Tax and Business Alert - May 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.

LEASING PROPERTY TO A CLOSELY HELD CORPORATION
Shareholders of closely held C corporations routinely lease real estate, equipment, and other property to their corporate entity. These leases can be held directly by the shareholder or through a separate entity, such as a partnership, LLC, or S corporation. Of course, the corporation could directly purchase the item or lease it from an independent source. But this article describes several advantages that can motivate these leasing arrangements. Read more...

TAXING A CHILD'S INVESTMENT INCOME
Some children who receive investment income are required to file a tax return and pay tax on at least a portion of that income (and possibly at the parents' marginal tax rate). This is often referred to as the kiddie tax. But it cannot be computed accurately until the parents' income is known. This article discusses tax rules that affect how parents report a child's investment income. Read more...

DON'T BE A CHARITY SCAM VICTIM
When a natural disaster strikes, thieves often play on the goodwill of people by posing as representatives of real charities to steal money or get information to commit identity theft. This article describes how bogus charities use several different tactics to get money and information from unsuspecting individuals. Read more...

TAXABLE TIP INCOME
Tips received on the job from customers must be included in the computation of one's tax liability, if any. This article explains the different kinds of tips that are taxable and what tips must be reported to one's employer. Read more...

AVOIDING PENALTIES ON IRA WITHDRAWALS BEFORE AGE 59 1/2
IRA owners can withdraw money from their account at any time and for any reason because the owner is in total control of this account. But most withdrawals from traditional IRAs will be at least partially taxable, and the taxable portion of a withdrawal made before age 59 1/2 will be subject to a 10% penalty tax (or as high as 25% on early withdrawals from a SIMPLE IRA). There can even be a 10% penalty tax assessed on a nontaxable portion of some early withdrawals from Roth IRAs. However, this article notes that there are some ways to avoid the penalty tax. Read more...

DIRTY DOZEN TAX SCAMS FOR 2014
This article notes that the IRS has released its latest annual list of the "Dirty Dozen," the twelve most common scams that taxpayers encounter. Topping the list in 2014 is tax fraud using identity theft. Read more...

TAXING SOCIAL SECURITY BENEFITS
Some taxpayers must include up to 85% of their Social Security benefits in taxable income, while others find that their benefits are not taxable at all. Those who receive income from other sources may have to pay taxes on at least a portion of their Social Security benefits. Income and filing status will also affect whether these benefits are taxable. This article offers a quick way to find out if one's benefits may be taxable and how to avoid tax time surprises by voluntarily requesting that federal income tax be withheld from benefit payments. 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