What are My CPE Requirements if I am an EA and Also an AFSP?

posted Nov 4, 9:20 am (13 days ago), permalink


Question: I just became an enrolled agent this year. I would like to keep my AFSP certification, as well. What do I have to do in terms of CPE in order to meet the requirements for both the AFSP as well as my EA license? Most importantly, do I have to take 4 hours of ethics now, since the EA license requires 2 hours per year, and the AFSP also requires 2 hours per year?


Christy's Answer: Congratulations on earning your EA license! If you are fulfilling your annual CPE requirements for your EA license, you automatically will fulfill the requirements for the AFSP. Note that, once you become an EA, you don't need to maintain the AFSP credential at all, but some practitioners like to add the AFSP to their list of credentials as an additional feather in their cap. Note that the IRS' "official" position is that credentialed preparers who already possess a much higher level of qualification (such as EAs and CPAs) are not the target for the AFSP requirements, but that they may voluntarily participate in the AFSP program if they wish. You can make this election in your PTIN account. 

Filing a Tax Return with an ITIN or SSN Mismatch, What do I do?

posted Nov 3, 9:49 am (14 days ago), permalink


Question: I have a client that recently received a valid Social Security Number. He was previously filing with an ITIN. The client is considered a U.S. resident for tax purposes (even in prior years) based on substantial presence. In 2018 he received his social security number, but he has 2 different w-2 forms with 2 different socials for different. One is his "real" SSN that he was given, and the other is a "made-up" social he used for almost all year up until November. I know that will cause an issue with the IRS if I just file it with his real social so anyone can tell me how to approach this?


Christy's Answer: If a taxpayer has a valid Social Security Number, that is the number that should be used on all the taxpayer's returns (this applies even if you are preparing prior years). So, use the SSN on all returns. Some software will still allow you to e-file, even if you have a SSN mismatch.

I have heard of tax professionals having problems with this in the past, usually with the taxpayer not getting proper credit for tax withholding. So I personally do not advise e-filing when you have an SSN/ITIN mismatch. The easiest solution is to file on paper and include a copy of all the taxpayer's W-2 forms, showing the withholding amounts. I’ve done this process dozens of times with no issues. You don’t need to include any type of explanation (the IRS knows what's going on, this is a common enough issue). You will have to do the same for the state, too. The paper filed returns will generally have a longer processing time, but beyond that, there are typically no issues.

Filing a Tax Return After an E-file Rejection (Past the Filing Deadline)

posted Oct 29, 8:00 am (20 days ago), permalink


Question: I have a client who tax return I filed on April 15, and the return was was rejected late in the evening, on April 16. No extension was filed (my bad). I resubmitted on April 17, but the client received an IRS notice with a penalty for late filing. I would like to try and have this late filing penalty abated. What should I do?


Christy's Answer: Late filing penalties are always a bummer. But in your case, you're in luck! The taxpayer qualifies for an automatic abatement because the return wasn't actually LATE! If you e-filed on the due date, and have proof of that, then the return is NOT late as long as you either

(1) resubmitted the return within 5 days, or

(2) filed it on paper within 5 days of the rejection.

This is officially called the "transmission perfection period". There is a longer "perfection period" for most entities, which is 10 days. This gives the tax practitioner more time to correct the return and submit it, without the return actually being considered late. If the IRS does send the taxpayer a notice, then you would have to respond to the notice with proof of the e-file submission (the date the return was submitted to the IRS), as well as proof of the rejection. 

Note: The perfection period is not an extension. It is generally a good business practice to file an extension for each taxpayer who is close to the filing deadline. However, in the case of the extended filing deadline (October 15) the transmission perfection period STILL APPLIES. So if the taxpayer's return is e-filed on October 15, and the efile is rejected, the taxpayer still has 5 days to correct the return and resubmit it, (either on paper or via e-file) and the return will still be considered timely. 

References: IRS Publication 1345, IRS efile handbook

 

Using a Motorcycle for Business, What's the Tax Treatment?

posted Oct 23, 9:05 am (26 days ago), permalink

Christy's Tax Tips


Question: I have a self-employed business client that purchased a motorcycle for business use (to save gas). When inputting the asset into my software, I do not see an asset type for this. What asset type do I choose? I am going through the form instructions on IRS.gov, however, as we know there are nuances and specifications that I may not be aware of. Please help!


