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Taxpayer Must Pay Tax on Unemployment Benefits

8/21/2017

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A certain taxpayer received unemployment payments in the amount of $3,360. Later on in the same year the Arizona Department of Economic Security (DES) decided that the taxpayer was not eligible to these payments. Consequently, the taxpayer repaid the unemployment benefits in the following tax year. He received a 1099-G from the DES but did not report the earnings on their tax return.

The IRS contended that because the taxpayer did not repay the money in the same year that it was issued, it became fixed for the year, and itconstituted taxable income. The taxpayer argued that the payments were not taxable under the recession doctrine.

The tax court agreed with the IRS. Because the taxpayer did not repay the money in the same year the money was received, it was taxable.

Don't let this happen to you! If you have any questions regarding your unemployment benefits, call our office. We can help you determine the taxability of your benefit payments.
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Increase in Identity Theft Spurs Change

8/15/2017

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The IRS has noticed an increase in identity theft related to business tax returns. Schedule K-1 returns filed by partnerships are included in this. As a result, the IRS is going to be asking for more information on business tax returns. The following may have to be verified for your tax return:

• The name and Social Security Number of the individual authorized to sign the return.
• The history of estimated tax payments made.
• Information on the parent company (if any).
• Additional information related to some deductions.
• The history of other forms filed by the company (e.g. forms 940 and 941).

Be aware that our office may request new or different information than we previously have due to IRS requirements. We always do our best to let you know beforehand what information we may need. Thank you for your patience!

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