Monthly News: September 2019

If you deal in virtual currency IRS Revenue Agents are using the information the courts ordered Coinbase to turn over to the IRS to find U S customers who bought and sold bitcoins to make sure they pay their taxes.  They’re mailing letters to people they believe have virtual currency.  Two of the letters are asking taxpayers to review their records to be sure they accurately reported the transactions and amend their returns as needed.  If you get one of these don’t ignore it.  Make sure you included the information on your tax return.  The third letter is asking that you sign penalty of perjury statements stating you are following the law.  If you get one of these, you should contact a tax expert immediately.

The IRS has a goal to increase tax enforcement on S corporations since the Large Business and International division has found taxpayer compliance to be deficient.

One of their targets is distributions by S corps.  They feel that S corporations are failing to report gains on distributions of property to shareholders. 

The IRS also believes that owners of S corporations are deducting losses above their shareholder basis in stock or loans to the company.  They will make this a big enforcement priority since they believe that compliance in this area is lacking.

The IRS is requiring many S corp.  owners to include their basis information with their 1040 returns.  The owners must, starting in 2018, check the box on line 28 of schedule E and attach a basis computation.  This applies to owners that report a loss, receive a distribution or loan repayment from the company, or sell their stocks.

The IRS will be doing audits at the shareholder level to ensure that the shareholders are tracking their basis properly.

Remember if you sent your kids to summer day camps in 2019 the costs may qualify for dependent care credit.  If your kids attended camps for sports, computers, math, theater, to improve their reading or study skills or just for general fun you may be eligible for this tax break.  You need to report the providers tax ID number on form 2441 and it would be best to get that information now so you have it when you file your 2019 tax return.  This tax break doesn’t apply to any overnight camps, summer school or tutoring programs.

If you filed a schedule D with your 2018 return you may be hearing from the IRS.  In May the IRS announced that there was an error in the schedule D worksheet that affected certain taxpayers.  There is no need to file an amended return the IRS will send you a letter if you are affected by this error.  You will be advised whether you owe additional taxes or are due a refund.