Tax and Financial News Archives | Decker, Farrell & McCoy, LLP

The IRS Versus the Taxpayer

According to the IRS, not only is your ignorance no excuse, but so is that of your tax preparer. In other words, the fact that your tax preparer made a mistake is no excuse and will not absolve you from compliance penalties.Unfortunately, the penalty for making what could be deemed an innocent mistake can cost a taxpayer a significant sum. What is worse yet is that defending yourself against the IRS is a costly endeavor in terms of both time and money. Part of the problem is that taxpayers often [...]

The 2022 Tax Guide

Now is the time of year to do everything you can to minimize taxes and maximize your financial health with proper year-end planning. In this article, we’ll look at several actions to consider taking before the end of 2022.Thoughtfully Harvest Losses and Gains Before Year-EndTax loss harvesting by selling securities at a loss to offset capital gains is a classic year-end planning strategy. Just make sure not to violate the wash sale rules. This means you can’t buy back the same security or a substantially identical one within 30 days [...]

Tax Planning Guide for Disaster Area Victims

The recent hurricane Ian impacted much of the southeast United States. As a result, it is good to know the general tax rules related to disaster victims. Below, we look at several tax topics for disaster area victims.1. Tax Returns and FilingsQ: I am a disaster area victim and needed to move from my home. I might not be back for a long time or even at all. Which address should I use on my tax return?A: A taxpayer should always use their current address in filing a tax return. [...]

How to Increase After-Tax Returns on Investments

It is all about how much you keep after taxes – not what you earn from your job, a business or investments. While it is always great to see fabulous investment gains, the only financial metric that really matters is what is in your bank account at the end of the day. One of the ways you can influence this is by minimizing the taxes you pay on your investments.Unfortunately, many people do not think about how taxes impact their investment returns until near the end of the year; however, [...]

Electric Vehicle Tax Credits and the Future of the Automotive Industry

One highlight of the recently passed Inflation Reduction Act of 2022 (IRA; HR 5376) includes modifications to what is more commonly referred to as EV credits. Specifically, Section 30D of the Act is where the most important modifications are, and where the present tax credit for electric vehicles is spelled out in the U.S. Code. There is also new stimulus for previously owned electric vehicles, industrial vehicles and “alternative fuel refueling property.”According to the Joint Committee on Taxation's estimates, in lieu of what was previously known as the credit for [...]

Expanding the Net Investment Income Tax

Despite borrowing massive amounts of money, the government still needs to find ways to raise revenue to pay for new programs and spending. The current democratically controlled Congress is looking to potentially implement new social programs and a climate bill. As a way of funding these initiatives, they are considering an expansion of the Net Investment Income Tax (NIIT).The NIIT is proposed to raise revenue since it is seen as politically more palatable, given that it typically only impacts a small group of wealthier taxpayers. Critics, however, say the plan [...]

The IRS is Auditing Fewer Returns than Ever

One of the perennial fears of taxpayers is getting audited by the IRS. Financially, few scenarios strike such fear into the heart of taxpayers. However, taxpayers can probably breathe a sigh of relief – at least for now. This is because the rate at which the IRS is initiating audits of individual taxpayers is dropping like a stone.Decline in Audit RatesThe rate at which the IRS is auditing individual taxpayers has declined overall between the years of 2010 and 2019 (2020 data is too new and 2021 returns are still [...]

Tax Break for Commercial Real Estate Investors

COVID-19 impacted the economy dramatically and commercial real estate was no exception in terms of decreased values. Often, the real property could no longer service the debt used to finance it. This debt restructuring and resulting debt forgiveness can result in taxable income.Taxable Income and Debt CancellationIf you have a $80,000 loan and the bank reduced the amount you owe down to $50,000, then you have an economic benefit of $30,000, which should be treated as taxable income. This is indeed how cancellation of debt is treated, but there are [...]

Secure 2.0 Retirement Bill

At the very end of March, the House of Representatives passed a version of the bill known as Secure 2.0. The bill passed the House with overwhelming bipartisan support in a 414-5 vote. The House version still needs to pass in the Senate, where there are differing ideas on exactly what the bill should contain. There is strong support, so it is less of a question of if Secure 2.0 will become law than what exact version.The Secure 2.0 bill in any version aims to help Americans save for retirement [...]

What Every Taxpayer Needs to Know This Season

The IRS is currently suffering a severe backlog in processing returns from 2021 for the 2020 tax year. As of Dec. 31, there were still more than 6 million unprocessed individual returns with notices and pending refunds. There are a few things every taxpayer should know that can help them navigate any delays in filing or speeding up the process to make filing this year as smooth as possible.Pass on the PaperNothing speeds up the process like electronic filing. Despite the uptick in electronic filing over recent years, the agency [...]