TAX MYTHS & CONFUSION DEBUNKED & EXPLAINED
Every year, people wrestle with tax information and this year with the new tax laws is no different. Things you should know:
- EVERYTHING YOU HEAR FROM FRIENDS, CO-WORKERS ISN’T TRUE – I know people say all the time, the things that they heard about the law, the amount that they got back. The things that they carried on their return, but unless you see it, don’t believe it! I don’t know people lie or why they all want to feel as though they could do what tax preparers do?! Tax preparers get tired of it and in general they have to defend their knowledge, which is quite backwards. ASK QUESTIONS, that’s understandable but don’t get swayed by false promises of wealth, tax refunds aren’t the lottery!
- ASK QUESTIONS TO THE PROFESSIONALS FOR UNDERSTANDING – A little knowledge is dangerous and there are those individuals that understand a little!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Unfortunately, their little is enough to make people question a lot! Ask your professional tax preparer and find out how the knowledge affects your return and tax situation specifically!
- TURBO TAX REFUNDS – Once upon a time, I used Turbo Tax too and every preparer knows and understands that with that software, it is easy for one to manipulate the data and questions to get the desired refund amount. Just because it goes through doesn’t mean it was right, so if you decide to go that route, find but don’t judge your preparer because in 90% of those cases, the individual is doing something that the tax preparer wouldn’t do or doesn’t know based on the information provided by the client. It’s usually not lack of knowledge by the preparer but more of professional ethic and code. There’s not a statute of limitations as it relates to tax audits.
- DEPENDENTS ETC… It’s all connected! Be careful about how and who you add to your return. Everything is connected and you can be caught on guard with and by the simplest things.
- RED FLAGS -Businesses that earned 5-6 figures should never be using a simple schedule C (entrepreneurs would know what this is)
Businesses that lose money or report a loss for more than 5-7 years, the IRS can and will consider it a hobby and you lose a majority of deductions
- Excessive deductions that outweigh income for certain professions Income not reported on 1099’s or W-2’s, If you are a ‘gig’ earner (meaning uber and other side jobs, should yield a 1099 and in turn, you there are deductions available to you as a sole proprietor) Professional preparers would know and assist you with those items.
- You cannot use last year’s income and/or expenses in this tax year!
- THE IRS WILL NEVER CALL YOU ABOUT TAXES!
- REMEMBER, before you buy into the non-sense of telling the IRS you cannot afford to pay them back the money that you owe them….. THE IRS ALREADY KNOWS:
- Where you work
- What you earn
- How long you’ve earned
- Assets
- Liabilities
- Algorithms! YES, believe it or not, I had a potential client that he normally runs his return through a few programs to see which algorithm provides the best refund! THERE IS NO SUCH THING!
- STOP WAITING AND GUESSING FROM YEAR-TO-YEAR and meet with your tax preparer to see what things you can do to change results.
While many have their views of tax offices and what they charge it is a profession for a reason. You pay for the knowledge in preparing the return.
