I have recently tried to communicate just how difficult it can be to deal with the IRS. This is not a straight criticism of the agency as an institution, it simply does not have the manpower to properly address all the things it should be able to properly address.

The IRS has given indications that things will improve, but that doesn’t seem to be happening, or at least not very quickly. This recent article showcases some of the ways and some of the reasons the IRS is falling behind and how a fix doesn’t appear to be imminent. With this all happening at a time when even some who filed their taxes on the original deadline back in May are waiting for their returns to be processed, the frustration can be strong.

With this growing frustration then, I thought it could be helpful to look at what rights you have as a taxpayer, a list that Is very simply labeled, the Taxpayer Bill of Rights. Of course, when you look at this, it may seem more than a little ironic that the second thing on the list is the right to quality service (where even the IRS includes the word ‘prompt’ in the definition of this type of service).

Furthermore, I can completely appreciate a cynic’s view of this list. It may look like a lot of platitudes that do not do you a lot of good if you are actually facing the IRS. Add in the increased tension that can be caused by the difficulty experienced in attempting to contact the agency, and a list of rights can feel empty.

You do not have to just throw up your hands, though. If you receive a letter from the IRS, it does not mean that you are automatically wrong. Sure, some people make mistakes when filing their taxes. But the IRS also makes mistakes when looking at those filed returns. And even more often lately, the agency makes mistakes when sending out notices – some of which have not been actually applicable to its recipients.

And it is frightening to receive such a letter, especially since they sometimes come in the form of a large bill that you did not expect. But one of the rights on the list is ‘The Right to Challenge the IRS’s Position and Be Heard,” so if it is their mistake, you have a chance to set it right. You want to act quick (especially when receiving a response to such action can be delayed) but you can do so. And if you need assistance from those with a greater understanding of how those things work, then do not hesitate to find it.

Warmly,

Josh Bousquet
Connect to Us ~ Facebook ~ Twitter

It seems impossible to stay away from financial and tax news this week.

First, there is the battle In congress over lifting the debt ceiling and moving along the Democrats’ hoped-for spending bill. I have previously written about some of this in this space because the spending bill is going to have to include new tax measures to pay for it. It has seemed almost inevitable since President Joe Biden took office, but now we are in October and things look less inevitable than they did at the beginning of the year, and it is difficult to say what any of this is going to look like by the time we reach the journey’s end.

Second, there is the release of the Pandora Papers, which show how some vast swaths of wealth are being handled to avoid taxes and creditors. The total numbers involved in these stories tend to stretch the mind. Billions are thrown around casually, but when you stop to take a moment to think about it, it is a LOT of money.

My main take on the Pandora Papers, though, is that this is not a huge expose of illegal activity. One can be upset that rules exist that allow the very wealthy to avoid paying what they ‘should,’ but they are just using the rules that exist to their advantage. If some rules changed (which would not be easy, since there are international entanglements in the story) then what they needed to pay would change. Until that happens, though, they are just using the situation to their advantage.

Whether this should happen or not, however, is a debate best had in different forums. But if the rules changed, those people involved would be okay. They may be held more accountable in new ways, but they would find their spot in the novel rules without their fortune suddenly disappearing.

That idea of new rules, though, goes back to the fight in Congress. Yes, there are going to be taxes raised on someone at some level to pay for what is attempting to be passed. But remember what happened when Democrats last passed tax rules? Chances are you don’t.  For when these things do change, the impact is immediately seen, some feel a bit of a new pinch, then they adapt and ease into the new rules.

Again, this is not the place to debate over what is the actual best and/or most equitable tax policy. But that is a debate that has be had somewhere. What this is then is a plea to accept whatever happens without rancor. If you disagree with those in power, you can show that by voting. Until then, though, you will find the way through whatever rules you must follow, and we will be there to help you travel that path in the way that most helps you.

Warmly,

Josh Bousquet
Connect to Us ~ Facebook ~ Twitter

Someday we will hopefully reach a point where discussing tax matters won’t just involve things that happened (or happened more) during the pandemic.

But we are not there yet.

So today I wanted to write a little bit about location. This really stood out last year as more people worked from home. And that home was not always in the same state as where they used to work. That changed how many had to pay and file taxes.

And now this year, many people are still doing so, some others are joining the work-at-home forces for the first time, others who could not travel for a time are working in new areas, and all these situations could raise new questions.

These issues came back into my view through a recent Accounting Today article that covers a lot of these situations for mobile entertainers. I don’t have the space to go as in depth here but wanted to put out a couple key points for those who may be affected.

