Basic Tax Rules That are Unlikely to Change Under Trump
Photo Credit: Gage Skidmore
Now that we have a new President who’ll be taking office this January, we can expect some changes to the tax rules coming down the pike.
However there are several areas that are highly unlikely to change. I’ll focus on several of those areas for now. We have to wait and see what kind of changes Trump is going to make and how those changes will affect the majority of taxpayers.
Forbes.com has posted a listing of 13 IRS tax rules that won’t change as a result of any of Trump’s Tax Plan. Mostly the things that won’t change are the basics that every taxpayer needs to be aware of. These are rules that have been in place for a very long time. I’m briefly highlighting these rules, however if you want the details you can go to
Everything is Income
No surprise here! The fact that the IRS considers every dollar that comes in as income is not likely to change. As everyone knows, the IRS taxes all income from any source, whether in cash or in kind: You win the Lottery, you get taxed; you win at the slot machines or the casino, you get taxed. You get the picture.
Here’s something that may not be as commonly understood by the majority of taxpayers as the first. The idea is that you always want to accelerate tax deductions and defer tax payments. However, if you have a legal right to money and say “pay me later,” it’s taxed now. But you can condition payment, such as refusing to sell your house or settle a lawsuit unless you are paid next year.
Foreign Bank Accounts
This may not affect a majority of American taxpayers, but those it does affect are in for a harsh awakening. Foreign accounts are being targeted more intensely than ever and that is not likely to change. While you don’t receive a 1099 form, you still must report the income generated in these accounts. Don’t be cavalier about this. This IRS has collected $10 billion as a result of offshore compliance.
Don’t Talk to the IRS
I always advise my clients to stick to this perfectly legal way of dealing with the IRS. If the IRS pays you a visit, either at your home or place of business, you’re best off declining to speak. Simply tell them your lawyer will call. If you do happen to say anything to the IRS, don’t lie.
File Even if You Can’t Pay
File returns even if you can’t pay. This is a no-brainer. There’s no faster way to attract the unwelcome attention of the IRS than not filing your taxes.
Next, you’ll want to pay small tax bills if you get a notice from the IRS, even if they’re wrong. I understand that small is relative, but don’t risk and audit or dispute by fighting over small sums.
Exercise Common Sense
The IRS, while massive and terrifying to many is not as scary as some people think. They are respectful and respond in kind to respectful taxpayers. Reply to every IRS letter, unless it says not to. This is increasingly important in the face of the growing incidence of tax fraud and scams with people posing as IRS representatives making threats.
If the IRS does red flag you for an audit, get professional help and advice. Trying to handle a tax case on your own is inevitably a mistake. Stick to these basics. They’re not about to change anytime soon. I’m sure we’ll be discussing the changes that are sure to come soon enough.