Tax Treatment of Virtual Currency Transactions

Whether you’ve invested in Bitcoin and sold it at a profit or loss or received it for services performed, you’ll need to report it on your tax return. Here’s what you should know:

Background

Prior to 2014, there was no IRS guidance and many people did not understand that selling virtual currency was a reportable transaction. They may have found themselves with a hefty tax bill – money they were hard-pressed to come up with at tax time. Others were unaware that they needed to report their transactions at all or failed to do so because it seemed too complicated.

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Final Regulations for 100 Percent Bonus Depreciation

Final regulations have been issued by the Treasury Department and the Internal Revenue Service implementing the 100% additional first-year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.

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Avoid Refund Delays by Renewing Expiring ITINs Now

People who are not eligible for a Social Security number must use individual taxpayer identification numbers (ITINs) if they have tax filing or payment obligations under U.S. law. Periodically and under certain circumstances, these ITINs expire and should be renewed as soon as possible to avoid unnecessary delays related to tax refunds next year.

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Choosing a Retirement Destination: Tax Considerations

With health care, housing, food, and transportation costs increasing every year, many retirees on fixed incomes wonder how they can stretch their dollars even further. One solution is to move to another state where income taxes are lower than the one in which they currently reside.

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File Cash Transaction Reports Electronically

Businesses that receive cash transactions of more than $10,000 must report these payments to the IRS. Now businesses can batch file their cash reports; this is especially helpful for those required to file many forms. Let’s take a look at several key points that taxpayers should know about reporting cash transactions.

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Small Business Update: Payroll Tax Deferral

On August 8, 2020, the President issued a Memorandum allowing employers to defer withholding and payment of an employee’s portion of the Social Security tax (i.e., the 6.2% FICA portion of the federal payroll tax on employees). Medicare taxes, however, are not covered. The payroll tax deferral is effective starting September 1, 2020, and also applies to the employee portion of the Railroad Retirement Act Tier 1 tax. While employers are allowed to defer the withholding and payment of the payroll taxes on employees’ applicable wages, they are not required to do so.

Let’s take a look at how this affects employers and employees:

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IRS Form 1040-X Now Available for E-Filing

Form 1040-X has been one of the last major individual tax forms that still needed to be paper-filed, but now taxpayers can quickly correct previously filed tax returns by submitting Form 1040-X, Amended U.S. Individual Income Tax Return electronically using commercial tax-filing software.

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Recordkeeping Tips for Individuals and Businesses

The key to avoiding headaches at tax time is keeping track of your receipts and other records throughout the year. Whether you use an excel spreadsheet, an app, an online system or keep your receipts organized in a folding file organized by month, good record-keeping will help you remember the various transactions you made during the year.

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Tax Considerations When Hiring Household Help

If you employ someone to work for you around your house, it is important to consider the tax implications of this type of arrangement. While many people disregard the need to pay taxes on household employees, they do so at the risk of paying stiff tax penalties down the road.

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