About: Jeffrey A. Quinn

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Vacation Home Rentals

You may be renting out that mountain cabin or beach house during this vacation season.  When it comes time to prepare your 2014 tax returns, don’t forget the implications of such vacation home rentals to your tax liabilities, some of which considerations are:

  • Required reporting of rental income and expenses on Schedule E of your Federal tax return.
  • Use by you as a “home” of the property, during non-rental periods, may cause your rental deductions to be limited in various ways.
  • And “personal” use includes not only your own use of the property, but use by your family members or others who pay less than the full fair market rental value for the time spent in the property.
  • A “freebie” offered by Uncle Sam can kick in when the property is rented out fewer than 15 days per year, in which case you don’t have to report the rental income at all.

Check out IRS Publication 527, “Residential Rental Property (Including Rental of Vacation Homes”) for more details.

IRS Encourages Review of Premium Tax Credit Status

Folks with health insurance procured through the Health Insurance Marketplace may be receiving advance payments of the premium tax credit.  These are paid to your insurance company with a goal of lowering your monthly premium.

Changes in circumstances can alter the amount of these advance payments, including:

  • An increase or decrease in your income
  • Marriage or divorce
  • Birth or adoption of a child

Changed conditions such as these can result in the credit ending up too much or too little, which can result in an unpleasant surprise at tax time.

Folks are supposed to report changes in their situation to the Marketplace as they occur.  Check out IRS Health Care Tax Tip 2014-15 for more info.

So, You’re Volunteering to Help Your Favorite Charity…

You can’t deduct the value of your services, but you should be able to deduct whatever out-of-pocket costs you incur.  Such costs must be:

  • unreimbursed
  • directly connected to your services
  • incurred only because of the services you provided, and
  • not personal living or family expenses.

Your volunteer work must be on behalf of a qualified (i.e.-tax exempt) charity.  And your expenses can include travel by air, car, rail or bus.  Not to mention meals and lodging.  See IRS Publication 526 for more details.

IRS Enforcement of Trust Fund Recovery Penalty Likely to Increase

The Treasury Inspector General for Tax Administration (TIGTA) recently studied IRS’ practices in assessing and collecting the IRC Section 6672 “responsible person penalty,” and recommended that group managers pay closer attention to this revenue raising opportunity.

Recall that if an employer fails to pay its payroll taxes, IRS can attempt to collect a penalty equal to 100% of the unpaid taxes from a “responsible person” within the employer’s ranks.

TIGTA notes that when trust fund recovery penalty assessments are not timely made, factors can arise which impede IRS’ chances to collect the trust fund taxes due.

IRS has agreed with all of the TIGTA recommendations, and has indicated that corrective actions will be taken.  The inevitable consequence will be more assertions of the “responsible person penalty” and more assertive collection actions by IRS in the near term.

501(c)(3) App Just Got Easier

In theory, anyway.

That’s because on July 1, IRS introduced a new, shorter application form to help small charities apply for tax exempt status more easily.

The new Form 1023-EZ is a mere three pages long (compared with the standard Form 1023 which spans 26 pages.) IRS thinks as many as 70 percent of all tax exempt applicants will qualify to use the new streamlined form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible to use the new form, which must be filed online, and be accompanied by a $400 user fee.

Check out Rev Proc 2014-40 for the details.

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