The biggest one of these is to just keep records of what you are doing and where you are doing it. You are not going to be able to look back at a year of transactions and payments if you are working in various areas and specifically recall where each happened.

This is also good practice for people who may not be setting up shop in different areas but travel for work. The better your record keeping when on trips, the more you will be properly tracking your potential deductions and keeping yourself from missing any expenses.

In addition to record keeping, though, I also want to stress the important of planning. So often in situations like this, where someone may be working in a new state, they understand that there could be tax implications, but tend to push that idea away and plan to deal with it when tax filing comes. Of course, this could lead to a nasty surprise if you did not set things up correctly, owe more money than you realized, and hit yourself with a surprise, large bill. At the same time, though, maybe you’ll be paying way more than you would have had to and could have been using that money that was being withheld to do something different along the way. Either way, planning would have prevented the situation.

So be aware and be active in addressing your situation. After all, in a time that has upended a lot of our lives, the more we have control over, the better we feel.

Warmly,

Josh Bousquet
Connect to Us ~ Facebook ~ Twitter

It is not like it is difficult to understand procrastination. Of course it is easier to not do something than to do something, no matter how much you should do it. And when it is not difficult to get a deadline extended for something you don’t want to do, kicking that can further down the road becomes super tempting. But even with all that, we are approaching the October 15th deadline for submitting taxes even if you received an extension.

Aside from procrastination, sometimes you can’t complete tasks because of circumstances beyond your control. So if you have been affected by one (or unfortunately more) of the numerous disasters that have ravaged parts of our country, it is possible that this deadline could have been pushed back further for you. If things have happened that would prevent you from reaching the October 15th deadline because of such disasters, it can be worth looking into if you qualify for the added time. Please do not hesitate to reach out to us if you need clarity with this.

But for the rest of you, it is time to get moving. The sooner you get everything together to prepare your taxes, the more time you have to confidently answer any questions that come up, and the better chance you have to use those answers to your best advantage. After all, if you are expecting a refund, why would you not want that money and as much of it as you are entitled to?

Getting this done can be even more important for those who still owe money to the IRS, though. We say this every year, but every year still see people who were unaware of it – receiving an extension to file is not an extension to pay your taxes. The deadline to pay 2020 taxes was still May 17, 2021. At that time, fees and interest started to accrue on your balance. The sooner you get your taxes filed, the sooner you get a handle on how you will pay that amount.

Every year it is true that filing electronically (and receiving payments via direct deposit) will get your return through the system faster. That is going to be even more true this year, however. As we have recently said in this space, we are seeing people who filed at the regular deadline still waiting for their return to be processed. That is already a long line so if you can avoid joining the slower one, it will only be good for your peace of mind.

So yeah, what are you waiting for?

​Warmly,

Josh Bousquet
Connect to Us ~ Facebook ~ Twitter

Small Business Week typically takes place in the first week of May each year, but as with, well, everything else over the past year and a half, it was postponed and is now being celebrated this week. There is nothing inherently necessary about that May date anyway, and it can always be a good time to think about a small business, so let’s join in the festivities.

Know that is even possible to starting thinking about a small business without actually having a business. Everything has a starting point after all. I think the biggest thing here is to have a passion for something you want to do. Have you ever had a tickle of an idea that you thought could become a business? That spark that you knew could be profitable if someone would just do it? Well, that probably came out of something you would like to do and when it comes to work, the things you want to do are going to thrive more than the things you need to do. So lean into it, identify that opening you saw, and think about how you could fill it.

As a quick tip, once you actually decide to pursue something as a business (even if you don’t envision it ever being more than a side hustle), set up a new bank account for it. This doesn’t have to be any special type of account and can likely be accomplished in minutes with your current bank. Keeping your business and personal spending separate, though, will fend off the headache of going through lists of transactions and determining what was what months down the road.

For those who try to make the transition from side hustle to business, the biggest hurdle can be getting from doing those things you want to doing the things you need to do. This can be as simple as properly forming the business legally, keeping a bank account balanced, paying the right taxes, or knowing whether you are actually making a profit. All of these are things that one understands need to happen on some level, but they aren’t why you start the business, and they aren’t what you know about. So when it comes to them, do not shy away from seeking out help from those who do know such things.

So to that end, know that the federal government runs a Small Business Administration, which shares a lot of information on its website at sba.gov. For more strictly tax-related issues, the IRS has put together a website in celebration of this week that offers up some information. And as always, if there is anything we can do to help facilitate your success, do not hesitate to reach out.

Warmly,

Josh Bousquet
Connect to Us ~ Facebook ~ Twitter