Sometimes it seems that the tax Code is a trap waiting to spring on some unfortunate. This time let's talk about a trap involving mortgages.
Last week Senator Baucus released the third in a series of staff discussions on tax reform. This discussion focuses on depreciation (also called "cost recovery") and tax accounting methods.
Not the most exciting topics, and I will not miss Thursday Night Football reading up on them. Let's review them quickly.
The Senator leads off with:
I am looking at a proposed rule for the Section 45R credit for small employers that offer health insurance. The IRS says I have until November 25 to respond with comments.
Let's talk about nonsense that tax practitioners have to work with.
This credit was added as an inducement for smaller employers to provide health insurance while waiting for the balance of the ObamaCare scaffolding to be erected.
I think it was November or December of last year that I met with a client. He was "behind" on his taxes, and he now wanted to do the right thing and catch up. He passed me a Form 1099, which he described as bogus. It had his name and social security number, but he swore he did not know the payor or provide any services for them.
Could be. Mistakes happen all the time.
I cannot understand people who go to great lengths to underreport income. I am not talking about tax planning – perhaps even aggressive tax planning – to reduce one's tax under the law. Some actions are so routine one may not even see them as tax planning, such as moving from a higher-tax state (say Ohio) to a lower-tax state (say Florida or Nevada).