It is important for business owners to know that the federal corporate tax rate has dropped for 2018. It used to sit at a full 35 percent. Thanks to the new Tax Cuts and Jobs Act, also known as the TCJA, the government cut that down to 21 percent.
Worth noting is the fact that this decrease is just at the federal level. Corporations still have to pay state taxes. However, such a significant tax decrease is sure to save companies money compared to prior years.
Many Maryland residents will not be allowed to apply for passports or renew their existing travel documents due to their unpaid taxes. Federal officials are renewing their efforts to enforce a 2015 law passed by Congress that compels the Internal Revenue Service and State Department to revoke or deny passports for individuals with tax debts of at least $51,000.
The IRS has released updates on their enforcement of this law, which became effective in February 2018. According to an IRS spokesperson, as many as 362,000 people are not qualified for a renewal or issuance of a passport because of their tax debt. The IRS will transmit the names of these individuals to the State Department.
Many people living in Maryland are struggling with debt from student loans. For those with government loans, options are available that can reduce their monthly payments and provide debt forgiveness after a long period of repayment. However, what many people entering these programs don't realize is that they could face significant tax issues after the debt is forgiven.
Federal law makes it very difficult for borrowers of student loans to discharge those loans in bankruptcy. In some cases, this made things very difficult for borrowers with high debt levels who were unable to earn enough to make even minimum monthly payments. As a result, new repayment programs were developed that capped the monthly payment amount for many borrowers.
Time is running out for taxpayers in the U.S. who have undisclosed foreign assets. The IRS is bringing the Offshore Voluntary Disclosure Program (OVDP) to a close. The program will end on September 28th, 2018. This will bring an end to the third installment of the program, which was reopened due to high levels of interest by taxpayers and tax practitioners in 2014.
Taxpayers with undisclosed foreign assets have little time left and a small margin for error to get their affairs in order. The IRS states that people had several years to comply with the law and now must submit by the deadline. After disclosing offshore assets, taxpayers will need to pay.
On June 21, the Supreme Court ruled that states can force online retailers to collect sales tax. This could place a burden on smaller businesses in Maryland and throughout the country. By not collecting sales taxes, companies that did business online could offer their goods cheaper than those with physical retail locations. Furthermore, smaller retailers will now have to deal with the regulatory burden of collecting sales taxes.
There are over 10,000 different jurisdictions that collect sales taxes at varying rates. Typically, these smaller operations rely on an outside accounting firm to do their taxes as opposed to a dedicated team of employees. One CFO for a medium online retailer said that he was worried that states could make an attempt to collect back taxes owed. However, those who study the issue say that companies like Amazon won't be impacted much by the court's decision.
Maryland residents who have unresolved tax issues may benefit from using the services of both accountants and attorneys. The services that they offer complement each other. In many cases, both the client and the accountant benefit from working with an attorney.
Attorneys may be particularly helpful in cases in which there are audit and collection concerns. The legal advice they provide can be helpful in determining whether an audit should be protested. Attorneys also have the qualifications to conduct research and present legal defenses in situations in which an appeal is filed. They help prepare clients for negotiation and may be instrumental in obtaining a more favorable outcome for a client.
If you ask around the office, the cryptocurrency most people will have heard of is Bitcoin. It's the oldest and is seen as the focal point of the cryptocurrency revolution. It is sort of the gold standard for these coins. It's also the coin that a lot of people made extreme amounts of money on during the rally in late 2017, when a coin that once sold for pennies reached $20,000 per coin.
However, Bitcoin is definitely not the only option. There are hundreds of different coins on the market. It's a bit chaotic once you dig into it, and regulations are few and far between, but you can invest in a lot of different options. This is how many traders earn even when Bitcoin is in a decline, as it has been since that $20,000 rally.
When a homeowner in Maryland or any other state fails to pay taxes, it could result in a lien being placed on that person's property. Eventually, it could lead to the property being sold at auction. In one case, a home was auctioned twice to two different bidders after an individual failed to pay both local and federal taxes. Multiple auctions occurred because the local authorities failed to communicate with federal authorities.
A company called Triangle Homes recorded a deed on the property in April 2014 while the bidder who won the IRS foreclosure auction did the same in June 2014. Triangle Homes argued that it had the rightful title because it recorded the deed first. However, a court ruled that the North Carolina law was not in effect because of the tax liens. When the home was sold, the federal tax lien was still in place because local authorities failed to provide notice of its foreclosure sale.
While most Maryland residents may be nervous about an IRS audit, the chances of actually being audited are relatively low. Only 1 percent of those who make under $200,000 will have their returns examined. Of those who make more than $1 million, roughly 12 percent can expect to have their returns examined. It is also important to know that no single deduction is guaranteed to trigger an audit.
Therefore, individuals can feel free to take any legitimate deductions that they have. As a general rule, returns are more likely to be flagged by a computer if something on them doesn't fit an expected range based on a person's income. However, a return will be checked by a person to see if a large deduction or other abnormality is reasonable within the overall context of the return. Taxpayers should know that an audit doesn't necessarily mean meeting with an IRS representative.
As a general rule, the IRS says that Maryland residents who have side gigs that lose money are engaging in hobbies as opposed to businesses. This means that they can't use that loss to offset any other income that they may have generated. In past years, individuals could deduct hobby expenses that were more that 2 percent of their adjusted gross income up to the amount of income the hobby generated.
This would be made as a miscellaneous itemized deduction, and it was only allowed if a person wasn't subject to the alternative minimum tax. However, since the Tax Cuts and Jobs Act was passed, it is no longer possible to claim any expenses related to a hobby. This will be in effect until at least 2025, and it provides taxpayers with side gigs an incentive to establish these activities as legitimate businesses.
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