AI Tax Answer Library

Multi-state tax allocation for remote workers

States generally tax wage income where the work is performed; the resident state typically taxes all income but offers a credit for taxes paid to other states to mitigate double taxation. Convenience-of-the-employer rules and reciprocity agreements can change the result.

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Innocent spouse relief qualification requirements

When you file a joint return, both spouses are jointly and severally liable for the entire tax, interest, and penalties. Innocent spouse relief can remove your responsibility for tax attributable to your spouse’s erroneous items

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Collection due process hearing procedures

A CDP hearing is an independent review by the IRS Office of Appeals of a proposed levy or a filed Notice of Federal Tax Lien (NFTL). It is intended to ensure the action is warranted and appropriate, and that collection alternatives were considered first

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Audit defense strategies for common examination issues

Returns are classified to determine the scope and where the case is worked: correspondence, office (TCO), or field (RA). RAs handle more complex cases and TCOs more limited issues; proper assignment is based on issue complexity and time expectations.

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How to respond to specific IRS notices and letters

Read the notice carefully to identify the tax year, the issue, the amount (if any), and the response deadline. Many IRS notices allow about 30 days to respond; allow the IRS at least 30 days to reply back after you respond.

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Client confidentiality and disclosure requirements

Here’s what HIVE AI had to say about "Client confidentiality and disclosure requirements": Client Confidentiality and Disclosure Requirements Overview of Confidentiality Obligations Client confidentiality represents one of the fundamental pillars of professional tax...

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How to handle IRS representation matters?

Practice before the Internal Revenue Service encompasses all matters connected with presentation to the Internal Revenue Service or any of its personnel relating to a taxpayer’s rights, privileges, or liabilities

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Is equipment financed in 2024 still eligible for depreciation?

Yes, equipment financed in 2024 is still eligible for depreciation, including bonus depreciation and Section 179 expensing. The method of financing does not affect the depreciation eligibility of business equipment, as long as the equipment meets the fundamental requirements for depreciation.

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How do I depreciate real estate used in my business?

Depreciating real estate used in your business involves specific rules and methods under the Modified Accelerated Cost Recovery System (MACRS). The treatment depends on the type of real property, when it was placed in service, and how it’s used in your business operations.

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Can I expense software subscriptions or licenses?

The tax treatment of software subscriptions and licenses depends on several factors, including the type of software, how it’s acquired, and how it’s used in your business. The tax code provides different pathways for expensing or capitalizing these costs, each with specific requirements and benefits.

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How does bonus depreciation phase down after 2023?

Bonus depreciation, also known as the additional first year depreciation deduction under Section 168(k), follows a specific phase-down schedule that began after 2023. Understanding this phase-down is crucial for tax planning as it significantly impacts the immediate tax benefits available for qualifying business property investments.

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What qualifies for Section 179 expensing in 2024?

Section 179 expensing allows taxpayers to immediately deduct the cost of qualifying business property rather than depreciating it over time. For 2024, there are specific requirements and limitations that determine what qualifies for this valuable tax benefit.

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Can I claim the Work Opportunity Tax Credit?

Yes, you may be eligible to claim the Work Opportunity Tax Credit (WOTC), but eligibility depends on several specific requirements related to your business type, the employees you hire, and proper certification procedures.

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How do I report owner’s compensation?

Reporting owner’s compensation depends significantly on the business structure and the owner’s role within the organization. The treatment varies dramatically between different entity types, and proper reporting is essential for both tax compliance and avoiding penalties.

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How do I handle state unemployment and payroll tax filings?

Handling state unemployment and payroll tax filings requires understanding both the federal framework and the specific requirements of each state where you have employees. This process involves multiple components including registration, ongoing filings, tax calculations, and compliance with varying state-specific rules.

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When do I need to issue W-2s to employees?

The requirement to issue Form W-2 to employees is governed by specific statutory and regulatory provisions that establish both the circumstances requiring issuance and the timing for providing these critical tax documents.

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What forms do I issue to contractors (1099-NEC)?

When issuing forms to independent contractors, you primarily use Form 1099-NEC (Nonemployee Compensation), which replaced the use of Form 1099-MISC for reporting nonemployee compensation starting in tax year 2020.

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What’s the difference between an employee and independent contractor?

The distinction between an employee and an independent contractor is one of the most fundamental and complex issues in tax law, with significant implications for both the worker and the entity paying for services. This classification affects tax withholding obligations, employment tax responsibilities, benefit eligibility, and various deduction opportunities.

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What is bonus depreciation for vehicles in 2024?

Bonus depreciation for vehicles in 2024 is 60% of the adjusted basis for most qualified property placed in service during the year T.D. 9874 . This represents a continuation of the phaseout schedule established by the Tax Cuts and Jobs Act.

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Can I deduct dues, subscriptions, and memberships?

Yes, you can deduct certain dues, subscriptions, and memberships as business expenses, but there are important limitations and restrictions that you must understand to properly claim these deductions while maintaining compliance with federal tax law.

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What’s the best way to track personal vs. business expenses?

Track personal and business expenses by keeping separate bank accounts, using dedicated business credit cards, documenting each expense’s purpose, and allocating mixed-use costs proportionally. Use accounting software to automate categorization and maintain compliance.

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Why Is My Refund Smaller Than Expected This Year?

There are several common reasons why your tax refund might be smaller than you expected this year. Understanding these factors can help you make sense of the difference between your anticipated and actual refund amount.

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