If you’ve paid or accrued foreign taxes to a foreign country and are subject to U.S. tax on the same income, you may be able to claim a foreign tax credit. Generally, only income, war profits and excess profits taxes qualify for the credit. The IRS recently issued final regulations relating to the foreign tax […]

How do you determine if a worker is an employee or an independent contractor? The IRS Office of Federal, State, and Local Government recently held a webinar to answer that question. Worker classification is determined by the relationship between a worker and the business, and whether the business can control how tasks are performed. A […]

Businesses should use Form 1099-NEC, “Nonemployee Compensation,” to report payments of $600 or more to nonemployees during 2021. Be aware that such payments could be subject to backup withholding in certain cases. Payers of nonemployee compensation during 2021 generally are required to file these forms by Jan. 31, 2022. Backup withholding could apply if the recipient […]

The U.S. Tax Court ruled that a married couple’s miniature donkey breeding activity was conducted with a profit motive. The IRS had earlier determined it was a hobby and the couple was liable for taxes and penalties for the two tax years in which they claimed losses of more than $130,000. However, the court found […]

If you received Economic Impact Payments (EIPs) or advance Child Tax Credit (CTC) payments in 2021, expect to hear from the IRS in January. Letters will be mailed, listing the total EIPs or CTC payments you received. Keep the letters with your tax records. Depending on your eligibility, you may be able to claim an […]

The Treasury Inspector General for Tax Administration (TIGTA), has issued its “Semiannual Report to Congress.” For the second half of fiscal year 2021, TIGTA conducted audits and investigations of the IRS resulting in “recovery, protection and identification of monetary benefits totaling more than $9 billion,” the report said. The report noted concern about the processing […]

In a report, the Congressional Budget Office (CBO) provides a budget overview for fiscal year 2021. The federal budget deficit in 2021 totaled nearly $2.8 trillion, almost $360 billion less than the deficit in 2020 but about triple the shortfall incurred in 2019. “During the past two years, deficits were much larger than they have […]

The National Taxpayer Advocate (NTA) is reporting that as of late October, the IRS had a backlog of more than 2.7 million unprocessed amended tax returns. The IRS claims the processing time for these returns is about 20 weeks. The NTA, however, says that Taxpayer Advocate Service (TAS) cases indicate that it’s taking the IRS […]