In today’s economy, millions of people across the United States act as freelance workers, either as a primary job or as a way to supplement income. The digital tools available to companies and workers in the gig economy allow many people to earn an income by transporting passengers, renting property to travelers, or performing a variety of other tasks. 

While many people and companies have benefited from the sharing economy, the increased prevalence of this type of labor has raised a variety of legal issues as employees seek to receive fair compensation and government entities ensure that taxes are applied correctly.

A recent ruling by the California Supreme Court will have a significant impact on gig economy workers and employers, affecting issues such as employee classification and taxes.

It is often said that death and taxes are the only two things that people are certain to experience. However, one’s tax obligations do not end with one’s death. When someone dies, income taxes may still be owed on his or her estate. Moreover, estate taxes or inheritance taxes may also apply. In order to ensure that taxes are filed correctly, it is important to have a strong knowledge of tax law.

Filing Taxes for a Deceased Person

After a person dies, the administrator of his or her estate must file a tax return and report all income he or she earned prior to the date of his or her death. Typically, the administrator will file Form 1040, and he or she may also be required to file tax returns for any previous years in which the deceased person failed to file a return. If necessary, the estate administrator can obtain documents related to the deceased person’s income and taxes by filing IRS Form 4506-T (Request for Transcript of Tax Return).

As tax season draws to an end, many taxpayers have scrambled to compile financial information and file their tax returns prior to this year’s extended deadline of April 18. During this time, many people worked with accountants or tax preparers to ensure they were able to obtain the largest possible tax refund. In many cases, however, the assistance of an experienced tax attorney can be essential when preparing your tax return, addressing complex legal issues, and avoiding potential tax penalties.

Benefits Provided By a Skilled Tax Lawyer

While a certified public accountant (CPA) will have knowledge of financial matters related to taxes, such as allowable deductions and tax credits, an experienced taxation law attorney will have a deep understanding of the legal issues related to tax audits and IRS collection. A tax attorney can help with the following:

In recent months, the news has been filled with discussion of cryptocurrencies such as Bitcoin, Ripple, or Ethereum. As these virtual currencies increase in value, many people are looking to invest in them. However, even though digital currencies can be exchanged for goods or services, or paid to employees as income, they are not the same as legal tender. This has resulted in a great deal of confusion as to how virtual currencies are treated under the United States tax laws.

Cryptocurrencies, Property, and Capital Gains

“Convertible” virtual currencies that have an equivalent value in real currency and can be exchanged into U.S. dollars are taxable as property, similar to other capital assets such as stocks or bonds. In general, capital gains taxes apply when these currencies are bought or sold, including when they are converted into cash, when one type of currency is traded for another virtual currency, or when digital currency is exchanged for other property. Any gains or losses are based on the fair market value of the currency at the time it was acquired and at the time of its sale or trade. 

Recently, we examined the options taxpayers have to achieve compliance when they have undisclosed foreign assets. One key method of compliance that the IRS has provided in recent years is the Offshore Voluntary Disclosure Program (OVDP). The program allows taxpayers to report their offshore assets and become compliant while minimizing their civil penalties and avoiding criminal prosecution. However, the IRS recently announced that it will be ending the OVDP on September 28, 2018.

Changing Options for Offshore Tax Compliance

The OVDP was launched in 2009, and the current version of the program has been in effect since 2014. The IRS has reported that since the OVDP was implemented, more than 56,000 taxpayers have used the program to achieve compliance—$11.1 billion in taxes, penalties, and interest have been paid. However, the number of people participating in the program has declined from a high of 18,000 people in 2011 to 600 in 2017.