Two Tax Credits to Help Pay Higher Education Costs

There are two federal tax credits available to help taxpayers offset the cost of higher education for themselves and their dependents.  These are the American Opportunity Credit and the Lifetime Learning Credit.

IRS Recharacterizes Dividend Payments to S Corp Shareholder as Wages

Watson, P.C. v. U.S., (DC IA 12/23/10)  An Iowa district court has concluded that an S corporation shareholder-employee’s $24,000 salary in 2002 and 2003 was unreasonably low, and allowed the IRS to reclassify over $134,000 of dividend payments to the shareholder-employee as salary.  As a result, the corporation now owes employment taxes, penalties and interest … Continued

2010 Tax-Exempt Gross Income Threshold Raised for Filing E-Postcard

The IRS announced on January 13, 2011, that it has raised the annual gross receipts threshold at which tax-exempt organizations must file Form 990 from $25,000 to $50,000, for tax years beginning on or after January 1, 2010.  Under this new rule, qualifying tax-exempt organizations whose gross annual receipts are normally $50,000 or less can … Continued

Taxpayer Advocate Service – 2010 Annual Report to Congress

On January 5, 2011, National Taxpayer Advocate released her annual report to Congress, identifying the need for tax reform, expressing concern over the IRS’s increasing use of hard-core enforcement actions, and highlighting the challenges the IRS faces in implementing the new health care law.