My business partner and I are struggling with choosing the correct business form. We are opening a small boutique with very little money, we both will be pretty much paying 50/50 for everything. Can someone please help us with this, as to we are trying to avoid having to pay big bucks to an attorney since money is limited. Thanks.
While you are thinking about getting your taxes done, you might think about doing one or some of the following:
1. I teach my clients what they need, how to prepare their taxes and how to become organized. Possibly you should start by asking your tax preparers detailed questions about every line item of your return. Also during tax season, go to the post office near you and pick up the forms and some publication or go to the www.IRS.gov and pick up some forms and its instructions and start reading in order to gain knowledge about taxes. Most people need the instructions associated with forms 1040, Schedule A, Sch. B, Sch. C (if you have a self-employment business), Sch. D (if you bought/sold stocks, bonds, real estate properties, or carrying over previous years stock losses,…), Sch. E (if you had rental real estate property), Form 4562 (relates to Sch. C and E- if you have self employment or rental real estate depreciations to include vehicles/trucks), Form 8829 (if you used your home for your self employment or rental property management), Form 2106 (if you are a w-2 employee which some of employee related expenses were not reimbursed by your employer OR you were doing job search and had job search, interviews and other expenses to include vehicle, meal, travel…)
2. In my previous articles, I mentioned a website and a couple of books. One of the books was “Your Credit = Your Life, Fix It Now!” There is a CD included that describes some of the tax liabilities. You MUST read.
3. Take some classes and get yourself paid by doing your taxes instead of paying a tax preparer.
4. Buy a tax preparation book, read and learn.
5. While you are doing any of the above to increase your knowledge (about how to prepare your taxes), you can also call the IRS at 800-829-1040 and choose the option relating to tax questions (NOT the option about refunds or owing taxes). I know, a lot of people are afraid of calling the IRS because they think the IRS agent is going to reach through the phone or the satellite and get to the person claiming money. For that reason, since you don’t know if the IRS is going to hang you and shake you upside down to get all your money, then make an anonymous call. All you want to do is to get some correct information on how to prepare your tax return and a better understanding of how things work. So, call from a blocked number and don’t give your name. Since you want general information about how to prepare (not relating specifically to your tax returns), then the IRS representatives are not going to ask for your names or SSN.
6. MOST importantly, buy a tax software such as Intuit (Turbo Tax) or H & R block (TaxCut) software to do your taxes. Both of these software packages which are less than $30.00 each have all sorts of information and instructions and take you through “INTERVIEW” steps even in more detail than your CPA or Tax preparer would. Now, if you are not sure about a questions, you can read the pop up help instructions or call the IRS 800-829-1040 number and select the option about having questions on how to prepare.
7. You also have the choice of having you local IRS office help you prepare the tax-return. However, be careful. The preparing representative, may tell you that some of your expenses are not allowed. I had to argue with the IRS auditors, show them publications, etc. for them to see it my way. Therefore, I do NOT suggest you taking your tax return to the IRS rep. (if you have many sources of income and deductions) to prepare. You can have the IRS prepare your return if it is very simple, if you have low income and a lot of mouths to feed (dependents). I assure you, the same way that some of the tax preparers and CPAs are clueless, some of the IRS representatives who provide information and prepare taxes may also lack full knowledge. This is based upon my extensive experiences researching information for others.
SO. Whatever you do, learn about how your taxes are done so that you will know what to save, spend or store during the year. Buy one of the software packages I talked about under paragraph 6 (above). They take you through a step by step interview and teach you as they ask you detailed questions. If you still have some unanswered questions, then call the IRS help line.
Now, when you call the IRS, you must know the best time to call. If you are calling during the tax season, expect to stay on the phone for a minimum of 20 minutes before you get started. If you call in the evening when everybody else is calling; again, expect to remain on the phone for a long time. The best time to call IRS for questions (whatever your question may be –refunds, amount owed, or preparing) is either in the morning and Saturdays and Sundays.
