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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
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
While you may have read my articles on various websites, or my posts on FB pages and other forums, from time to time I like to wax eloquent without fitting my thoughts into someone else’s prescripted format. Some of the entries may be long and a few will simply be rants. Whatever the case, you are guaranteed to find some nugget of tax knowledge fitting for your situation with a dash of sarcasm or philosophy.
Since our clients are primarily engaged in multistate assignments, cross border employment or posted abroad, they share a common connection of working on the road, exploring the world or just planting themselves in a foreign land ….. travelers and nomads at heart.
Be sure to visit our website http://www.traveltax.com
Thanks for reading!