Jim Payne's Tax Blog in Gainesville, FL

I recently represented a woman in her 80s who had been defrauded from most of her life savings. She was forced to liquidate her brokerage and retirement accounts, which created a large tax bill due to income and capital gains. Although she had enough left to pay the taxes, doing so would have lef...

An Offer-in-Compromise (OIC) can be a lifeline for taxpayers with overwhelming tax debt. It lets individuals settle their tax liabilities for less than what they owe, but only if they meet specific criteria. This isn’t a free pass. The IRS closely reviews each application, considering your abilit...

One of S corporation owners' most crucial tax considerations is determining "reasonable compensation." The IRS scrutinizes S corporation shareholders' compensation because it impacts how income is taxed. While S corporation shareholders can take salary and distributions, only the salary is subjec...

For S corporation owners, reasonable compensation is crucial for staying compliant with the IRS. As both shareholders and employees, owners must pay themselves a fair salary based on their work. This is important because shareholder-employees receive funds through wages (subject to payroll taxes)...

While the thought of an IRS audit can be stressful, the reality is that only about 0.4% of individual tax returns are audited each year. However, certain red flags can increase your chances. Understanding these triggers can help you avoid mistakes and reduce your audit risk. Here are the most com...

If you run a small business and report income and expenses on a Schedule C, the last thing you want is for the IRS to categorize your endeavor as a hobby. Why? Because hobby losses aren't deductible, while business expenses are. The IRS scrutinizes businesses that consistently report losses, and ...

When IRS auditors examine a business, they often use indirect methods to estimate income. This is especially common when records are incomplete or inconsistent. One method compares a business's cash and credit card deposits to industry averages. However, a growing problem is that the IRS sometime...

Knowing how to use the IRS Collection Appeals Process (CAP) can help protect your rights if you face IRS collection actions like levies or liens. CAP lets taxpayers challenge IRS enforcement actions. It may also delay or prevent those actions while your case is reviewed. Here’s a guide on how to...

Dealing with the IRS can be frustrating, especially when problems aren’t resolved through normal channels. The Taxpayer Advocate Service (TAS) is here to help when things go wrong. But when should you turn to TAS? Here are key situations where they can make a difference:1. Financial Hardship or I...

When dealing with IRS collection actions, knowing your options for appealing or disputing those actions is crucial. One such option is a Collection Due Process (CDP) hearing. But what happens if you miss the 30-day deadline to request a CDP hearing? Fortunately, the IRS offers another option know...