John D. Teter Law Offices



1361 South Winchester Boulevard, Suite 113
San Jose, CA 95128

california tax lawyerThe U.S. Tax Code is complicated, and it is easy for taxpayers to make mistakes when filing tax forms or reporting their income and assets to the IRS. This is especially true for taxpayers with foreign assets or income. These taxpayers will need to meet multiple types of reporting requirements, and failure to do so can result in large penalties. A taxpayer who is the owner or beneficiary of a foreign trust will need to be sure to file Forms 3520 and/or 3520-A at the appropriate times, and if they fail to do so, they may face significant penalties.

A person may hold assets in a trust that is outside the jurisdiction of the United States. Since these types of trusts may sometimes be used in tax avoidance schemes, taxpayers are required to report certain types of transactions to ensure that income taxes and any other applicable taxes will be applied correctly. These requirements may apply to the owner or grantor of a foreign trust, a beneficiary who receives distributions from a foreign trust, and a trust itself.

Form 3520

U.S. citizens, domestic corporations or partnerships, estates, and trusts that are controlled by U.S. persons are required to file Form 3520 in the following situations:


san jose tax lawyerBusiness owners may need to address a variety of tax matters, and one important issue involves the classification of workers as either employees or independent contractors. Employers who classify workers incorrectly could face penalties, or they may be required to pay certain types of employment taxes at the federal and state levels. By understanding the rules for classifying workers, business owners can be sure they are in compliance with all applicable tax laws.

Federal Worker Classification Rules

Employers will need to withhold and pay certain types of federal taxes on behalf of employees, including income taxes, Social Security taxes, and unemployment taxes. However these taxes do not need to be withheld for independent contractors. The IRS looks at three issues to determine whether a worker should be classified as an employee or independent contractor:

  • Behavioral control - If a company controls how a worker performs their job, such as the hours and locations they work and whether they can work for other companies, they will be more likely to be considered an employee.


san jose tax lawyerWhen a couple gets divorced, they will need to address a wide variety of financial issues, and they should be sure to understand how the decisions they make will affect the taxes they will be required to pay and the deductions and credits they can claim. One divorce-related tax issue that may affect people in 2021 is the Advance Child Tax Credit. Parents will need to be sure to understand how this credit will be handled during the divorce process and after their divorce has been completed.

Claiming Child Tax Credits and Receiving Advance Payments

When a parent can claim a child as a dependent, they will be able to receive a child tax credit when filing their annual tax return. In 2021, Congress passed a law that provides parents with advance payments for this tax credit. Between July and December of 2021, a parent who will claim the child tax credit for this year can receive monthly payments. The monthly payment for children under the age of 6 is $300, and the monthly payment for children under the age of 18 is $250. To qualify for these payments, children must meet the applicable age requirements on December 31, 2021. 

Parents who are married generally do not need to do anything to begin receiving Advance Child Tax Credit payments. If parents claimed a child as a dependent on their tax return for 2020 and they received a tax refund through a direct deposit to their bank account, the IRS will automatically make monthly payments to the same account.


san jose tax lawyerThe IRS may assess multiple types of tax penalties against a taxpayer. While the most common penalties involve the failure to file a tax return or pay taxes that are owed, taxpayers may also face penalties for failing to report certain types of transactions. To prevent potential penalties, a taxpayer will need to understand their reporting requirements, and those who are facing penalties may want to engage an attorney to determine options for relief.

Transaction Reporting Requirements

Certain types of transactions must be reported to the IRS by filing Form 8886. Taxpayers involved in such transactions, including individuals, corporations, partnerships, trusts, or estates, must file this form for each reportable transaction. Reportable transactions include the following:

  • Listed transactions and transactions of interest - The IRS maintains a list of types of transactions that must be reported because they are commonly used for tax avoidance. These include basket option contracts, distressed asset trust (DAT) transactions, and syndicated conservation easement transactions. Other reportable transactions are considered transactions of interest because they have the potential to be used for tax avoidance.


california tax lawyerWhile nearly everyone in the United States is required to pay taxes, many taxpayers struggle to do so. The U.S. Tax Code is complicated, and it can be easy for a person or business to make mistakes. A taxpayer may also encounter financial difficulties that affect their ability to make payments to the IRS. Because of these issues, there are a variety of reasons why a taxpayer may be subject to penalties, which can make their tax burden even more difficult. Fortunately, the IRS provides different forms of penalty abatement in certain situations. By working with an attorney who is experienced in addressing tax penalties, taxpayers can request abatement and find ways to resolve their tax issues as quickly and affordably as possible.

Abatement for IRS Tax Penalties

The IRS most commonly imposes failure-to-file (FTF) penalties for those who do not file a tax return or extension by the due date or failure-to-pay (FTP) penalties for those who do not pay the taxes owed in full when they are due. Taxpayers may qualify for relief from these penalties in certain circumstances, and they will usually need to show that they failed to meet the IRS’s requirements based on factors that were out of their control. The type of penalty abatement that may be available include:

  • First-time penalty abatement - While the name of this form of relief may seem to indicate that it is only available to a taxpayer once, it is actually available any time a taxpayer did not have any penalties in the previous 3 years before the tax year in which they were subject to a penalty. To qualify, a taxpayer will need to file all returns that are currently required or file an extension, and they must pay or make arrangements to pay all taxes that are currently due. If penalties are reduced or eliminated, interest that was charged on these penalties will also be removed or reduced.

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