When you call the IRS to get some questions answered and do not want your number revealed, then block your number. The bottom line is when asking tax preparation questions, the IRS agent will not ask you for your name, but every agent will provide his/her name and ID number. For consistency of receiving correct information, write the person’s name and ID down and if you are not satisfied or think the answer may not be correct, then call back, you’ll get someone else then ask the same questions and compare. I’m certain you’ve heard about the “Second Opinion” concept.
Now let’s say you are not sure if you correctly prepared your return. In that case, print it, take the return and all your supporting documents that allowed you to do the return to your tax prepaper, tell him/her to review the information in detail and even offer to pay, or pay for time to review. This way, you will know how good or bad you have done. IF you made mistakes, then you can correct those mistakes and learn new things for the following years.
There is so much more to say about tax preparation, your preparer, your refund or taxes owed. It would be impossible to address all here. The book, I mentioned, “Your Credit = Your Life, Fix It Now!” talks about refunds, some scams and tax liabilities. The money you spend buying this book is minimal in comparison to the knowledge you gain.
I hope this information has been helpful.
With best wishes,
Mike Samadi
Any questions? Go to Q & A of http://www.MasterCreditRepair.net, read and post. Go to the “Comment” page and post your story or comment. Your personal information will remain confidential. Joint my membership club (coming soon).
A lot of people don’t realize their ability and potential to negotiate, do their tax returns or even how to expect to receive their refunds. Referencing my previous article where and when I said: “I repeatedly use the expression that “lack of knowledge costs a person a lot of money” or “knowledge is wealth.” I interpret this expression by saying, “scammers see your lack of knowledge as PRICELESS.” The book I wrote costs about $25.00 but WILL save you so much in time and money, giving you so much knowledge so that when you get fraudulent calls from collection agencies or even those so called “debt consolidation”, “debt reduction”, and “debt management” companies or others, you will be able to immediately recognize the scams and fraud. In the “Fraud Watch” article, I will give you examples.
Most of us are scared of IRS because the fear the agency created or the horrible stories we’ve heard. Scares come from the facts that most people lack knowledge. Besides the fact that the IRS is a fruit of several rich individuals to create shelter for the government so on and so forth; you must understand that the IRS agents (who you as a taxpayer deal with) are not only easier to work with than most customer service representatives of credit card companies and banks, but also are more helpful and understanding. I am not trying to take sides, but have dealt with a lot of them.
I have seen a lot of people that pay the IRS a large sums of taxes because they don’t realize the mistakes their taxpreparer makes/made. I don’t care if a person claims to be a tax-preparer or even a Certified Public Accountant (CPA). I have seen several CPAs’ work that cost their customers-clients unnecessary tax expenses, because of their mistakes. In fact, I had to rescue several people from paying over $20,000.00 to $50,000.00 taxes to the IRS because their accountants did not include a lot of their legitimate expenses (such as education loans/expenses, business expenses when business income was included or so much more).
Now allow me to explain this a bit differently. Of course your accountant does not have a crystal ball to know what your expenses were the year past before he/she prepares your return. I have an expression for Crystal ball. When someone asks me a question that requires guessing or predicting, I tell that person, “sorry, my crystal ball broke several years ago.”
Your CPA’s crystal ball must be like mine. Therefore, you must help him/her to do the best job possible for you. There are some clueless preparers (no disrespect is intended); however, one thing I noticed that most (90%) CPAs or even tax-preparers don’t have is AN EFFECTIVE INVENTORY OF ALL YOUR EXPENSES AND INCOME.
Let see, what do I mean by that. Tax season is right around the corner and most people “assume” (you don’t know how much I hate this word) that we’ll do the same way as did last year. Just because you or your CPA makes the mistake of preparing your return incompletely, don’t blame the IRS for your lack of effort in your tax preparation. The IRS says, do what you can do to maximize your benefit as long as you are truthful and don’t fudge numbers. OKAY. The IRS says take advantage of your refund and reduce your liabilities in the best method available to you as long as you are not deceitful. Some tax-preparers are deceitful and some are honest. Some CPAs are clueless and some are knowledgeable. However, the bottom line of responsibility FALLS ON YOUR SHOULDERS. If there is something wrong with your tax return, even if the tax-preparere or CPA signed the tax return (below your signature), the IRS contacts you (ALWAYS through mail the first time) for any inaccuracies. I hope I am clear on this.
