Tax and Business Alert - April 2014



Welcome to this month's edition of the Tax and Business Alert. Our goal is to provide you with current articles on various tax and business topics. The articles are intended to keep you up to date on trends and issues that may impact your business and personal financial affairs. Please contact us if you have questions about any of the issues discussed.

TAX IMPLICATIONS OF INVESTOR OR TRADER STATUS
Most taxpayers who trade stocks are classified as investors for tax purposes. This means any net gains are going to be treated as capital gains vs. ordinary income. Taxwise, that's good - up to a point. But traders have it better. However, trading must be "substantial" to successfully meet the test for trader status. This article explains how that's defined. Read more...

DOUBLE BENEFIT FROM A TAX DEDUCTION
For most taxpayers, the amount of federal income tax they pay depends on where they fall in the federal income tax brackets and the breakdown of their taxable income between ordinary (e.g., wages) and capital gains from the sale of assets (e.g., common stock). As federal taxable income decreases, the rate of tax on at least a portion of that income also decreases. In addition, if a taxpayer has a long-term capital gain that, after considering ordinary income, is partially taxed at the 0% rate, any additional deduction that decreases ordinary income will simultaneously decrease the tax rate on a comparable amount of long-term capital gain to 0%. This has the effect of producing a double benefit for that deduction. This article offers an example. Read more...

TAX CALENDAR
This article notes two upcoming deadlines for filing quarterly estimated tax payments and other tax forms and/or savings plan contributions. Read more...

COLLEGE FINANCIAL AID BASICS
After children have submitted their financial aid applications and started receiving award letters from various colleges, it may be difficult to interpret and compare their offers. This article provides information that should be helpful in this regard. It discusses the different types of aid available, including several different kinds of federal student aid. It also looks at options the student has when receiving an offer of aid. Read more...

MONITORING SECTION 530 ELIGIBILITY
As the IRS continues to focus on worker classification, it has become increasingly important that eligible businesses take precautionary steps to ensure compliance with Section 530 to avoid a costly reclassification. Section 530 of the Revenue Act of 1978 allows the business to treat a worker as an independent contractor (i.e., as not being an employee) for employment tax purposes regardless of the worker's status under the common law control rules. But, as this article explains, certain requirements must be met, and failure to comply can result in significant penalties. Read more...

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. The information contained in this newsletter was not intended or written to be used and cannot be used for the purpose of (1) avoiding tax-related penalties prescribed by the Internal Revenue Code or (2) promoting or marketing any tax-related matter addressed herein. © 2014