1. Claiming Rental Losses:
Passive loss rules prevent the deduction of rental real estate losses, but there are two important exceptions:
2. Taking an Alimony Deduction: Alimony paid by cash or check is deductible by the payer and taxable to the recipient, provided certain requirements are met. payments must be made under a divorce or separate maintenance decree or written separation agreement. The instrument can’t say the payment isn’t alimony. 3. Writing off a Loss for a Hobby: You must report any income you earn from a hobby, and you can deduct expenses up to the level of that income. But the law bans writing off losses from a hobby. To be eligible to deduct a loss, you must be running the activity in a business-like manner and have a reasonable expectation of making a profit. 4. Deducting Business Meals, Travel and Entertainment: A large write-off will set off alarm bells, especially if the amount seems too high for the business or profession. Agents are on the lookout for personal meals or claims that don't satisfy the strict substantiation rules. To qualify for meal or entertainment deductions, you must keep detailed records that document for each expense the amount, the place, the people attending, the business purpose and the nature of the discussion or meeting. 5. Failing to Report a Foreign Bank Account IRS scrutinizing information from amnesty seekers and is targeting the banks that they used to get names of even more U.S. owners of foreign accounts. Failure to report a foreign bank account can lead to severe penalties. Make sure that if you have any such accounts, you properly report them. This means electronically filing Fin CEN Form 114 to report foreign accounts that total more than $10,000 at any time during the previous year. And those with a lot more financial assets abroad may also have to attach IRS Form 8938 to their timely filed tax returns
1 Comment
|
Blog Info:Blogs are about learning basic accounting, accounting formula, tips and advice, and investment concepts and terms. Categories
All
Archives
September 2021
|