30 October 2012

TAX Identity Theft


Why you should be concerned about your tax return.


In 2011 over 5 Billion dollars in refund checks were delivered. That’s a large sum of money considering all of it went to the Identity thieves.
Even though many of the fraudulent returns were filed using social security numbers of children, the deceased and individuals that would not normally file,There is very little to stop tax identity theft  from happening to us.  
An increasing number of taxpayers have filed their returns only to discover someone stole their identity and   filed a return without their knowledge. (I know of at least 3 people who had that experience). In addition to a feeling of violation and major annoyance, other issues that could arise are:
  • Delayed Refund
  • IRS having the wrong address on file
  • Audit notice
A delayed refund check due to identity theft would cause many financial upsets. 
The IRS having an incorrect address might not be so bad for some but, an audit notice could cause a nervous breakdown for others.
Jokes aside, if you're a victim of Tax Identity theft, the first course of action should be to fill out a form 14039 with the IRS. (send it certified with return receipt). 
The next step is to call to confirm the IRS received your form 10439. Make sure you get the name, badge number and time you called the IRS representative to CYA (cover your assets).
 The next thing you should do is file a police report. Why you may ask?
Just in case you get audited you will have the police report as an affidavit. Let's face the facts, that the IRS is a large organization and many (if not most) of the departments in the IRS do not communicate with one another.
 Without a police report and proof of a filed form 14039, it could be well into the next year before the identity theft issue is resolved.

23 October 2012

3 Ways to keep the IRS away.


IRS Proof your taxes with 3 simple actions.

 Don't commingle your funds – Make sure your business account and personal account are separate. This makes it easier to keep track of your expenses and income. And it will also allow you to keep track with how your business is doing.  And this will allow you to better evaluate your business productivity.

 Report all your 1099 income with your tax return. The IRS has computers that keep better track of the reported 1099s so it is very important that all of your 1099 income is reported. If not then you will be audited.

Keep good records: You might think this just helps in an audit. However, good record keeping can avoid IRS problems to begin with. Most audits are correspondence audits done by mail. Having good records may well avoid the more intensive in-person audits.

3 simple solutions can keep the IRS away.

17 October 2012

Tax Debt reported to Credit Bureaus

Congress to consider allowing the IRS to report bad debt to credit bureaus



Congress is considering allowing the IRS to report tax debt to the three credit bureaus.

Equifax , Experian and TransUnion. The stated reason according to sources is because to promote earlier payment of debt.  I look at it from the standpoint of a bully having backup.

It has been proven that once the IRS audits you and wins (by tax payers giving into the pressure and not appealing the decision or just paying because they don’t want to deal with the hassle) This could possibly place many tax payers in a situation they cannot get out of. How would a tax payer borrow money to pay off the debt if they are not allowed to borrow money because the IRS reported owed debt to the credit bureaus.

 The IRS reporting debt to the Credit Bureaus may create or inflate the following.
  • Larger financial burden for the tax payer
  • Increase the amount of non filers.
  • Increase the fear of the IRS

Allowing the IRS to report tax debt to the 3 major credit bureaus Is another attempt by congress to squeeze money out of the tax payer by intimidation and fear. You may be wondering why the government would allow the IRS to report tax debt, below are some logical (from my perspective) reasons for the government allowing this to happen.
  • Lack of government fiscal responsibility
  • Not many politicians want to attach their name to raising taxes on the middle class
  • About $110 billion of the total debt was classified by IRS as uncollectable.

Possibly allowing the IRS to report tax debt is has no benefit to the tax payers but , it most definitely will help the IRS in their collection process. The question is at what cost?

09 October 2012

Starting a Business?


Starting a Business?
 “Some nontraditional things to think about before you start your business”


With the economy in the tank and social security being more social than secure. People are turning to business start-ups. I am a big proponent of starting a business but there are some things one might want to consider before you start down the road of business ownership. What are some of the things to think about before you should start a business?
  • How do you manage your personal finances?
  • Is there a plan with how you handle the household?
  • Are there many unfinished projects in your home?
  •  Is your house hold operating with its optimal efficiency
  • How do you handle your personal taxes?

You may be asking yourself why he is asking questions about the house hold when the topic is about business start up.
The answer is simple, most business start ups are ran in the same manner as the household is ran.
So what I’m I trying to say?

  • If you have horrible money management skills on the personal side then you will have horrible money management skills on the Business start up side
  •  
  • If you do not have, a plan on how the household is ran than more than likely the business start up will have a less than stellar business plan.
  •  
  • If there are many unfinished projects around the home then the likely hood of a start up business having any longevity are slim.
  •  
  • If your household is not operating optimally then your start up business will not run optimally.
  •  
  • If you let a non professional prepare your personal taxes then you will do the same for your business. (and that’s not good).


This is an observation based on my experience as a tax prepare and business consultant.
There will always be exceptions but, for the most part it is very difficult to run a business start up if you cannot effectively run your home.  Ger your home situation fixed before you start your business.