The Best Present for American Taxpayers

The President has signed the Protecting Americans from Tax Hikes (PATH) Act which extends numerous tax provisions. Some important tax provisions have been made permanent, while others were extended through 2016 or 2019. The PATH Act also adds in other miscellaneous provisions to combat erroneous education credit, child tax credit and earned income tax credit claims. Some of the most notable provisions include:


  • The $250 deduction for educator expenses.
  • The state and local sales tax deduction.
  • Qualified charitable distribution (QCD) from an IRA of up to $100,000 per year.
  • The 100% §1202 exclusion on qualified small business stock.
  • Earned Income Credit.
  • The EIC “marriage penalty” relief and credit increase for those with three or more children. Taxpayers are no longer allowed to claim EIC for years in which a social security number was not obtained by the due date of the tax return.
  • The American Opportunity Tax Credit. – Taxpayers are no longer allowed to claim the American opportunity tax credit for years in which a taxpayer identification number was not obtained by the due date of the tax return. o Institutions are now required to report the amount paid for education expenses for years beginning after 2015. Claims for the American opportunity tax credit requires an EIN from the institution.
  • Child Tax Credit. – Instead of increasing the threshold for the additional child tax credit to $10,000, The Act keeps the threshold at $3,000 permanently. Taxpayers are no longer allowed to claim the child tax credit for years in which a taxpayer identification number was not obtained by the due date of the tax return.
  • Section 529 plans now allow expenditures for computers, peripheral equipment and software, provided they are to be used primarily by the beneficiary during years of academic study.
    Note: The $500 penalty for failure to comply with EIC due diligence is now expanded to include the child tax credit and American opportunity tax credit.

Through 2016
·   Cancellation of debt income exclusion on qualified principal residences.
·   Mortgage insurance premiums paid or accrued allowed as a deduction.
·   The tuition and fees deduction.
·   The credit for nonbusiness energy placed in service, such as windows, doors, etc.
·   The residential energy efficiency credit (REEP) under §25D was modified to extend
    the credit solar electric or solar water property through 2021. The credit percentage
    is reduced each year after 2019. Note: This provision was not in the PATH Act, but
    in the different part of H.R. 2029.
·  The Act extends the 10% credit for purchases of electric powered 2-wheeled vehicles,    such as electric motorcycles. The Act did not extend the credit for 3-wheeled vehicles.


  • §179 limit remains at $500,000. In addition, expensing “off-the-shelf” software is also made permanent. The restriction on heating and air conditioning units has been eliminated.
  • The 15-year life is made permanent for the following qualifying properties:
    • Qualified leasehold improvements.
    • Qualified restaurant buildings.
    • Qualified retail improvements.
  • The 5-year recognition period for built-in-gains of an S corporation that was previously a C Corporation.
  • The Credit for Increasing Research Activities (the research credit).
    • Eligible small businesses can claim the credit against AMT.
    • Eligible small startup companies may offset their FICA tax liability with the research credit.
  • The ability to limit the reduction in basis for charitable contributions made
    by an S corporation to the property’s adjusted basis.
  • Transit passes and van pool benefits.
  • The due date for W-2s and W-3s and returns reporting nonemployee compensation have changed. The new due date is January 31 for tax years beginning after the enactment of The Act. For most taxpayers, this is tax year 2016. Any information returned now has a de minimis safe harbor for errors. If an information return has an error of $100 or less ($25 or less for withholding), no correction is required.

Through 2016

  • The clarification of a race horse as three year property.
  • Qualified film expensing. The Act contains a provision to include live theatrical performances.
  • The alternative fuel vehicle refueling property credit. 

Through 2019

  • The 50% bonus depreciation applies to property placed in service through 2017, then reduces to 40% for 2018 and 30% for 2019.
  • The act extends the first year depreciation for passenger automobiles subject to §280F limitations. The Act allows for the additional $8,000 of bonus depreciation through 2017, then $6,400 for 2018 and $4,800 for 2019.
  • The Work Opportunity Tax Credit. o The Act also includes a provision to allow a credit for qualified long-term unemployed individuals.

