Tax Law

People who decide to ignore their tax bills will quickly become acquainted with a tax attorney. The Internal Revenue Service (IRS) and the state taxation…

→ Read More

Can I claim my parents as dependents on my tax return?

The IRS allows persons who are the head of a household to claim relatives who live with them as dependents on their tax return. This means that you can claim your parents as tax dependents, but before you do so, you must pass the test set out by the IRS to determine if your parents qualify as non-child dependents. IRS regulations provide five requirements that must be met before you claim a relative as a tax dependent.

→ Read More

How is real property tax imposed?

Many counties have a real property tax that is imposed on the ownership of real estate located within its boundaries. Real property tax is typically imposed upon the assessed value of the real property and typically set as a percentage of the most recent purchase price paid for a parcel of real property. Real property taxes are imposed and collected at the local level.

→ Read More

How do I prove my tax return is correct during an audit?

If you are undergoing an audit and need to substantiate, or prove, the statements you made on your tax return, pull out your stash of canceled checks, logs, receipts, bank statements, or any other financial documents related to your tax return. You will be asked to show all financial records that you used to show your taxable income when filing the tax return to prove you did so correctly.

→ Read More

What is a taxable year?

A taxable year is the 12-month time period that the IRS defines for each person’s tax season. In most cases, the taxable year is the regular calendar year, starting in January and ending in December. However, a taxable year under IRS rules does not necessarily have to be a regular calendar year.

→ Read More

What are capital assets?

Nearly everything owned by taxpayers is considered a capital asset. It doesn’t matter whether the taxpayer uses the property for personal or investment purposes. The most common capital asset owned by U.S. taxpayers is their primary residence. Other examples of capital assets include household furnishings, stocks and bonds held in a personal account, and jewelry.

→ Read More

What tax records do I need to keep and for how long?

To be safe, keep your income tax returns indefinitely since they can be your paper trail. Documents regarding investment, real estate and business assets, and other supporting documents (receipts, canceled checks, credit cards, and so forth) should be kept for six years. This is because the IRS can go back three years from the filing date to audit your records and returns, and impose additional tax. In some cases, the IRS can audit up to six years after filing if income is under-reported by 25% or more or if there is suspected fraud. Even if you have always been completely honest about your income and have never been audited, you still need to keep tax records. Sometimes mistakes are made that are not your fault and having the records on hand can help correct the problem with less hassle.

→ Read More