Greensburg Pennsylvania Tax Attorney Blog

Are you unknowingly committing tax fraud?

Like many people across Pennsylvania, you may find filing your taxes endlessly complicated, and you may, at times, make guesses or estimations during the process. In some cases, however, “fudging the numbers” or estimating when filing your taxes can land you in serious hot water, because in certain instances, your actions may prove criminal in nature.

Even if you do not have any malicious intent when you make errors filing your taxes, GoBankingRates reports that certain common tax mistakes cross the line and could potentially lead to tax fraud charges. So, what types of errors are Americans making that are drawing the unwanted attention of the Internal Revenue Service?

The importance of an Advanced Healthcare Directive

Planning for your future healthcare needs might be a hard thing to think about, but it’s is an important part of caring for yourself and your family. An advanced healthcare directive-–including a living will and a durable power of attorney–-should be a part of your estate plan to specify your wishes.

These documents outline your medical and healthcare instructions in the event that you were no longer able to speak for yourself and designates someone to do so. Being specific with your intentions and appointing someone to speak on your behalf now will ensure that those treating you know your preferences before it’s too late.

Wills, trusts and more for millennials

If you are one of the many millennials in Pennsylvania, the thought of creating a will, a trust or any other type of estate planning document seems like something far off in the distant future. In fact, you likely think about it only in terms of something your parents or grandparents should be doing. This could not be further from the truth. Certainly, your parents and grandparents can benefit from these things but so can you.

As explained by NerdWallet, estate planning is not always just about outlining your wishes for after you die. There are several tools available that can provide valuable assistance to your family members should you ever be in an accident and unable to make your own health care decisions or manage your own finances. An advance directive, for example, gives someone else the ability to make choices about your care. A power of attorney allows another person to take care of your financial matters until you are able to do so again.

What are the consequences of failing to pay payroll taxes?

When you get your paycheck in Pennsylvania, you will note that money has been taken from it to pay taxes. This is a legal requirement. Your employer must take these taxes from your pay unless you are an independent contractor. If your employer fails to take payroll taxes, it can cause trouble for your employer and you.

According to the IRS, employers not only have to keep your portion of the payroll taxes but also must pay their share of these taxes. An employer must report all of your earnings and the taxes withheld on those earnings to the IRS. The taxes withheld must be put into an approved bank account. If your employer fails to do any of these things, it could face civil and criminal charges.

Understanding the probate process

When a friend or loved one passes away, it is often difficult to deal with the aftermath involving property and assets. It can be difficult to make critical decisions when dealing with the emotional despair of losing someone. The deceased may have left behind an estate filled with possessions, property and assets he or she wanted to distribute to heirs after passing. In some cases, a will may have been left behind. However, there are other situations where a person may have died without creating a last will and testament. Either way, the case may enter the probate process to help in finalizing the estate.

The first step of probate is to determine whether the will is valid. It is then the responsibility of the estate administrator to gather and appraise any property and assets that were left behind. Once this is accomplished, the administrator must pay off any debt, expenses or taxes remaining on the estate. Finally, the remaining property is distributed to the rightful heirs named in the will.

What is a testamentary trust?

There are many options you will have as you plan your estate in Pennsylvania. One of those options in a testamentary trust, which is a trust that is set up within your will, according to Yahoo! Finance. It is laid out and specified within the will. When you pass away, the assets indicated as part of the trust will go into the trust.

It is important to understand the point that the trust does not actually exist until you die. You have the ability to change it at any time, but once you die, it becomes irrevocable and cannot be changed by anyone else.

Why is the IRS auditing my business associate and me?

The IRS might choose to review your tax return in detail, particularly if you have dealings on record with individuals under audit. In fact, the IRS could decide to audit anyone at any time. There are only a few limitations on this power, although internal practices tend to limit tax reviews to returns filed over the past three years. The bottom line is that many Pennsylvania individuals and companies are audited every year — it is not an accusation of wrongdoing.

While the IRS does perform audits without evidence of error, it is often advisable to exercise caution after receiving any notice of review. It is also usually a good idea to prepare fully if you discover that a business associate is undergoing a concurrent audit. 

How do you prevent ademption?

Ademption decisions could potentially subvert the intent of your will. At the very least, they would probably diminish the value of your estate somewhat, as your beneficiaries and executors drew funds therefrom to research your intentions. You could potentially avoid subjecting your beneficiaries to the complexities of ademption with a few simple gestures.

Of course, preempting ademption requires an understanding of the process. This article focuses on what risk this law could pose to your estate and what you might do to mitigate the potential losses. 

What is legally deductible from federal taxes?

Many Pennsylvania businesses owners and individuals like the control and confidentiality that comes from preparing and filing their own taxes. However, this approach is often at best time-consuming. One of the largest pitfalls involves tax deductions and credits. In extreme cases, you could potentially file a faulty return that leads to fines, audits and even legal battles with the IRS. 

If you are new to filing your taxes on your own, then you might not know about the most common tax deductions that people take. Especially if you decide to itemize, it might be a good idea to start by filing your personal taxes — assuming you do not operate a sole proprietorship — and move on to business taxes in a later year.  

What to consider when estate planning

Are you one of those people who think that estate planning is just for the rich and famous? The reality is, estate planning is for everyone and it does not matter the size of your estate or income. It is important to make sure you create documents like wills, trusts and powers of attorney. When proper planning is in place, you make sure you don’t leave any confusion for your loved ones about your final wishes. 

Contact

John A. Cochran, Esquire
140 S. Main St.
Suite 301
Greensburg, PA 15601

Phone: 724-216-0704
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