From IRS.gov: Specified Foreign Financial Assets – Overview

What are the specified foreign financial assets that I need to report on Form 8938?

If you are required to file Form 8938, you must report your financial accounts maintained by a foreign financial institution.  Examples of financial accounts include:

  • Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer.

And, to the extent held for investment and not held in a financial account, you must report stock or securities issued by someone who is not a U.S. person, any other interest in a foreign entity, and any financial instrument or contract held for investment with an issuer or counterpart that is not a U.S. person. 

Examples of these assets that must be reported if not held in an account include:

  • Stock or securities issued by a foreign corporation;
  • A note, bond or debenture issued by a foreign person;
  • An interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar agreement with a foreign counterpart;
  • An option or other derivative instrument with respect to any of these examples or with respect to any currency or commodity that is entered into with a foreign counterpart or issuer;
  • A partnership interest in a foreign partnership;
  • An interest in a foreign retirement plan or deferred compensation plan;
  • An interest in a foreign estate;
  • Any interest in a foreign-issued insurance contract or annuity with a cash-surrender value.

The examples listed above do not comprise an exclusive list of assets required to be reported.

Cash or foreign currency, real estate, precious metals, art and collectibles

I directly hold foreign currency (that is, the currency isn’t in a financial account).  Do I need to report this on Form 8938?

Foreign currency is not a specified foreign financial asset and is not reportable on Form 8938.

Does foreign real estate need to be reported on Form 8938?

Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938.  For example, a personal residence or a rental property does not have to be reported.

If the real estate is held through a foreign entity, such as a corporation, partnership, trust or estate, then the interest in the entity is a specified foreign financial asset that is reported on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.  The value of the real estate held by the entity is taken into account in determining the value of the interest in the entity to be reported on Form 8938, but the real estate itself is not separately reported on Form 8938.  

As 2015 draws to a close, a turbulent economic and legislative environment means taxpayers need to keep a close eye on several major planning issues, according to Grant Thornton LLP

1. Check on Congress

The most important thing you can do this year for your tax planning is to keep an eye on Congress to see whether lawmakers manage to extend popular tax provisions before the end of 2015. Some notable provisions must be extended in order to allow: 
• Taxpayers aged 70½ and over to make tax-free charitable contributions from individual retirement accounts (IRAs); 
• Businesses to deduct up to half of eligible equipment placed in service this year; 
• Teachers to receive an above-the-line deduction for $250 in classroom expenses; 
• Students and parents to receive an above-the-line deduction for tuition expenses; 
• Companies to receive a credit for qualified research expenses; and 
• Taxpayers in states without an income tax – like Washington, Texas and Florida – to deduct state sales taxes.

2. Document Your Business Activities

You may not need to pay a 3.8 percent Medicare tax on your business income if you participate in the business enough so that you are not considered a “passive investor.” Participation is almost any work performed in a business as an owner, manager or employee as long as it is not an investor activity. Even so, you must document your activities, and the IRS will not let you make ballpark estimates after the fact. Make sure you document the hours you’re spending with calendar and appointment books, emails and narrative summaries.

3. Prepare Your Information Reporting

You should start gathering information early this year to make sure you can complete your mandatory reporting on time. Congress has enacted new legislation that more than doubles most penalties for late or incorrect information returns. This includes the Form W-2 employers must provide to all employees and the Form 1099 a business must provide to any contractor it pays at least $600 for services. These returns are due to recipients by Feb. 1 and the IRS soon after.

4. Get Your Charitable House in Order

If you plan on giving to charity before the end of the year, remember that a cash contribution must be documented in order to be deductible. If you claim a charitable deduction of more than $500 in donated property, you must attach Form 8283. If you are claiming a deduction of $250 or more for a car donation, you will need a written acknowledgement from the charity that includes a description of the car..

