IRS employees can lose their jobs if they willfully don’t comply with tax laws. However, a 2017 audit by the Treasury Inspector General for Tax Administration, showed many IRS employees had understated income or filed their tax returns late. In a recent letter to U.S. Senate Finance Committee Chairman Charles Grassley, the IRS Commissioner reported that most such cases had been resolved and only 19 remain open. He added that finding willful neglect among the employees “is not a science.” In response, Grassley commended the IRS “for shoring up oversight of its workforce” and removing employees who were willfully noncompliant. To read the Commissioner’s letter: https://bit.ly/2OTMTTL
Taxpayers who use their homes for business may qualify to claim home office deductions on their tax returns. To determine if you’re eligible, here are several points to keep in mind. The home office deduction is available to both homeowners and renters. The home must be your principal place of business. Deductible expenses include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent. Expenses for a separate structure, such as an unattached garage, don’t qualify for a home office deduction unless it’s used exclusively and regularly for business. You can’t claim a deduction if you’re an employee. Find more details from the IRS here: https://bit.ly/2MbhU3z
Misuse of corporate funds could be deemed taxable dividends. One performer was compensated for his comedy shows and speaking engagements with payments made to his wholly-owned C corporation. The business then paid personal expenses on his behalf, including for groceries, airfare, video rentals and more. The taxpayer deducted those amounts from the corporation’s income as legitimate business expenses. The IRS argued the payments represented constructive dividends to him. The U.S. Tax Court agreed with the IRS, finding that the taxpayer had participated in a tax-avoidance strategy. The court added penalties for negligence and for using frivolous or groundless positions.