Let’s go back to the “Crystal Ball” issue. You have been going to the same tax-man/woman for years. You take some papers to him/her to do your tax return. He/she tells you are going to receive so much refund or going to owe so much. You blindly say, “OK. Yes, Sir/Mam,” sign the documents as he/she instructs and send it out/file it… Neither you (an uninformed person about the tax laws) nor he/she bothers to ask you if your lifestyle, spending habits or any situation has changed over the years. So, he “ASSUMS” you have no changes from the years past. You are at fault for your own losses by not sharing any changes. For that reason, I had created a six-seven (6-7) page inventory sheet (called expense report) which I provide to a few of my clients before I talk with them. Although I don’t prepare tax returns, but (as said before,) I have rescued a lot of CPA and tax-preparers’ customers from massive tax liabilities to the IRS (at no direct fault of taxpayers, but their preparers’).
I told a couple of my clients whom I’ve helped with credit issues, I don’t want to do their taxes (especially if they do not have any problems with the IRS or state). Therefore, I give them my “Expense Report” and explain the line items of the report. I even mention to them that some of the line items are for informational purposes only or that a CPA or tax-preparer may not be able to use the information if they are not self employed and/or don’t fall within certain categories. Of course, I knew these people’s entire financial as I have reorganized their entire financial life (except stocks, bond, life insurance and a few other long term investments). Sadly to say, when they filled out the sheets and took them along with their w-2’s, 1099s, 1098s, and other supporting documents for the purpose of tax return, their CPAs said; “there was no need for that…” and handed them a two page expense report which did not cover most of the important issues. The clients came back to me with those reports and I had to contact the CPAs in order to make certain that the expenses are accordingly covered.
Dear wonderful taxpayer. There is nothing wrong with you claiming all your legitimate and legal deductions and maximizing your refund or reducing your liabilities. The IRS doesn’t deny you, but says, “be honest.” Until the day you become an expert and are capable of fighting the IRS (by not paying any taxes), you are a small fish in a big pond and must pay your taxes accordingly, but maximize it to your benefit (as allowed by law).
Allow me to share a couple of arguments I had with the IRS managers and even the U.S. attorneys representing the IRS interest.
1. About filing status: The IRS says, use the best method of filing your tax return that benefits you. It even includes the first thing on your tax return “Filing Status.” I had a client whoes CPA worked on the families’ tax returns and marked the return as “Married Filing Jointly”, when the best result for the family was married filing separate (as they were for the last 7 months of the year). Of course, itemized deductions were involved. The CPA caused this family that had two young children (in day care) to pay a little over $1,000.00 in additional taxes on their tax return when they had already paid nearly $8,000.00 of tax withholdings to the IRS through their W-2 on their nearly $85,000.00 W-2 and retirement distributions income. The client came to me on some unrelated issue (mortgage loan consulting). I asked to see his returns for the past two years (for informational purpose– w-2 employs don’t need tax-returns for mortgage loans…) and noticed many more mistakes the CPA’s had made (even on past returns).
I then discussed and decided to amend their most recent return and faced the obstacle of an IRS law stating, that you can change everything else but your filing status. As a result, I communicated with the Tax Payer Service Manager (TSM) and discussed the issue of the law. She addressed a publication that contained filing status tax law. Then, I diverted her attention to another publication that was thicker and had more details. I explained to her that she needs to reconsider her words as a) the mistake was not at the fault of the taxpayer but a CPA who is authorized by the IRS to do such “crappy” work and b) that the law does allow changing the filing status under particular situations. She then argued, “but they signed the return…” I had to corner her by asking her a question that would put her in the taxpayer’s shoes when and where she needed to rely on the expertise of a third party… She had nothing further to say and my client received a refund check of a few thousand dollars a couple months later.