5. Remember Your State and Local Tax Obligations

Don’t forget that state and local governments impose their own filing and payment responsibilities with various income, sales and property taxes. Recently, states have become more aggressive in taxing corporations that are not physically present in their states, but have significant sales to customers in those states. While there may be exceptions for limited business activities in particular states, it is wise to check on your activities of your salespeople that often travel to different states to ensure you are filing all state corporate tax returns as needed.

6. Take a Closer Look at Your State Residency Status

For individuals who split their time in two different states throughout the year, now is an excellent time to consider where you may be taxed as a resident for 2015. To make it more likely that the high-tax jurisdiction will respect the move and not continue to tax you as a resident, you should track the number of days you are spending in each jurisdiction. Generally, if you reside in a state for 183 days or more, that state will assert residency and the ability to tax all of your income. Furthermore, if you move to a new state but you maintain significant contacts with the old state (including driver’s license, residences, bank accounts and the like), you could run the risk of being taxed as a resident in the old state.

7. Accelerate Deductions and Defer Income

Why pay tax now when you could pay later? The time value of money can make deferring tax almost as valuable as escaping it. Generally, you want to accelerate deductions and defer income. There are plenty of income items and expenses you may be able to control. Consider deferring bonuses, consulting income or self-employment income. On the deduction side, you may be able to accelerate state and local income taxes, interest payments and real estate taxes.

8. Manage Your Gains and Losses

Capital gains and losses present excellent opportunities for deferral because you have nearly complete control over when you sell them, but be careful when harvesting losses. You generally cannot use capital losses against other kinds of income, and if you buy the same security within 30 days before or after you sell it, you cannot use the loss under the wash sale rules.

9. Bunch Itemized Deductions

Many expenses can be deducted only if they exceed a certain percentage of your adjusted gross income (AGI). Bunching itemized deductible expenses into one year can help you exceed these AGI floors. Consider scheduling your costly non-urgent medical procedures in a single year to exceed the 10 percent AGI floor for medical expenses (7.5 percent for taxpayers age 65 and older). This may mean moving a procedure into this year or postponing it until next year. To exceed the 2 percent AGI floor for miscellaneous expenses, bunch professional fees like legal advice and tax planning, as well as unreimbursed business expenses such as travel and vehicle costs.

10. Make Up a Tax Shortfall with Increased Withholding

Don’t forget that certain kinds of taxes are due throughout the year. Check your withholding and estimated tax payments now while you have time to fix a problem. If you’re in danger of an underpayment penalty, try to make up the shortfall by increasing withholding on your salary or bonuses. A bigger estimated tax payment can leave you exposed to penalties for previous quarters, while withholding is considered to have been paid ratably throughout the year.

When you Face A Divorce

Since the 1970s, divorces have been much more common in the United States than they were previously. Divorces raise legal issues such as possession of assets, custody of children, claims to income, and countless others

This is a short list of preparatory steps you can take to ensure that the ultimate outcome is as equitable and manageable as possible

Familiarize yourself with the applicable state’s divorce law. Different states have different approaches to property and liability ownership. Your attorneys are the professionals, of course, but it’s essential to know the basics, and better to have a deeper grasp.

  • Run a credit report. This gives you a head’s up about any possible unknown debts your  spouse has incurred without your  knowledge.
  • Take an inventory of tangible and financial possessions. This will need to be done eventually anyway, but the sooner the better in case the process leads to any surprises, such as long-dormant retirement plan or taxable asset accounts.
  • Secure the most recent statements for all accounts, and appraisals for tangible property with any potentially significant value. One less obvious benefit to the appraisals is to smooth out the process of dividing possessions with sentimental value to one party that might also be thought to have economic value, but actually do not. 
  • Establish individual banking, investment, and credit card accounts in your name, to be ready for the separation of assets.
  • Create a pre- and post-divorce budget. Assuming the couple isn’t operating under an up-to-date budget, creating a new, accurate one will establish the foundation for a prospective post-divorce budget that might include new expense categories, such as child care.
  • Although the resulting picture might indicate that tightly restrained spending may be in your short-term future, the knowledge of what to expect — and that it will be survivable — can take some of the emotional strain out of the upcoming divorce process.

