1. 5 Income Tax Filing Dos and Don’ts

    Working on your 2012 taxes? Here are five “dos and don’ts” to help get the job done right:

    1. Don’t blame the computer:

    “The so-called ‘TurboTax defense’ is raised by taxpayers to avoid penalties – they claim reasonable cause for their tax return errors because they used TurboTax or similar return preparation software to prepare the erroneous tax return. That is what Brenda Bartlett claimed when she was penalized for not reporting all her income on her tax return…The Tax Court rejected her defense, since the problem was that Brenda entered the information incorrectly into the program – not that the program made a mistake.” (Charles “Chuck” Rubin

    2. Do get proof of donations: 

    “Contributions by cash or check of less than $250 must be substantiated by a bank record, such as a cancelled check or a written communication from the donee organization, noting the organization’s name and address, and the date and amount of the contribution. A contribution log is insufficient.” (Duane Morris

    3. Don’t overstate your home-office deduction:

    “For years, taxpayers have viewed the home office deduction—which allows you to deduct a portion of your rent, mortgage payment, real estate taxes and utilities—as an easy way to reduce their tax bill. But the IRS takes a firm position on what does and does not qualify as a home office. Before you deduct your home office, read the rules carefully to ensure that yours qualifies.” (Lawyers.com

    4. Do consider a gift tax return to record transfers of wealth:

    “Some transfers require a return even if you don’t owe tax. And, in some cases, it’s desirable to file a return even if it’s not required. Generally, you’ll need to file a gift tax return for 2012 if, during the tax year, you … [m]ade gifts that exceeded the $13,000-per-recipient gift tax annual exclusion (other than gifts to your spouse that qualify for the marital deduction)…” (Adler Pollock & Sheehan

    5. Don’t hide offshore assets:

    “[T]axpayers [who] do not come forward now, will face the IRS with the presumption that there conduct in avoiding disclosure was ‘willful’ and they will likely face the worst case civil penalty assessments if not criminal prosecution. The maximum civil assessment under the FBAR rules (as part of the Bank Secrecy Act) is a civil penalty of 50% of the highest account balance per year or $100,000 whichever is greater. Under the IRC the willful (civil fraud) penalty for not reporting taxable income is 75% of the unreported income per year, plus interest.” (Sanford Millar

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Notes

  1. alcovarichmond reblogged this from is-that-jdsupra and added:
    Great Tax Tips!!!
  2. is-that-jdsupra posted this