What To Do With 1099 And Other Tax Forms By Cash Tracks Financial

Tax Tips From Marcelino Dodge, Owner Of Cash Tracks Financial Inc

Transcript From The Tax Answers Advisor On Voice Of America Podcase

Marcelino:

Good day. And I welcome all to another exciting tax episode of The Tax Answers Advisor with Marcelino Dodge Enrolled Agent on show number 55. And man, I just put out my appreciation there for all those listening around the world. I will be posting a video of this later on the Cash Tracks Financial Inc. YouTube Channel, please subscribe to that page and check out one of our other programs that’s on that page because we’re just like putting out great information for you. Also, some may be aware now I’m also broadcasting this live as I’m recording here on my Facebook, Cash Tracks Financial Inc Facebook page. So, we’ve got a lot of good information there as well for you to be able to look over and keep in touch and keep informed of what’s happening in the tax world. I invite all to give me a call to have a free mutual exploration session, just take a look see if my tax planning and other year-round services are right for you, which is the great part about being an enrolled agent is that I can serve you no matter where you are in the United States, we can do it completely virtually, through a virtual meeting or E-signatures, all of those services are available to be able to help taxpayers to save and pay as little taxes as possible.

And this is whether you’re an individual, or if you’re a business owner. Please give me a call. It’s 844-394-4287, email is Success At Cash Tracks Financial. And you can also please visit my website, which is www.cashtracksfinancial.com. A lot of great information there, on blogs and so on. So, you can just continue to get wonderful information and be informed about taxes. And so, we can do whatever we can do to help you to pay as little tax as possible and caviar business organized. Yes, we’re going to talk about today for you.

What Is The 1099 IRS Tax Forms?

What is this 1099 that I received these letters, “MIAC”, “NEC”, “DIV”, “K”? And a few other topics we’re going to discuss as this program goes along, because there’s a lot of information out there and many people have perhaps already filed their taxes as of the date of this recording. But we’re still going to discuss some very important items because we some people maybe are getting their W-2s late or maybe some have filed. And I’ve already received now, wait a minute, I got this 1099 Oh, wait a minute I work I did some work for these people back in like the summertime and I’m getting this 1099 What am I supposed to do with this? Do I have to pay taxes on it? What’s the deal here? or perhaps you did some type of work that you knew you’re going to get paid a 1099 on. And maybe there’s some prepares. We don’t know all the rules of perhaps exceptions, that you can take to get some expenses so that you’re not paying just full self-employment tax on it. Because that’s the key point when you have a 1099, you could be paying self-employment tax on that which if you don’t understand what self-employment tax is, what self-employment tax is, is what would normally be withheld out of your check if you had a W-2 plus the amounts that the employer matches or would normally match for you if you are an employee.

What Happens When You Are Self Employed

When you’re considered a self-employed person, which what many who get it like a 1099 in ECR, you pay both sides of that, and it’s around 15% is what it adds up to have your net profit. And so, there’s a few little tweaks and twitches you can do in there. So, to be able to have some expenses, although you’re not paying full self-employment tax on that as well as if you know you’re going to get paid that we’re going to talk a little bit as well about you know, you need to talk to a tax professional as to what exactly you need to do so that you can plan and be able to pay as little tax as possible as well as be aware of what expenses you can take. Keep in mind that if you work for an employer, well, I will say work for a person or an individual or a business and you do get paid more than $600 You will get a 1099 of some sorts from them or at least you should get a 1099 and many who have a tax professional that they’re working with will have a 1099 issued out just for their sake because it could be having to deduct or trying to do got that on their taxes.