Decide What You Want From the Divorce

This is an important step. Think very carefully about what you want to ask for in your divorce.

Remember: The law requires you to raise all legal issues that you have against your spouse in your divorce complaint. Before you fill out the complaint forms, you must decide what other relief you want in addition to having the court end your marriage.

Looking at the information about finances and property will help you decide what to ask for in your divorce.

These are some things that you might ask for in your divorce complaint.

  • Alimony/Spousal Support.
  • Division of Real Property.
  • Division of Personal Property.
  • Division of Debts.
  • Taking Back Your Former Name or Changing Your Name.
  • Insurance Policies and Premiums.

 Assignment of Estimated Tax Payments in a Divorce

One issue that is often overlooked is the allocation of estimated tax payments to the taxpayer’s and spouse’s income tax returns, when they file separate returns in the year of the divorce.

When a couple have filed joint returns in the past and file separate returns in the current year due to a divorce, estimated tax payments for the current year are typically credited to the first person listed on the previous year’s joint tax return.

According to IRS Publication 505, Tax Withholding and Estimated Tax, couples who have filed joint returns in the past and will be filing separate returns in the current year due to a divorce can divide estimated tax payments in any way they can agree upon. If an agreement cannot be made, estimated tax payments for the current year should be divided in proportion to each spouse’s tax as shown on their current year’s separate returns.

Overpayments on Past Jointly Filed Returns

The treatment of overpayments on past jointly filed tax returns is similar to the IRS’s guidance for estimated tax payments.

Since divorces are so common, the IRS and state taxing authorities need a better and simpler approach to assigning estimated tax payments and crediting overpayments from previous jointly filed tax returns.  In any case, estimated tax payments should not automatically be assigned to the taxpayer who is listed first on the tax return. There needs to be a way to communicate with the IRS and state taxing authorities on this matter.

Installment Agreements

If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement:

Before applying for any payment agreement, you must file all required tax returns.

Understand your agreement & avoid default

  •  Your future refunds will be applied to your tax debt until it is paid in full;
  • Pay at least your minimum monthly payment when it’s due;
  • Include your name, address, SSN, daytime phone number, tax year and return type on your payment;
  • File all required tax returns on time & pay all taxes in-full and on time (contact IRS to change your existing agreement if you cannot);
  • Make all scheduled payments even if we apply your refund to your account balance; and
  • Ensure your statement is sent to the correct address, contact IRS if you move or complete and mail Form 8822, Change of Address (PDF).

Monthly payment amount is based upon ACTUAL necessary and reasonable living expenses as opposed to IRS national and local standards The maximum number of monthly payments made occur over the remaining life of the 10‐ year collection statute.

Offer in Compromise

Submitting an Offer in Compromise is the process in which a taxpayer may reduce their Internal Revenue Service or State tax debt by negotiating with the taxing agency to accept an amount less than the actual amount they owe.

The Offer in Compromise works best for an individual who has few assets and not much disposable income.

If you wish to file an Offer in Compromise, it is best to look very carefully at all aspect of the case including reviewing the bankruptcy statutes so that you don’t inadvertently extend the statute of limitations.

This process is often referred to as settling one’s taxes for “pennies on the dollar”. The IRS or State has the authority to settle or compromise” Federal and State tax liabilities by accepting less than full payment under certain circumstances. A Federal tax debt may be legally compromised under one of the following conditions:

  • 1.Doubt as to Collectability-doubt exists that a taxpayer could pay the full amount of tax owed within the collection statute.
  • 2.Doubt as to Liability-doubt exists as to whether the tax should have been assessed to the taxpayer
  • 3.Effective Tax Administration-there is no doubt the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s offer.

