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San Jose CA tax lawyer cash transaction reportingAs a business owner, the law requires that you take certain steps when you make large transactions. For cash transactions over $10,000, you must submit a form to the IRS reporting such a payment. Form 8300 is due 15 days after the transaction is completed. Entities who must file this form include individuals, companies, corporations, partnerships, associations, trusts, or estates.

How to File a Transaction Report

The IRS recommends that businesses electronically file cash transaction reports. Electronic filing has several benefits: it is fast and easy to do, and it costs the business nothing. Businesses also have the option to file Form 8300 on paper. To file electronically, a business needs to have an account with the Financial Crimes Enforcement Network’s BSA E-Filing System.

What Transactions Am I Not Required to Report?

It should be noted that not all transactions over $10,000 have to be reported. The law is concerned only with cash transactions, rather than transactions that have a paper trail. Thus, cashier's checks, bank drafts, traveler's checks, or money orders with face amounts of more than $10,000 do not have reporting requirements. 

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San Jose tax law attorney tax returnsIncome Tax Day--April 15, 2019--is just around the corner. This year, your taxes may be different from years past, thanks to the tax reform passed by the U.S. government. The Tax Cuts and Jobs Act (TCJA) has changed a wide variety of tax laws, and the IRS has stated that nearly every taxpayer will be impacted. 

These are some important ways taxes have changed that should be kept in mind when filing your 2018 taxes:

  • Tax rates changed. Taxes will be levied against taxpayers according to seven income tax brackets. These brackets range from 10 percent to 37 percent.
  • Higher standard deduction. The standard deduction has almost doubled. For 2018, it is $12,000 for singles, $18,000 for heads of household, and $24,000 for married couples filing together. There is a higher deduction available to the blind and those who are 65 and older. This means that many people will opt to take the standard deduction instead of itemizing deductions.
  • Certain deductions are limited or eliminated. One of the most common deductions that has been reduced is that for state and local tax. For 2018, the deduction is limited to $10,000 and to $5,000 for couples who are married and filing separate tax returns.
  • Child Tax Credit increased and expanded. The credit tops out at $2,000 for each qualifying child age 17 years old and under. Also, the income restriction for receiving full credit has been bumped up to $400,000 for joint filers and $200,000 for other taxpayers.

tFinally, it should be noted that the deadline by which you must file your tax return along with payment of any taxes owed has not been changed. While you can file for an extension, you must do so before Tax Day. Note: As in prior years, although an extension to file may be obtained, there is no extension to pay taxes due. Failure to timely file (in April or on extension) can mean an assessment of penalties and interest. Failure to timely pay (in April) can also mean an assessment of penalties and interest.

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San Jose CA tax debt lawyer for passportsFailing to pay your tax obligations can lead to major consequences. One problem you might run into is that you may not be able to obtain a U.S. passport or renew an existing passport. Carrying tax debt could also keep you from using your already issued passport. This can be detrimental for those who need to travel internationally for work or family reasons.

The IRS has prioritized the enforcement of this consequence of not paying back taxes for the past year. The law targets those with “seriously delinquent tax debts,” which is defined as a debt of $52,000 or more, including taxes, penalties, and interest.

If the IRS identifies you as being seriously delinquent, it will inform the State Department, which by law will deny a passport application or renewal. If you have in your possession a valid passport, the State Department also has the power to revoke the passport or limit your ability to leave the United States.

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San Jose tax deduction lawyer real estateUnder the Tax Cuts and Jobs Acts of 2017, certain owners of rental properties may be eligible for a significant tax deduction. The law allows for a 20 percent deduction against “qualified” business income for pass-through businesses. In determining whether someone qualifies for this deduction, a key consideration is whether the taxpayer engages in a “qualified trade or business” for purposes of Section 199A of the Internal Revenue Code. In some cases, it can be difficult to determine whether a business meets these qualifications, and the IRS has issued additional guidance about safe harbor for rental real estate businesses.

Qualifying for Safe Harbor

According to the IRS, the 20% qualified business income (QBI) deduction can only be taken against business income, rather than real estate investments. To achieve the required classification as a qualified trade or business, the IRS has set forth two major requirements for owners of rental real estate.

First, real estate property must be directly owned by an individual taxpayer or by an eligible pass-through entity. Second, the taxpayer must document 250 hours of rental services each year. Rental services encompass numerous activities, such as arranging advertising, collecting rent, supervising employees, and performing maintenance. Such activities that are performed directly by the owner or by an employee, agent, or independent contractor on behalf of the business will count toward the 250-hour requirement.  

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San Jose tax penalty relief attorneyIf you have been hit with a penalty by the IRS, you might believe that you have no other choice than to pay. This is an incorrect assumption, as there are numerous circumstances where the IRS may not require you to pay a penalty. In order to take advantage of this relief, you must fully comply with certain IRS procedures.

Importantly, if you believe you may be assessed a penalty, you can preemptively apply for abatement when you act quickly. Also, if you have already paid a penalty, you may still request abatement. In all cases of tax penalty abatement, time is of the essence. 

Do You Qualify for Tax Penalty Abatement?

The IRS offers penalty abatement to those who have a reasonable cause for late filing, late payment, or accuracy-related issues (negligence penalties). Reasonable causes include natural disasters and medical emergencies. If the IRS has made a mistake with regard to your return, you may also qualify for penalty abatement. Depending on your specific circumstance, you may also qualify for a one-time abatement of a penalty.

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