how states are extremely aggressive in residency audits and how serious the state tax returns are.
Among reminders are
- Do not use assignment addresses on any legal document
- Do not use assignment addresses on tax returns
- Avoid buying cars out of state unless you can tag it to your own
- Keep a copy of your contract in your car in case you are stopped
The article linked below highlights the tools that state revenue agencies will use to conduct “Residency” audits. Ignore the political aspect of the article, and focus on this quote:
New York’s success rate on audits can be attributed not only to the traditional methods of investigation like going through an individual’s credit card bills, but also to new high-tech tools that include tracking phone records, social media, and even veterinary and dentist records, …..
Here is the article: New York Residency Audits
5 Tips for Travelers Tax Filings For the Upcoming Tax Season
We are now in the middle of tax filing season 2019.
A lot has changed since tax reform, but the filing requirements have not.
Here are 5 quick thoughts to help.