To be eligible for this type of compromise, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.

The majority of the taxpayers fall into the first category (i.e. you owe the tax and agree as such but you cannot pay the IRS the full amount of what is owed).

For the IRS to consider an Offer in Compromise, you must at least offer to pay an amount equal to the quick sale value of all your assets plus all the money the IRS “believes” they can collect from your future disposable income for a period of 12 or 24 months (this time period was reduced from 48 or 60 months as part of the Fresh Start Initiative which has passed but the reduced time frame remains at the lower amount).

 There are three basic plans for the payment of an Offer in compromise

An offer may be paid upon acceptance in full or over 5 months once an offer has been accepted. In order to pay off the offer using either of the above mentioned options, the taxpayer must submit a non-refundable down payment of 20% of the full offer amount with the paperwork initially.

There is also a Periodic Payment option which requires no down payment but requires regular payments be made throughout the process of determining if the offer will be accepted. In this case the offer must be paid in no more than 23 monthly payments.

A taxpayer submitting an offer must include as part of his/her offer the realizable value of their assets (quick sale value) plus the total amount that the IRS could collect over a 12 month period.

In determining the amount of the offer, the IRS uses a quick sale value of assets, and the amount that can be collected from future income.

IRS Tax Brackets and Deduction Amounts for Tax Year 2015

2015 Income Tax Brackets

The Federal income tax has 7 tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The amount of tax you owe depends on your filing status and income level.

What Are Your Filing Status Options?

There are 5 options for filing status:

• Single
• Married Filing Jointly
• Married Filing Separately
• Head of Household
• Qualifying Widow/Widower

It’s important to realize that moving into a higher tax bracket does not mean that all of your income will be taxed at a higher rate. Instead, only the money that you earn within a particular tax bracket is subject to that particular tax rate.


Taxable Income            Tax Rate

$0 to $9,225                   10%

$9,226 to $37,450          $922.50 plus 15% of the amount over $9,225

$37,451 to $90,750         $5,156.25 plus 25% of the amount over $37,450

$90,751 to $189,300       $18,481.25 plus 28% of the amount over $90,750

$189,301 to $411,500     $46,075.25 plus 33% of the amount over $189,300

$411,501 to $413,200     $119,401.25 plus 35% of the amount over $411,500

$413,201 or more            $119,996.25 plus 39.6% of the amount over $413,200

 Married Filing Jointly or Qualifying Widow(er):

Taxable Income            Tax Rate

$0 to $18,450                   10%

$18,451 to $74,900            $1,845.00 plus 15% of the amount over $18,450

$74,901 to $151,200         $10,312.50 plus 25% of the amount over $74,900

$151,201 to $230,450        $29,387.50 plus 28% of the amount over $151,200

$230,451 to $411,500        $51,577.50 plus 33% of the amount over $230,450

$411,501 to $464,850        $111,324.00 plus 35% of the amount over $411,500

$464,851 or more              $129,996.50 plus 39.6% of the amount over $464,850

Married Filing Separately:

Taxable Income            Tax Rate

$0 to $9,225                   10%

$9,226 to $37,450            $922.50 plus 15% of the amount over $9,225

$37,451 to $75,600          $5,156.25 plus 25% of the amount over $37,450

$75,601 to $115,225        $14,693.75 plus 28% of the amount over $75,600

$115,226 to $205,750      $25,788.75 plus 33% of the amount over $115,225

$205,751 to $232,425      $55,662.00 plus 35% of the amount over $205,750

$232,426 or more            $64,998.25 plus 39.6% of the amount over $232,425

Head of Household:

Taxable Income            Tax Rate

$0 to $13,150                  10%

$13,151 to $50,200          $1,315.00 plus 15% of the amount over $13,150

$50,201 to $129,600        $6,872.50 plus 25% of the amount over $50,200

$129,601 to $209,850      $26,772.50 plus 28% of the amount over $129,600

$209,851 to $411,500      $49,192.50 plus 33% of the amount over $209,850

$411,501 to $439,000       $115,737.00 plus 35% of the amount over $411,500

$439,001 or more            $125,362.00 plus 39.6% of the amount over $439,000

2015 Personal Exemption Amounts

You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.