2. My tax Audit. In 1993, I purchased a property in Austin, TX (several years after I left TX). The property was purchased sight-unseen (as I was in GA). Relying on the words of a “Real Estate agent” who I thought I could trust, was a horrible thing to do. Not until after the purchase and my visit to the property did I realize how bad of a shape it was in (as opposite to what the agent led me to believe). After spending a massive amount of money to repair the property myself, I sold it for a bit of profit. However, the IRS hit me with a little over $51,000.00 of tax liabilities for 1993 and 1994. Through the years of audit (1997 through 1999) and providing a lot of receipts and my appeal, it reduced the claim to over $25,000.00. Then, finally came the Tax Court. During my communications with the U.S. attorney who was defending the IRS, I learned a few things. But before I get there, allow me to explain a couple of things about myself. They are: 1. Not until this issue, did I ever know how or what to do about tax returns. 2. My 1993 and 1994 tax returns were done by a CPA and amended by a tax-preparer before my audit nightmare began.
Now let’s see what I learned from the U.S. Attorney representing the IRS. 1. This wonderful lady was telling me that she represented the IRS for over 12 years and she knows the tax laws very well. 2. She was disallowing some of my receipt because some receipts were faded. Please note that the audit and Tax Court issues are taking place in 1997 through 2000. 3. She was telling me that just because I have cancelled checks showing that I paid for some of the expenses, those are not considered receipts.
When she made the remarks about the canceled checks are not sufficient, I had to stop her and tell her the exact words as: “Ms. ???, I now realize that you need to go back to law school, because you must have missed a few things before you graduated and took your bar exam. You are doing injustice to the IRS.”
She was stunned, surprised and silenced for a minute. She didn’t have anything to say. Then I continued by asking her: “You live in Charlotte, Is that Correct?” She responded, “Yes.” I asked, “let’s say that Duke Power disconnects your power, you get home and learn that you are the only one in your neighborhood who does not have power. You call Duke Energy being angry of its mistakes. The company representative responds by telling you it was disconnected for non-payment. You argue otherwise. The rep. tells you to prove that you paid. What do you show for proof?”
Take a wild guess what her answer was. That’s right. She said, “Canceled check.”
So I acted as though I had a hearing problem and asked, “What did you say?” She repeated her response and then she became very quite. So I had to break the silence by telling her to stop with her double standards. She then agreed to accept my cancelled checks.
However, it did not end there. As I was recovering some more of the 1993 receipts, I marked some of the very faded ones by placing circle around the date and dollar amount and wrote the information outside the circles. During the first hearing before the Tax-Court, the Judge asked, “do parties have any comments or objections before we start”. The same attorney along with her partner immediately jumped to object my receipts by calling it “tampering with evidence”. The Judge was shocked and asked for the evidence. He looked at them and asked me, “Mr. Samadi, what do you have to say about this?” Since I did not know what the attorneys were talking about, I asked the Judge if I could view the evidence they were addressing. I was handed two receipts. Immediately after looking at the receipts, I started laughing. The Judge was surprised and asked about my behavior. So I explained: “Your honor, I was trying to avoid giving the government representatives eye-ache and headache by rewriting the figures outside the circle so that they would not need to squint to figure out what was on the sheets.”
The judge looked at them and said. ”Is this all you got? Go and work out your deals. I do not want to see you about this case.”
So here we (the U.S. Attorney for the region, the two (2) assistant U.S. attorney, the Appeals Manager, the then retired Tax-Auditor and I) went at it again in a conference room. When we finished, they agreed to write me a check based on my w-2 withholdings.
The moral of the above two TRUE stories. A. Stay stupid and pay for your ignorance. Learn about your life and finances and prosper. B. Do not give up when you have a fight ahead of you. C. Just like if you were going to have brain surgery, you would need to get a second opinion. Do that with all your financial issues (especially taxes, life insurance, stocks and other investment, mortgage loans and big ticket item purchases).
Again, stay ignorant and pay the price.
I hope you are enjoying these. I will expand on this and the Tax Preparer Scam issues in the next article.
