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April 21, 2015

Eustis Corrigan Participates in #ReutersTax Chat

Eustis Corrigan, Senior Managing Director of the Memphis officeparticipated in a Thomson Reuter's tax chat on Twitter. Using the hashtag (#ReutersTax), Eustis and several other "taxperts" across the U.S. answered questions in 140 characters or less.

The following questions were asked by various followers and answered by Eustis (EC):

  1. What are some common tax mistakes?
    • EC: Common mistakes include bad math and misspelled names; misclassification of dividend income as well
  2. Can you explain the tax impact on pre-tax contribution to 401(k) vs after-tax contribution?
    • EC: A pre-tax contribution is not subject to federal income tax and reduces AGI for c/y; tax is deferred until withdrawal is made
  3. What’s your advice to folks who don’t have the cash to pay their taxes?
  4. Is there any way for a grandparent to get a Federal tax break while contributing to their grandchildren's education? [Follow-up: What about 529s from grandparents? Tax impact vs. savings mechanism]
    • EC: A direct payment of tuition is not subject to gift tax; no other tax break
    • EC: The earnings of a 529 plan are tax free IF used for qual education expenses
  5. What will happen if I don’t file my taxes?
    • EC: If you don't file your taxes you will likely receive notices or a visit from your friendly IRS agent!
  6. How do I file for an extension? (And what are the penalties?)
    • EC: File form 4868; if you owe with your extension avoid penalties by paying all taxes owed by the original due date
  7. Should I pay for my taxes with a credit card?
    • EC: Pay taxes with a CC only as a last resort; it is always an economic analysis that should include interest/fees
    • EC: If you have a good relationship with a banker try that route first; interest rate and terms might be better
  8. What’s the craziest tax deduction you've ever heard of?
    • EC: Great question! Deducting the cost of a Mardi Gras ball costume and dues
    • EC: Also cost of cat food at a salvage yard; cats kept snakes and rats off property!
  9. How can we report dividend income from schedule K if the schedule is not available at the time?
    • EC: You may need to file an extension until you get the Schedule K-1
    • EC: The IRS matches K-1s so in order to avoid notices be safe and extend
  10. Should a loan modification be treated as a cancellation of debt?
    • EC: It depend if the modified terms result in a significant modification under IRC sec. 1001; consult tax advisor
  11. What’s the best way to avoid an audit?
    • EC: Sometimes an audit is unavoidable due to random selection; stay honest/keep good records/use a specialist
  12. I got a refund! Should I use it to pay down debt or invest it? Any other tips?
    • EC: Pay your CPA if you used one! Fund an emergency account first then pay down debt.

To view the full conversation click here or search for #ReutersTax on Twitter. If you have further questions regarding any of the above, please contact Eustis Corrigan at ecorrigan@cbiz.com or 901.685.5575. You can also follow Eustis on Twitter @eustiscorrigan for more tax insights.


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