DONATIONS: If you are 70 1/2 or older, consider making the donation from your IRA. You can transfer up to $100,000 annually from a traditional IRA directly to a charity. The charitable transfers count as all or part of your required minimum distributions, but unlike other IRA payouts, these direct gifts are not added to your taxable income. This can be a great way to get a tax benefit from a charitable gift even if you don’t itemize.

In addition, this tactic, unlike taking the distribution and then making the contribution, doesn’t increase your AGI so it can be beneficial to taxpayers that have Social Security Benefits, Rental Losses, IRA contributions, medical expenses, miscellaneous itemized deductions, health care subsidy, adoption expenses, education expenses, child care expenses, education loan interest, earned income credit, personal exemptions, 3.8% investment surtax, Medicare surcharge, and retirement credit. David M. Snyder, CPA


TAX DEBTS: The IRS went after a taxpayer’s transfer of real estate. A woman who owed over $2 million in back taxes conveyed real property worth $400,000 to her grandson for no consideration. At the time of the transfer, she had no other significant assets. The IRS asked the court to set aside the transfer, claiming it was a fraudulent conveyance under state law. The IRS sought foreclosure and sale of the property. The court sided with the IRS.

I wonder what happened to all the income that generated over $2M of taxes and why she only had $400k of assets. David M. Snyder, CPA


PAYROLL TAXES: The Tax Court decided a case involving a property manager that was being treated as an independent contractor. His work on-site at the apartment complex consists of leasing available units, collecting rents, doing maintenance and many other duties. He requires little to no supervision in his daily work. However, the owner has the right to direct his performance. He owns some tools, but most belong to the company. He gets paid monthly and can be let go at any time. The court decided that the property manager is an employee and not an independent contractor and that the firm must comply with the employment tax rules and issue him a W-2.

The IRS can go back three years to assess payroll taxes, penalties and interest. There can also be payroll benefits ramifications. David M. Snyder, CPA


David M. Snyder, CPA, ASBC

The Tax Axe, LLC