Christy's Answer:  The MACRS asset class for a motorcycle is the same as any other vehicle: 5 years.  There are some nuances, however. First, your professional software may not actually list "motorcycle" as a vehicle choice. But, it doesn't matter what the software says. Take, for example, a golf cart (that is used as a business vehicle on a golf course) or an ATV that is used on a farm. These are all specialty vehicles that can be business-use, depending on the taxpayer's scenario. Your software may not list any specialty vehicle like that, but a motorcycle still a vehicle with a 5-year depreciation class life. Some caveats: Motorcycles are considered "listed property". This means the taxpayer can only claim Section 179 depreciation if the asset is used at least 50 percent of the time for business. Taxpayers also have to keep records of the motorcycle's use. Motorcycles also cannot use the standard mileage rate. This requires the taxpayer to keep track of what they actually spend during the year for gas, repairs, maintenance, insurance, license and registration fees, and other expenses, such as mandatory safety gear (like a helmet). This is true of all similar vehicles, as well, such as: mopeds, scooters, or bicycles. These vehicles must use actual expenses or actual costs.

Examining the Tax Treatment of Website and Domain Sales

posted Oct 17, 10:46 am (31 days ago), permalink

Christy's Tax Tips


Question: One of my tax clients is planning to sell a website that he built. His business is an SMLLC. He does not regularly sell websites, but this is something that he plans to do this year. What are the tax implications of selling a website? Is there any IRS guidance on a gain computation in this case?


Christy's Answer: A domain or website is generally treated as a capital asset for tax purposes (generally, a Section 197 intangible). Therefore, the sale is given LTCG treatment if the taxpayer has owned it for more than a year. This is unless he's in the actual business of selling websites (a reseller). 

The IRS guidance is spotty in this area because the sale of intangible assets is complex and and digital asset sales are fairly new (with respect to tax law), so this is an emerging area of tax law.

The sale of a website can include a number of different assets:

  • The sale of the domain (the web address, which is always treated as a capital asset unless the business is truly a reseller),
  • As well as other copyrighted materials and digital assets that already exist on the website (logos, web design, proprietary software, etc.).

Most of the guidance out there is secondary, but this article does a good job explaining the basics of how the asset is treated. It also includes a link to a recent IRS CCA on the subject. IRS CCA 201543014 specifically discusses the treatment of costs associated with the acquisition of a domain, but the whole CCA is an enlightening read on the tax treatment of digital assets in general.

Now, for the specific scenario that you have described, a disregarded SMLLC is just treated as a self-employed person, so the sale of the taxpayer's website or domain would generally go on Schedule D, (although, once again, if the taxpayer is actually in the business of selling websites on a regular basis, the website could potentially be treated as inventory, but that would be rare).

FIVE Free CPE Courses in October from the IRS Stakeholder's Office!

posted Oct 8, 9:07 am (41 days ago), permalink

free 5 cpes

There are five free CPE courses coming up in October from the IRS Stakeholder's office. Register now and get up to 8 hours of free Federal Tax CPE. 


 

Relief Procedures for Certain Former Citizens  Rescheduled

Date: October 10, 2019

Time: 10 a.m. (ET), 9 a.m. (CT), 8 a.m. (MT), 7 a.m. (PT)

This webinar will cover the following:

  • Provide background on United States citizenship by birth and relinquishing citizenship
  • Discuss tax implications of relinquishing citizenship
  • Describe the purpose and scope of the new Relief Procedures for Certain Former Citizens (“relief procedures”)
  • Explain specific filing requirements under the relief procedures and discuss common issues taxpayers may encounter
  • Discuss how submissions under relief procedures will be handled by the Service
  • Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax. Registration:

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison


An Overview of the Foreign Tax Credit

Date: October 17, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

  • Explain the impact of residency status on U.S. taxation.
  • Differentiate residency status under U.S. immigration law versus U.S. tax law.
  • Determine an individual's residency status for U.S. tax purposes.
  • Describe the special tax rules that apply to dual-status aliens.
  • Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

 


Tax Obligations of U.S. Individuals Living and Working Abroad

Date: October 17, 2019

Time: 11 a.m. (ET), 10 a.m. (CT), 9 a.m. (MT), 8 a.m. (PT), 7 a.m. (Alaska), 6 a.m. (Hawaii)

This webinar will cover the following:

  • Specify the U.S. income tax obligations of U.S. citizens and resident aliens abroad.
  • List the requirements for claiming the foreign earned income exclusion.
  • Summarize the U.S. employment tax obligations of U.S. citizens and resident aliens abroad.
  • Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison


Understanding the 2020 Form W-4 and How to Use it 

Date: October 22, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

  • Explain the reason for a new design of the W-4
  • Explain Steps 1-5 of the 2020 Form W-4 Explain who must use the 2020 Form W-4
  • Illustrate how to complete two of the five worksheets from Publication 15-T
  • Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 1 CE Credit - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison


Tax Security 2.0 - A “Taxes - Security - Together” Checklist

Date: October 24, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

  • Deploy the “Security Six” basic protections
  • Create a written data security plan
  • Educate yourself on phishing scams
  • Recognize the signs of client data theft
  • Create a data theft recovery plan
  • Plus a live Q & A.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 1 CE Credit - Category: Federal Tax. Registration:

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

Free 2 Hour CPE Course: IRS Relief Procedures for Certain Former Citizens

posted Oct 2, 10:25 am (46 days ago), permalink

free cpe irs

IRS Relief Procedures for Certain Former Citizens

Thursday, October 10, 2019

10:00 a.m. Eastern, 9:00 a.m. Central, 8:00 a.m. Mountain (MDT), 7:00 a.m. Pacific

This free 100-minute webinar is open to ALL

This webinar will cover the following:

  • Provide background on United States citizenship by birth and relinquishing citizenship
  • Discuss tax implications of relinquishing citizenship
  • Describe the purpose and scope of the new Relief Procedures for Certain Former Citizens (“relief procedures”)
  • Explain specific filing requirements under the relief procedures and discuss common issues taxpayers may encounter
  • Discuss how submissions under relief procedures will be handled by the Service Plus a live Q & A

Tax ProfessionalsEarn 2 CE CreditCategory: Federal Tax 

click to sign up button


 

Three FREE Upcoming CPE Courses from the IRS Stakeholder's Office

posted Sep 6, 5:47 am (73 days ago), permalink

Sept 2019 CPE Courses
Three upcoming courses from the IRS Stakeholder's Office on a variety of tax topics, earn up to 6 hours of free CPE credit. Sign-up links below:

 

Tax Withholding Estimator Course, Sept 19, 2019

This webinar will:
  • Illustrate the user-friendly features and design improvements of the new IRS withholding estimator to help taxpayers check their withholding
  • Demonstrate how to use the new withholding estimator
  • Explain why taxpayers need to do a Paycheck Checkup to check their withholding
  • Provide a live Q & A
Closed captioning will be offered.
Continuing Education: All participants who qualify will receive a Certificate of Completion.
Tax Professionals earn up to 2 CE Credits - Category: Federal Tax

Registration: Please visit the registration website. 
Sponsored By: IRS Stakeholder Liaison
Date: September 19, 2019
Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

 


An Overview of the Foreign Tax Credit, Oct. 17, 2019
This webinar will cover the following:
  • Explain the impact of residency status on U.S. taxation.
  • Differentiate residency status under U.S. immigration law versus U.S. tax law.
  • Determine an individual’s residency status for U.S. tax purposes.
  • Describe the special tax rules that apply to dual-status aliens.
  • Plus a live Q & A
Closed captioning will be offered.
Continuing Education: All participants who qualify will receive a Certificate of Completion.
Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Registration: Please visit the registration website. 
Sponsored By: IRS Stakeholder Liaison
Date: October 17, 2019
Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

 


Tax Obligations of U.S. Individuals Living Abroad, Oct 17, 2019
This webinar will cover the following:
  • Specify the U.S. income tax obligations of U.S. citizens and resident aliens abroad.
  • List the requirements for claiming the foreign earned income exclusion.
  • Summarize the U.S. employment tax obligations of U.S. citizens and resident aliens abroad.
  • Plus a live Q & A
Closed captioning will be offered.
Continuing Education: All participants who qualify will receive a Certificate of Completion.
Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Registration: Please visit the registration website. 
Sponsored By: IRS Stakeholder Liaison
Date: October 17, 2019
Time: 11 a.m. (ET), 10 a.m. (CT), 9 a.m. (MT), 8 a.m. (PT), 7 a.m. (Alaska), 6 a.m. (Hawaii)