Author: Steve Perry

  • How long should a taxpayer keep records?

    How long should a taxpayer keep records?

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    by

    Steve Perry
    in

    The IRS typically reviews returns for three years after filing, but it can extend to six years if more than 25% of income is unreported. In cases of fraud, there’s no limit. Taxpayers should maintain comprehensive records for potential audits, especially related to significant transactions like property sales.

  • Hobby or Business, What’s the Difference and Why Does it Matter?

    Hobby or Business, What’s the Difference and Why Does it Matter?

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    by

    Steve Perry
    in

    Businesses can deduct most of the costs of doing business even if it shows a loss on the tax return.  If a taxpayer has a hobby that generates income, direct expenses can also be deducted.  This is where the similarity ends.  A hobby cannot lose more than gross sales.  So, what distinguishes a business from…

  • Employee vs Contractor

    Employee vs Contractor

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    by

    Steve Perry
    in

    Small business owners often opt to hire contractors to avoid managing employees and payroll complexities. However, mischaracterizing this relationship can lead to IRS audits and significant penalties. Understanding the distinctions between contractors and employees in terms of control and relationship is crucial. Consulting a tax professional is advised to navigate these complexities.

  • Employee Retention Credit

    Employee Retention Credit

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    by

    Steve Perry
    in

    The Employee Retention Credit (ERC) was designed to help employers retain staff during the pandemic, but it has led to widespread scams and backlogs at the IRS. Many fraudulent claims have emerged, prompting investigations and criminal charges. Businesses seeking ERC should hire qualified professionals to navigate these complexities and avoid risks.

  • Charitable Contribution Recordkeeping and Substantiation Requirements

    Charitable Contribution Recordkeeping and Substantiation Requirements

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    by

    Steve Perry
    in

    The article discusses charitable contributions under the US tax code, outlining recordkeeping requirements and deduction limits. It details cash and noncash contributions, conditions for deductions, and exceptions. Key limitations include caps on deductions based on adjusted gross income. Professional guidance is recommended for significant contributions and maximizing tax benefits.

  • Challenges to Small Business from Regulation

    Challenges to Small Business from Regulation

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    by

    Steve Perry
    in

    Business owners often overlook hidden costs associated with taxation and compliance when pricing their products or services. Local, state, and federal taxes, alongside labor costs and payroll complexities, significantly affect profitability. Understanding these costs is crucial for effective pricing and maintaining compliance while ensuring the business remains financially viable over time.

  • A Summary of the IRS Fresh Start Initiative

    A Summary of the IRS Fresh Start Initiative

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    by

    Steve Perry
    in

    The Fresh Start Initiative (FSI), launched by the IRS in 2011 and expanded in 2012, aims to assist taxpayers with tax debt by increasing thresholds for tax liens, installment agreements, and Offer in Compromise (OIC) qualifications. Its changes have made it easier for individuals and small businesses to manage and resolve tax liabilities. It no…