January 2018 – Internal Revenue Code Simplified

Form 944 to Simplify Tax Filing for Small Business Owners

January 28, 2018 by Prashant Thakur

Form 944 is a great step to reduce the compliance burden for the smallest employers. As you must be aware that an employer is required to withhold taxes from employee wages, then file and deposit the payroll taxes. After that, company employer is required to file quarterly federal payroll and income taxes. Now, very small businesses (read employers) can file FORM 944 just once a year and save themselves from year-rounded compliance burden under Internal Revenue Code. You will see that the Form 944 , a simplified employers annual tax return , indeed asking for very little details as under:

Employer Identification Number
Employer contact information
Employee wages, tips, and other compensation
Federal income tax withheld
Taxable Social Security and Medicare wages
Adjustments
Deposit information

Why Filing Form W-8Ben Good for Non-US Sellers !

January 26, 2018 by Prashant Thakur

When you earn income by providing services inside the U.S., section 1441 of the Internal Revenue Code lays down that payer needs to withheld tax from payments made to foreign vendors unless the income is exempt under a tax treaty between the foreign vendor’s country and the U.S.A. That is the reason, a US establishment, be it Amazon or Smashwords or any other US entity, informs you about the need to update and fill your tax information form -8Ben-failing which they will deduct U.S. federal income tax at 30 percent from payments.

Self Employed Health Insurance Deduction Simplified !

January 21, 2018 by Prashant Thakur

Can a self employed Individual claim health insurance deduction from taxable income? The answer is definitely yes. Anyone who has self-employment income can claim health insurance deduction, not only for the premium paid for himself but for also for the spouse, and dependents. Who can claim health insurance deduction? As you know there are various ways a …

IRS Tax Problems : 10 Celebrities Jailed on Tax Evasion Charges

January 18, 2018 by Prashant Thakur

IRS tax problems have sent many celebrities behind bars. With the recent guilty plea by DMX for tax fraud, in the amount of $1.7 million over a period of 5 years, has once again sparked a controversy over celebrities evading tax. With this, here are our top 10 tax troubled celebrities who had to face jail time for tax evasion/fraud.

