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IRS Headliners Offer Helpful Hints for Tax Return Preparation

 

Headliner Volume #118

March 18, 2005

During this season when many Americans are preparing federal income tax returns, the Internal Revenue Service reminds you of the following Headliners.  These previously released Headliners are still accurate and provide numerous helpful hints for tax return preparation: 

Abusive Home-Based Business Tax Schemes

Taxpayers should be wary of programs and promoters who are selling the concept that one can operate any type of unprofitable "business" out of their home and claim personal expenses as business expenses.

Abusive Offshore Tax Avoidance Schemes

Taxpayers should exercise caution and be wary of schemes that attempt to evade taxes by hiding income and assets in banks and other institutions outside the United States.

Abusive Trust Tax Avoidance Schemes

Taxpayers in the small business community and public in general should be aware of schemes that create “sham” trusts in an attempt to evade federal taxes. In the last few years the IRS has detected a proliferation of abusive trust tax avoidance schemes.

Disclosure Reminder for Participants in Listed Transactions. 

Participation in "listed transactions" must be disclosed on tax returns. Listed transactions are those that the IRS has determined to be structured for the significant purpose of tax avoidance or evasion.

Haven’t Filed an Income Tax Return?

Filing tax returns and paying the correct amount of tax is good citizenship.  Conscientiously discharging this duty contributes to our nation’s well being and provides peace of mind.  Failing to file returns can jeopardize a family’s financial security and future.

Net Operating Loss (NOL) Helpful Hints

Tax practitioners can speed up the processing of net operating losses (NOLs) by avoiding some common errors. Individuals, estates and trusts may have an NOL if deductions exceed income for the year. Taxpayers can use an NOL by deducting it from income in another year or years.

Rules for Employer Provided Meals and Lodging

Taxpayers should be aware of the proper rules for deducting the cost of lodging, meals and other expenses when traveling away from home for business, particularly when furnished by the employer at no charge to the employee.

Selling Securities? Common Errors to Avoid

The Internal Revenue Service has seen an increase in tax return errors related to reporting securities transactions. To assist taxpayers in avoiding the most common reporting errors and omissions, the IRS is offering some helpful tips.

Unreported Income, Initiatives to Identify

One of the Internal Revenue Service’s priorities is to identify individuals who are filing tax returns but not reporting all taxable income. In addition to increasing the resources devoted to this key area, the IRS has implemented a broad strategy to address these cases.

What should a person do who has been underreporting income?

Immediately file amended returns!