Free Site Registration


Common Taxpayer Misconceptions

The NAEAís collection of ridiculous things tax clients believe

You don't have to be a tax protester to harbor mistaken ideas about the Tax Code -- many perfectly normal people do. According to an informal poll of Enrolled Agents by the National Association of Enrolled Agents, here are some of their clients' most common misconceptions.

My Social Security benefits arenít taxable. My Social Security benefits arenít taxable.

Depending on the amount of other income that a taxpayer has to report, their benefits may be taxable Ė but the maximum amount of Social Security benefits that must be included is 85 percent.

I donít need to report stock sales if I bought other stocks with the proceeds. I donít need to report stock sales if I bought other stocks with the proceeds.

Many taxpayers think that if they reinvested the money from a stock sale, or otherwise didnít see any cash, that it doesnít need to be reported. But stock sales outside of retirement accounts must be reported.

Iím a student and only work part-time, so I donít have to file a return. Iím a student and only work part-time, so I donít have to file a return.

Filing requirements are based on filing status, dependency status, amount of income, and whether it is earned or unearned Ė not whether youíre a student.

Advertisement
Itís my preparerís fault. Itís my preparerís fault.

No matter who prepares your tax return, the taxpayer is legally responsible for its contents.

My deadbeat cousin lives in one of my rental properties. He doesnít pay much, but I can still treat it as a rental. My deadbeat cousin lives in one of my rental properties. He doesnít pay much, but I can still treat it as a rental.

There are limits on how far below fair market rental value you can go Ė including the fact that expenses cannot exceed income. There may be other limits as well: The Tax Court has suggested that a fair rent for a family member could be up to 20 percent below market.

My spouse and I separated last year and lived apart for most of the year Ė so I can file Single. My spouse and I separated last year and lived apart for most of the year Ė so I can file Single.

Unless you were legally divorced or separated as of the end of the year, you cannot file as single.

If I take dividends instead of wages from the S corp I own, I can save on payroll taxes. If I take dividends instead of wages from the S corp I own, I can save on payroll taxes.

In terms of S corp shareholders and employees, reasonable compensation must be paid before any dividends or loan repayments are permitted Ė and failing to properly report wages could result in reclassification of the dividends or loan repayments as wages, with penalties.

Advertisement
Iím a signer on a foreign bank account, but not the owner Ė so I donít need to disclose it. Iím a signer on a foreign bank account, but not the owner Ė so I donít need to disclose it.

This area is under particularly heavy scrutiny right now, according to the NAEA, and there are a number of factors that determine the need to disclose these accounts and/or the assets. Since the penalties for non-disclosure are pretty severe, clients will want to make absolutely sure that they donít have a responsibility to report.



Obamacare Tax Problems to Watch Out For

Affordable Care Act-related tax issues await CPAs and those who prepare their own returns this upcoming tax season,†according to the National Conference of CPA Practitioners.

View the slideshow >>


10 Must-Have Apps

Don't go to work without these 10 apps every business-minded CPA should have on their smart devices.

View the slideshow >>


2015 in Numbers

Your peers' predictions for the next year in accounting

View the slideshow >>


Tax Extenders You Can Count On

Tax extenders, temporary tax provisions that are reinstated by Congress on a regular basis, have been a recurring part of the tax arena for years. Most of the current group up for debate have expired at the end of 2013, and their eventual extension will be retroactive, but not all will be extended. Here are the best bets.

View the slideshow >>


The 2014 Technology Pacesetters

Our annual list of innovative accounting resellers

View the slideshow >>


Firm Fitness: 10 Ways to Keep Your Staff Healthy

Health and wellness perks from our Best Firms to Work For

View the slideshow >>


The Best Firms to Work For Awards 2014

Accounting Today recognizes the profession's best workplaces

View the slideshow >>


10 Year-End Tax Tips

As 2014 draws to a close, there may be more planning opportunities than ever before, but also more traps for the unwary, according to Grant Thornton LLP.

View the slideshow >>


The 2014 MP Elite

The third edition of our annual report highlights 10 outstanding accounting firm leaders.

View the slideshow >>


Most Unusual Resume Lies

The pressure to stand out in a sea of applicants may tempt job seekers at accounting firms and other businesses to be less than honest on their resumes. When CareerBuilder asked about the most unusual lie they've ever caught on a resume, employers recalled these doozies.

View the slideshow >>



Advertisement

Advertisement

Advertisement

Advertisement