Video : IRS Tax Problems List

The Tax Problems List of Celebrities

Lauryn Hill
1. Famous for
  1. 8 time Grammy winner
  2. Former Fugees singer
2. Tax evaded: Failed to pay taxes on more than $1.5 million revenue between 2005 to ’07
3. Sentence: Sentenced to 3 months in the federal penitentiary
4. Fun Fact:
  1. She claimed she stopped paying taxes after she dropped out of the music business
  2. She staged a post-prison show in 2013 after being released
Ja Rule -Rapper and actor Ja Rule, whose real name is Jeffrey Atkins, got more than two years jail sentence for failing to file income tax returns between 2004 and 2006.
Richard Pryor
1. Famous for
  1. Regarded as one of the most influential comedians of all time
  2. Labeled “The Picasso of comedy” by Jerry Seinfeld
2. Tax evaded:
3. Sentence: 10 days behind bars in 1974
4. Fun Fact: He told the Judge, “You know, I forgot” during his tax evasion trial
Leona Helmsley
1. Famous for
  1. Billionaire hotel tycoon, whose elitist persona earned her the nickname “the queen of mean”
  2. Famous for saying “Only little people pay taxes”
2. Tax evaded: $1.2 million in 1988
3. Sentence:
  1. Sentenced to 4 years in prison, and 750 house of community service
  2. However, she ultimately served only 21 months in prison
4. Fun Fact:
  1. The judge overseeing her community service sentenced her to an additional 150 hours after learning that she made her employees do some of her chores
Fat Joe
1. Famous for
  1. Famous Rapper
2. Tax evaded: $3 million tax evasion
3. Sentence: Four months in federal prison and a $15,000 fine
4. Fun Fact:
  1. Real name is “Joseph Antonio Cartagena”
Chuck Berry
1. Famous for
  1. Rock and roll pioneer
  2. Popularly known for his song “Roll over Beethoven.”
2. Tax evaded: $200,000 of unpaid taxes
3. Sentence: 4 months in prison & 1,000 hours of community service
4. Fun Fact:
  1. He started his sentence right after playing for Jimmy Carter at the White House
  2. He completed his community service quota by doing benefit concerts
Darryl Strawberry
1. Famous for
  1. Basketball wizard
  2. Domestic abuse and repeated abuse of drugs
2. Tax evaded: Failed to report more than $350,000 from 1986 to 1990
3. Sentence: 3 months in prison, and three month home confinement
4. Fun Fact:
  1. He was dropped by the San Francisco Giants for persistent drug abuse (Cocaine)
  2. He was indicted for three counts of tax evasion but plead guilty to only 1, thus bringing down his maximum sentence down from 15 years
Heidi Fleiss
1. Famous for
  1. Known as the “Hollywood Madam”, she was famous for running in an elite prostituting ring
2. Tax evaded:
3. Sentence: 37 months in prison
4. Fun Fact:
  1. Her tax evasion sentence ran concurrently with her money laundering count & 8 counts of
  2. She was given a far lesser sentence than the maximum prison sentence due to expert testimony that money laundering laws had been drafted with mobsters in mind, and the judge weighing in by saying that male customers of prostitution are usually not tried
Pete Rose
1. Famous for
  1. Major League Basketball player & manager
2. Tax evaded: Tax fraud
3. Sentence: 5 months in prison in 1990, and $150,000 in tax liens
4. Fun Fact:
  1. After getting banned from lifetime from Baseball by Baseball commissioner Rob Manfred in 2015, he said, “I should actually be the commissioner of baseball.”
Wesley Snipes
1. Famous for
  1. Actor, film-producer, Author
  2. Founder of Amen-Ra Films
  3. Played the role of “Blade” in the blade trilogy
2. Tax evaded: $7 million during 1999 through 2001
3. Sentence: Previously served a 3-year sentence
4. Fun Fact:
  1. He served three years, the maximum punishment for three counts of misdemeanours for failing to file tax return, in McKean Federal Correctional Institute
  2. He was recently engaged with the IRS in a court battle over his civil taxes, where the IRS served him with a $17.5 million tax bill

New 20% Tax Deductions for Qualified Business Income ?

August 22, 2018January 17, 2018 by Prashant Thakur

The Tax Cuts & Jobs Act has brought a new provision in the Internal Revenue Code to provide 20% tax deduction for all self-employed or freelancers or estate or trust from a partnership, S corporation or sole proprietorship or s corporation or who have qualified business income. This is in addition to 25 self-employment tax deductions already available to freelancers.

IRC 162 : Sexual Harassment Payout Deduction Not Allowed ?

January 9, 2018 by Prashant Thakur

Sexual harassment payouts will be more painful for the people or organisation who commits or at lease accept the same indirectly by opting for the settlement with the alleger. The just passed The Tax Cuts & Jobs Act law has modified section 162 of the Internal Revenue Code that allows general business expense deduction to provide that under certain circumstances sexual harrassmentpayout or settlement amount can not be deducted as business expense by employres or business entities.

1099 Misc Filing Deadline Approaching . File to Avoid Penalty

October 11, 2019January 8, 2018 by Prashant Thakur

A self-employed person has to pay self employment tax and complete Schedule SE , include payments for services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). But before all that one other legal responsibility of self-employed is to send a 1099-MISC to the contractors you paid.So let us start from basics …

Can IRS Mine Bitcoin Tax ?

July 28, 2018January 3, 2018 by Prashant Thakur

Bitcoin or crypto-currencies maybe virtual in form , but the tax event of virtual currencies are real ! Despite the huge claim about anonymity of the holder of bitcoins or crypto-currencies , IRS is very close to put in place the lid on any evasion that a person may plan to avoid paying taxes on bitcoin or taxes on ethereum transaction. IRS has taken position that any transaction in virtual currency -be it sale or exchange or barter -by any person in United States will have tax consequences .In other words , end to the question: is bitcoin.tax legit?