Mike SamadiAny questions? Go to Q & A of http://www.MasterCreditRepair.net, read and post. Go to the “Comment” page and post your story or comment. Your personal information will remain confidential. Joint my membership club (coming soon).
I haven’t filed my personal tax returns for the past 4 years…I own a small business and have recently been divorced. I need help..am unable to sleep at night from worrying about this. Do I contact a tax attorney or someone with the IRS first? Haven’t received any correspondence from the IRS, but am just waiting and worrying! Please don’t tell me what a stupid choice I have made…already beating myself up daily. Just want to resolve this issue and move on. Thank you!!!
First of all, you need to decide whether you can deal with IRS tax debt issues on your own, or you require specialized help offered by IRS debt and settlement companies. IRS debt settlement companies employ a special team of IRS experts, whose services cost a lot of money, if they’re hired on a private basis. However, when you engage with a particular IRS debt settlement company, the services offered by these individuals are “incorporated” or “included” within their “package”.
Tax debt relief is the best solution that digit can go for if he or she has failed to pay the taxes in time. There are several tax debt ministration agencies that offers extend settlement plans so that their clients may come out of their debt quickly. They have specialized professionals who work round the timekeeper to help impossible their clients. Government also on the different power has umpteen victuals for the people who have their taxes due. An underpayment is easier to pay back than the mortal who has just refused to pay the money. With the help of a professional intermediator one stool reduce his or her payable assets to a small fee, which will enable the governing to get back a apportionment of the money that is owed.
Tax debt relief hawthorn ofttimes ring for legal proceedings that is why a proficient attorney who is modified in this field is indispensable. The professional professional can aid to seize the relief without imprisonment. Whatever the reasons be, taxes repayable are ever offensive in the eyes of law. The tax collectors in the introductory mitt beam legal notifications which if not answered leads to the continuance and the professionals physiologist appendage these situations.
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One, is retaining an IRS Tax Attorney online or locally. When you are in trouble with the IRS or being audited, the one thing that you do not want to do is go into their office alone. Hiring a tax attorney is not only necessary it is critical since they are lawyers who are specially trained in tax law and tax related issues. They can assist you with both state and federal tax problems. It important that you have a tax attorney that is well informed with all the tax laws.
When you get the letter from the IRS, the word AUDIT just jumps off the page. Your heart beats faster and you begin to panic. Many people do not realize that having a tax attorney will help alleviate that overwhelming feeling of dread and help you sleep better. Tax law is not to be minimized and representing yourself against the lawyers employed by the government is, in word, just foolish.
A qualified tax attorney is well trained in dealing with the IRS and may negotiate you out of any tax problem you may have including a IRS levy, tax lien or tax debt since he or she knows what the tax laws are. You may end up with little or no debt to the IRS.
When you are in debt to the IRS, as thousands of Americans are every year, a tax relief attorney can help alleviate any debt you may incur. You don’t want just any lawyer with a J.D. following their name, tax law should be the only focus of the attorney, and he or she should be able to a resolution to your tax problem.
It is important that you find the right tax attorney for your current situation. There are two different categories personal and corporate. Each is experienced in the area of tax law that is specific to your needs. Each will assist you in avoiding the maximum penalties that the IRS can impose. Some research online will yield websites you can quickly find a prospective IRS tax attorneys in your area if you don’t have one in mind.
Tax attorney fees will usually cost more than a regular attorney, however, it is in your best interest to find one if you are in trouble with the IRS. Do not be fooled into thinking the auditor is there to fix your problem, their sole purpose in life is to take what they think belongs to the government and a IRS tax attorney’s sole purpose it to prevent it.
What is great about a attorney specializing in tax law representing you is that they know every loophole in every law and will use it for your benefit against the IRS should the need arise. If you find yourself in a complicated situation and the IRS is hounding you, it is a good idea to consult a IRS tax attorney online or in your area as soon as possible for. You will be glad you did.Visit Herehttp://gov-debt-grantbenefit.blogspot.com