I was thinking about how often people rely on tax software like TurboTax, and it reminded me of a story that might interest you. Remember Timothy Geithner? When he was nominated for Treasury Secretary, it emerged that he had made some tax errors in previous years despite his deep financial expertise and using TurboTax to file his returns. Case Summary Errors and Discovery: Geithner was responsible for paying Social Security and Medicare taxes, but it was discovered that he did not pay them during his initial employment. An IRS audit 2006 had previously caught the mistake for 2003 and 200 ..read more

Listen, I know filing taxes jointly makes things easier, but it also means sharing responsibility. What happens if your spouse’s mistakes leave you with a hefty tax bill? It’s frustrating, but something called innocent spouse relief could help. A recent tax court case (Kraszewska v. Commissioner) highlighted this option. Basically, if you had no idea your spouse was hiding income or inflating deductions (like Ms. Kraszewska), you might be able to get some protection from the IRS, especially if you keep your finances separate. Consider innocent spouse relief in these three key situati ..read more

The recent H&R Block outage exposed a vulnerability for many taxpayers: a reliance on last-minute filing solutions. While these services can be convenient, they can also lead to stress, errors, and missed opportunities. Could there be a better way to manage your taxes? At Palma Financial Services, we believe in a proactive approach to taxes. It means planning throughout the year, not just at filing deadlines. Tax Software Limitations Limited Knowledge: Software can’t understand your unique situation or identify complex deductions and credits a professional can. Error Potent ..read more

REMINDER!Today, April 15th, is the deadline to file your 2023 federal taxes (April 17th for Maine and Massachusetts residents). While tax payment isn’t due today, filing late can result in penalties. Need more time? You can request an extension to file by October 15th, but any taxes owed are still due today. Schedule your tax assessment by clicking the link below or calling us at (408) 708-9330. Book Your Free Assessment Here ..read more

As we delve into tax strategies, you have a powerful tool—the Section 199A deduction under the Tax Cuts and Jobs Act. It’s time to explore how this can be a game-changer for your business. The 20% Boost for Pass-Through Entities (2018-2025): This provision can enable you to save an additional 20% on your qualified business income, a significant boon for entities like sole proprietorships, partnerships, and S corporations. But there’s a strategy to it, particularly regarding how you manage your salary. S Corporations: The Delicate Dance of Salary Strategy The Lower Salary Gamble: Som ..read more

Did you know you might be eligible for significant tax credits for sick and family leave taken during 2020 and 2021? It applies even if you’re self-employed or run a small corporation. You might qualify if you could not work between April 1, 2020, and September 30, 2021, due to COVID-19-related reasons. Here’s how to know if you qualify: If any of these reasons apply to you during the specified period, you could be eligible for tax credits: COVID-19 Quarantine or Isolation: You were subject to a government-mandated quarantine or isolation order. Doctor-Recommended Self-Quarantine:&n ..read more

Listen up if you’re into crypto, Big changes are coming for tax time in 2025. Remember that whole thing about people buying and selling crypto without paying taxes? Yeah, Congress isn’t a big fan. So, they’re making companies that deal with crypto report everything to the IRS, just like stockbrokers do. It’s a bit complicated, so the IRS is taking its time (we’re talking over 280 pages of rules!) to figure out exactly how this will work. Here’s a breakdown of the new crypto tax reporting rules coming into effect in 2025: New Form for Crypto Transactions: Starting in 2025, companies ..read more

Did you know that even missing one tax deadline can lead to penalties and headaches? Don’t let that happen! The new year is here, and with it comes tax season! That’s why we are sharing the 2024 Federal Tax Calendar to help you stay on top of important deadlines. But what if you’re worried about missing a deadline or have a complex tax situation? Schedule a tax assessment with our team. We’ll work with you to understand your unique situation and develop a tax strategy tailored to your needs, ensuring you maximize deductions and minimize your tax burden.   April 1 File Elect ..read more

Imagine this: Dr. Smith, a successful dermatologist in Beverly Hills who generates over $5 million annually, has entrusted his tax filings to a seemingly reputable wealth management firm for five years. They assure him everything is handled, even providing fabricated documents as “proof” of electronic filing. However, Dr. Smith was unaware that his tax returns had never been filed with the IRS. Years later, during a routine audit, the IRS uncovers the discrepancy. Dr. Smith faces a significant tax burden. Let’s analyze the potential financial blow: Back Taxes: Dr. Smith could owe over $8 ..read more

Feeling stressed about old tax returns? The IRS has limitations on how far back they can look. Let’s explore these timeframes and ease your worries! The statute of limitations clarifies when the IRS can no longer audit your tax return or assess additional taxes. In most cases, the IRS has three years from the later of two dates: your filing deadline (typically April 15) or the actual filing date. Generally, audits happen within 12-18 months of filing. However, some exceptions extend the audit window to 6 years: Significant Omissions: You left out more than 25% of your income or over $5,0 ..read more