Professional Business/Tax Services, Inc.

Tax Accounting Humor Friday

Taxpayers concerned about outliving their retirement income and those who, for one reason or another, desire to minimize their required minimum IRA distributions may wish to consider investing a portion of their account in a qualified longevity annuity contract (QLAC). IRS regulations generally allow taxpayers to use up to $125,000 or 25% of their retirement account (whichever is lower) to purchase a QLAC.

Not filing your tax returns is probably one of the worst things you can do. Ignoring those letters from the IRS can escalate until the IRS prepares a substitute return for you based solely on income reported to them without any allowable exemptions or itemized deductions and using the unfavorable married filing separate status, which may be followed by Tax Court if response isn't timely and collection efforts.

Where did your Federal income tax dollars go in 2015? If you wanted to know what your 2015 Federal income tax dollars paid for, this infographic is a great breakdown. Data and image from the National Priorities Project and CNNMoney. The breakdown of your tax dollar:

When an individual makes a business trip outside of the U.S. and the trip is 100% devoted to business, all of the business-related travel expenses are deductible. However, if a vacation is incorporated into that trip, some complicated rules come into play that can significantly impact the tax deductions for travel expenses.

Since Obamacare does not allow employees to receive the premium tax credit (PTC) if the employer offers affordable minimum essential healthcare coverage, some employees who were offered affordable insurance and instead purchased their insurance through the Marketplace - and received advance PTC - may receive a letter from the IRS requesting repayment.

If you have lost your job, there are a number of tax issues that you may encounter. They include severance pay, unemployment compensation, health insurance, pension plans, job search expenses, moving costs and possibly a home sale. How you deal with these issues can profoundly impact both your taxes and your finances.

When you rent out your home or vacation home for short periods of time (30 days or fewer), you are subject to some special tax rules that can be either beneficial or detrimental, depending on the specifics of your situation.

A challenging issue employers often face is the distinction between employees and independent contractors in the eyes of tax law, with the IRS generally leaning toward employee status. The distinction can have significant ramifications related to payroll taxes, withholding requirements, health insurance requirements and numerous other costs associated with an employee. Employers should address the issue with care.