For tax year 2015, the personal exemption amount is $4,000 (up from $3,950 in 2014).

The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phase-out (PEP) thresholds are as follows:

Filing Status            PEP Threshold Starts            PEP Threshold Ends

Single                                    $258,250                              $380,750

Married Filing Jointly              $309,900                             $432,400

Married Filing Separately       $154,950                              $216,200

Head of Household               $284,050                             $406,550

2015 Standard Deduction Amounts

There are two main types of tax deductions: the standard deduction and itemized deductions. You can claim one type of deduction on your tax return, but not both. For example, if you claim the standard deduction, you cannot itemize deductions – and vice versa (if you itemize deductions, you cannot claim the standard deduction). You are allowed to use whichever type of deduction results in the lowest tax.

The standard deduction is subtracted from your Adjusted Gross Income (AGI), thereby reducing your taxable income. For tax year 2015, the standard deduction amounts are as follows:

Filing Status            Standard Deduction

Single                                     $6,300

Married Filing Jointly              $12,600

Married Filing Separately       $6,300

Head of Household               $9,250

Qualifying Widow(er)             $12,600

Identity Theft

What is tax-related identity theft?

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.

Generally, an identity thief will use your SSN to file a false return early in the year. You may be unaware you are a victim until you try to file your taxes and learn one already has been filed using your SSN.

Know the warning signs

Be alert to possible identity theft if you receive an IRS notice or letter that states that:

  • More than one tax return was filed using your SSN;
  • You owe additional tax, refund offset or have had collection actions taken against you for a year you did not file a tax return;
  • IRS records indicate you received wages from an employer unknown to you.

Steps to take if you become a victim

  • File a report with law enforcement.
  • Report identity theft at ftc.gov/complaint and learn how to respond to it at identitytheft.gov.
  • Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records:
    • Equifax, www.Equifax.com, 1-800-525-6285
    • Experian, www.Experian.com, 1-888-397-3742
    • TransUnion, www.TransUnion.com, 1-800-680-7289
  • Contact your financial institutions, and close any accounts opened without your permission or tampered with.
  • Check your Social Security Administration earnings statement annually. You can create an account online at www.ssa.gov.

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

  • Respond immediately to any IRS notice; call the number provided
  • Complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to instructions.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490. We have teams available to assist.

How to reduce your risk

  • Don’t routinely carry your Social Security card or any document with your SSN on it.
  • Don’t give a business your SSN just because they ask – only when absolutely necessary.
  • Protect your personal financial information at home and on your computer.
  • Check your credit report annually.
  • Check your Social Security Administration earnings statement annually.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or the Internet unless you have either initiated the contact or are sure you know who is asking.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

Review the following resource information on irs.gov

Are You A Resident of the State?

Resident Taxation

Most states tax their residents on ALL income, regardless of whether it is attributable to in state activities or property.

To be taxed as a resident of most states , an individual must either be domiciled in the state or be a statutory resident (i.e., maintain a permanent place of abode and spend more than 183 days in the state during the tax year).

A number of cities use identic al rules for determining who is a city resident for income tax purpose.

Nonresident Taxation

Generally, nonresidents of a particular state pay tax only on income that is derived from or connected with in-State sources, including wages, salaries, deferred compensation and pensions from employment in the State , rents and capital gains attributable to real estate or tangible personal property in the State , as well as income from a business trade, profession or occupation carried on in the State , including partnership or “S” corporation items.

