Jim Payne's Tax Blog in Gainesville, FL

As a business owner, figuring out how much to pay yourself can be tricky. Paying too little or too much can lead to issues with the IRS if your compensation is deemed “unreasonable.” The good news? You can correct unreasonable compensation before an IRS audit, and in some cases, it may even make ...

There's good news if you've ever been stressed about not having every receipt for your tax deductions. Almost 100 years ago, a principle was established that still benefits taxpayers today—it's called the "Cohen Rule." Born out of the 1930 Cohen v. Commissioner case, this rule remains a powerful ...

When it comes to dealing with the IRS, many taxpayers feel a sense of dread—and for good reason. The IRS, while powerful, does not have a reputation for precision. In fact, the agency is often wrong, and taxpayers can be left sorting through the mess. One critical area where the IRS often stumble...

When a taxpayer fails to file a return or keeps inadequate records, the IRS doesn’t just shrug and give up on assessing tax. Instead, it has a range of tools at its disposal to estimate a person’s taxable income through what's known as "indirect methods." These techniques help the IRS reconstruct...

Keeping good financial records is important even if you haven’t filed taxes in a while. Non-filers still need to track income and expenses in case the IRS contacts them. This guide covers what records to keep, how long to keep them, and why it’s important.Why Record-Keeping MattersYou might think...

Receiving an IRS Notice of Determination can be intimidating, but don’t panic—it's just a step in the IRS process that requires your attention. This notice typically means the IRS has decided on a tax matter you've been involved in, such as a request for an Offer in Compromise, a Collection Due P...

I recently represented a woman in her 80s who had been defrauded from most of her life savings. She was forced to liquidate her brokerage and retirement accounts, which created a large tax bill due to income and capital gains. Although she had enough left to pay the taxes, doing so would have lef...

An Offer-in-Compromise (OIC) can be a lifeline for taxpayers with overwhelming tax debt. It lets individuals settle their tax liabilities for less than what they owe, but only if they meet specific criteria. This isn’t a free pass. The IRS closely reviews each application, considering your abilit...

One of S corporation owners' most crucial tax considerations is determining "reasonable compensation." The IRS scrutinizes S corporation shareholders' compensation because it impacts how income is taxed. While S corporation shareholders can take salary and distributions, only the salary is subjec...

For S corporation owners, reasonable compensation is crucial for staying compliant with the IRS. As both shareholders and employees, owners must pay themselves a fair salary based on their work. This is important because shareholder-employees receive funds through wages (subject to payroll taxes)...