Partners often personally pay for partnership expenses that are not reimbursed by the partnership. These expenses, referred to as UPE, can be personally deducted against partnership income/(loss) on your income tax return, BUT ONLY IF the partnership agreement allows for it. Since these expenses can no longer be taken as a miscellaneous itemized deduction, consider adding the following to your partnership agreement if it is not already there:
Expenses Incurred on Behalf of Partnership
The partnership has always recognized that is is essential to the successful conduct of its business that,
The IRS just published its Spring Statistics of Income Bulletin with a mixed bag of results. Individual adjusted gross income between 2015 and 2016 showed a minor uptick of 0.1% to $10.2 trillion, reflecting higher salaries, wages, pensions and annuities. But taxable income decreased by 0.1%, so the total income tax collected by the IRS went down. Standard deductions were claimed on 68.7% of individual returns. Itemized deductions were claimed on about 30% of 2016 returns,
U.S. citizens with interests in foreign accounts must generally file a Report of Foreign Bank and Financial Accounts (FBAR), or face penalties. One taxpayer failed to file an FBAR or to pay the IRS-imposed penalty of $1.2 million. The IRS filed suit. Both a U.S. District Court and the U.S. 9th Circuit Court of Appeals rejected her claims that the penalty violated the 8th Amendment of the Constitution (Excessive Fines Clause) and violated treaty provisions.
Tax-exempt status was denied. A nonprofit corporation was set up to “deliver quality management consulting services to medical providers and advance government programs through patient safety initiatives.” It was denied tax-exempt status by the IRS and the U.S. Tax Court. The entity wanted to provide low-income housing, “uplifting services for the elderly and veterans” and internal auditing services. The court ruled that it wasn’t eligible for tax-exempt status because it wouldn’t serve the public interest and would solely benefit its founder.
IRS YouTube videos explain certain employment tax topics. In a series of short videos, the IRS covers payroll-related topics that may be of interest to small business owners. Topics include how to voluntarily correct the classification of employees and when and how to report employment taxes withheld from employee paychecks to the IRS. A third video discusses how the IRS tax calendar can help employers keep track of important tax deadlines. Access the IRS YouTube channel here: https://bit.ly/2HQ12Jy
The issue of a penalty for a private school’s volunteer treasurer requires a trial. A U.S. District Court denied summary judgment to the IRS on its imposition of a trust fund recovery penalty. Why? The man’s conduct could make him eligible for a “reasonable cause” exception for being penalized, but a trial is necessary to make that determination. An exception requires that a “responsible person’s” failure to cause withheld payroll taxes to be paid over to the IRS isn’t willful if the person reasonably believed the taxes were being paid.
The IRS has corrected a previous notice that lists housing cost exclusions for U.S. citizens working abroad. Those citizens having a tax home in a foreign country and who meet specific requirements may be able to exclude certain housing costs from their gross income. The excludable amount is the excess of the year’s housing expense over a base amount of $16,624 in 2018 (previously reported as $16,656 in Notice 2018-33). That limit is adjusted for higher cost areas,
The Trump administration’s 2019 budget proposal includes repeal of the Affordable Care Act. Released on Feb. 12, the proposal also includes establishing HSAs for Medicare beneficiaries, providing incentives for states to build unemployment insurance reserves, and providing the IRS with $11.1 billion in “base funding.” That includes $2.3 billion for “running key tax filing and compliance IT applications” and $110 million for “IT modernization efforts.” Although many of the proposals are unlikely to become law,
Calling the IRS? Be sure you can verify your identity. The IRS issued a reminder to taxpayers, and those who are authorized to speak on their behalf, that before they call the tax agency they should have the following ready: 1) Social Security number (SSN) and birthdate for those named on the tax return in question; 2) an Individual Taxpayer Identification Number if the individual has one in lieu of an SSN;