States will generally NOT tax a nonresident’s income from intangible
personal property such as income from stocks, interest, dividends, etc.

 Domicile  is “the place which an individual intends to be such individual’s permanent home – the place to which an individual intends to return whenever such individual may be absent.”

“Leave and Land” “Domicile…is established by physical presence
coupled with an intent to establish a permanent home

Domicile Factors

The Primary Factors

  • Maintenance of a Home
  • Active Business Involvement in the State
  • Time Spent in the State
  • Location of “Near and Dear” Items
  • Location of Family

The “Other” Factors

  •  The address at which bank statements, bills, financial data and
  • correspondence concerning other family business is primarily received
  • The physical location of the safe deposit boxes used for family records and valuables
  • Location of auto, boat, and airplane registrations and drivers’ licenses.
  • Voter registration and voting patterns.
  • Possession of special parking tax exemptions.
  • Nature and level of telephone activity.
  • Citations in will and other legal documents

Statutory Residency 

Generally, a statutory resident is an individual who is not domiciled in a state (i.e. New York), but maintains a permanent place of abode in New York and spends, in the aggregate, more than 183 days of the taxable year in New York. The only exception from this rule is for individuals in the active service of the United States Armed Forces.

Permanent Place of Abode is a dwelling place permanently maintained by the taxpayer, whether or not owned by him, and will generally include a dwelling place owned or leased by his or her spouse.” An individual maintains a permanent place of abode by doing whatever is necessary to continue one’s living arrangements in a particular dwelling place including contributing to the household, in money or otherwise. Additionally, the regulations provide that a dwelling must be maintained for “substantially all of the taxable year” in order to be considered a permanent place of abode for statutory residence purposes.

An abode must be used for residential purposes, not as an abode for others.

183 Day Rule

Proof -The taxpayer has the burden of proving that he or she was present
in the state for less than 184 days.


Tax Season Tips

Tax Tips about Deducting Charitable Contributions

When you give a gift to charity that helps the lives of others in need. It may also help you at tax time. You may be able to claim the gift as a deduction that may lower your tax. Here are some  tax tips you should know about deducting your gifts to charity:

Qualified Charities
You must donate to a qualified charity if you want to deduct the gift. You can’t deduct gifts to individuals, political organizations or candidates.

Itemized Deduction
To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A  Itemized Deductions, with your federal tax return.

Benefit in Return
If you get something in return for your donation, your deduction is limited.  You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.

Donated Property
If you gave property instead of cash, the deduction is usually that item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market.

Clothing and Household Items
Used clothing and household items must be in at least good condition to be deductible in most cases. Special rules apply to cars, boats and other types of property donations.

You must file. Form 8283, Noncash Charitable Contributions, if your deduction for all noncash gifts is more than $500 for the year.

Records to Keep
You must keep records to prove the amount of the contributions you made during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, in order to claim a deduction.

Donations of $250 or More
To claim a deduction for donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the gift.

A written acknowledgment is considered contemporaneous if it is obtained by the taxpayer by the date on which the taxpayer timely files his or her original tax return—or the due date including extensions, whichever is earlier—for the year in which the contribution was made.

The IRS’s rules for substantiating the value of noncash contributions are many and complex; and the requirements increase with the value of the donated property.

Motor vehicles.
Special rules exist for donations of motor vehicles, boats and airplanes

Generally, if a taxpayer donates a qualified vehicle with a claimed fair market value of more than $500, the taxpayer can deduct the smaller of the gross proceeds from the sale of the vehicle by the organization or the vehicle’s fair market value on the date of the contribution. The taxpayer may claim the fair market value at the time of contribution in certain cases, for example if the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it or if the qualified organization gives the vehicle, or sells it for a price well below fair market value, to a needy individual in furtherance of the organization’s charitable purpose.

See Publication 526, Charitable Contributions, for more on these rules.