Highway use tax return due date is coming up. The IRS reminded truckers and owners of heavy highway vehicles that the next federal highway use tax return is due on Aug. 31, 2016. The deadline generally applies to Form 2290 and the accompanying tax payment for the tax year that begins on July 1, 2016, and ends on June 30, 2017. Returns must be filed and tax payments made for vehicles used on the road during July. The use tax of up to $550 per vehicle applies to motor vehicles with a taxable gross weight of 55,000 pounds or more. Contact us for more information.
No tax deduction after retaining wall falls down. You may be able to write off property losses if they arise from a fire, storm or other sudden, unexpected casualty. Suddenness is a key element. Gradual deterioration doesn’t qualify. In one U.S. Tax Court case, a taxpayer argued the damage to a collapsed retaining wall was due to excessive rainfall. The court found the collapse was due to progressive deterioration. The rain may have contributed to it but didn’t cause it. Therefore, the taxpayer got no deduction. (Alphonso, TC Memo 2016-130)
Good news for some homeowners. The IRS announced that it accepts a 9th Circuit Ct. of Appeals decision that allows unmarried people who own homes together to deduct more mortgage interest. Under tax law, you can deduct interest on up to $1 million of acquisition debt and $100,000 of home equity debt. The court ruled these limitations are applied on an individual basis, not a residence basis. That means unmarried co-owners are collectively limited to a deduction for interest paid on up to $2.2 million, rather than $1.1 million, of acquisition and home equity debt.
Widow must pay a portion of estate tax debt. A surviving spouse, who served as executrix, has been held personally liable for part of her late husband’s unpaid federal estate taxes. The First Circuit Court of Appeals ruled that the widow/executrix owes an amount equal to what she took out of the estate because she transferred “virtually all” of the estate’s assets to herself instead of paying the tax claim. Key point: The government must be paid first when the estate of a deceased debtor has insufficient assets to pay all of its debts (McNicol, CA1, 7/15/16).
Four out of 10 Americans pay no federal individual income taxes. The nonpartisan Tax Policy Center estimates the current percentage of individuals paying no federal income tax at 44%, roughly the same as it was in 2015. At the peak of the last recession, the figure was 50%. The center estimates that about 1/3 of workers who pay no federal income tax get net refundable credits that also fully cover their payroll taxes, including their employer’s share. See more details at http://www.taxpolicycenter.org/taxvox/closer-look-those-who-pay-no-income-or-payroll-taxes