What Should I Do About A 1099 Form

So, if you receive that, you do need to claim that as income. And certainly, you could be sitting there asking, well, I got this 1099. But I don’t know what to do with this. What expenses can I take? Well, can the software help you? Can a tax expert help you? Well, I don’t know. But what I do know is that if you’re expecting such a form, or if you’ve already received such a form, and maybe if you filed and received that form, you need to talk to a tax professional we talked with to your friends over there, or this person that does taxes on a part time basis, what you need to be doing is speaking to a really good tax professional, who can sit down with you and go over and mention Okay, do you perhaps have this expense? Do you have? Did you have this gone? Did you keep records these kinds of suggestions, so that you can pay as little tax and not just have to go with the full boat of 25 or $30,000, may be on this 1099 which unfortunately some people will have to because they didn’t plan ahead which is what I encourage through this program, encourage if you just know, if you have any inkling that you’re gonna get paid on a 1099.
Or if you know, right up front. First thing you should go and do is go and talk to a tax professional and know exactly what you can do so that you’re not going to pay full amounts on that. So, when you get that 1099, there are expenses you can take, what expenses can you take? Well, I really depending on what you’re doing. I mean, you may not actually be in business or conducting business, but you are earning income. So, there could be some expenses that are allowed as a result of earning this income. And that’s what some of the IRS guidelines and rules actually can provide for you some expenses. So, what expenses can you take to perhaps offset that 25 to $30,000, that you received on a 1099 or even a $40,000? Well, it really depends on what type of work you’re doing. For example, if you are a truck driver, and you’re being paid on a 1099 which is very common in the trucking industry, what you can one of the ideas many truck drivers know this is that there’s a per diem for transportation drivers that you can take for days away from home and travel away from home.

And that really helps truck drivers on a 1099 basis as well as other little expenses that a truck driver can take. Now say for example, you are a person doing home care for individuals. Are there expenses you can take for that? Well, first thing I would suggest if you’re going to do that is think about having or creating a spot in the home that can be considered the office in the home. Because what happens a lot of times and I’ve already seen that in this tax season is that individuals are tax preparers will say, well, you can’t take the mileage on that because it’s called commuting mileage. Well, first of all, we got to think about what is commuting. Well, commuting is going from your home to your primary place of business. And as normal sole proprietors or some sole proprietors who have like a storefront, for example, they’re operating their store, and they go from their home to their store while that store is their primary business location, so that the miles from their home to their storefront, those wouldn’t be deductibles miles, those would actually be commuting miles because they have a storefront like me personally, if I was a sole proprietor, when I travel from my home to my office, my office is my primary place of business. I wouldn’t be able to deduct those miles.

Travel Deductions

But when I travel from my office out to go visit a client, or perhaps traveled from my office to go to like some tax event education, those kinds of areas, those miles would be deductible. But from my home to my office will not be deductible salaries, got to go to my office first. Now, what’s the difference here? Well, we see that some will argue that about commuting but what if you don’t have a storefront? And what do we have to define here? Well, once again, I’m thinking about travel and mileage auto expenses mean is what I’m talking about. It’s particularly at this time, and I mentioned commuting as between the taxpayer’s home and regular workplace.
Then there’s travel, which I mentioned a little bit about those expenses incurred while traveling outside your tax home which is what I do many times when I’ll travel from my home up to perhaps Denver, Colorado for a tax seminar. That’s outside of my tax home because my tax one was in Southeast Colorado. And then of course there’s transportation getting from one place to another, which essentially would be like traveling from my office to a client’s location or a client’s business which could exactly be what you’re doing. You could be traveling from your office to your client’s business. However, what if you don’t have a commercial location? Like, like a retail location? Or like what I have with my business, a commercial building location that I What if you don’t have that? Where is your regular place of business?
While your regular place of business can’t actually be your home, and the IRS rules and exceptions have a rule or an exception that allows your home to be your principal place of business? But what do you need to have that as your principal place of business? Well, you need to have an office in the home, which if you’re going to understand that you’re going to receive a 1099, this is an ideal way of to deal with that, is that it’s you got a principal place of business tests. So, what you need to do is set up a spot in your home, where you will be doing administrative work, management activities for whatever activity you’re going to get paid the 1099 on. And spot it can be just like a spot in the room, doesn’t have to be a whole room just be like a four-by-four spot in a room or is it okay? This is where I take care of management activities.

For, say, this healthcare work that I’m doing, it’s gonna use access when I that’s when I encounter a lot. That’s, that is your primary place of business. And when you leave that primary place of business, to go and serve your clients out, say they’re 10, 15 miles away from you, then yeah, you can deduct those mileage. But what also if you make trips to perhaps pick up medication, or maybe you do shopping for them? That’s part of conducting business, that’s in your business. So yes, those miles would be deductible. And once again, saying that your fixed location of business is would be out of your home and thus, you get the home commuting exception which is to me often overlooked by many tax preparers, because they just see oh, wait a minute, that’s commute. Certainly, that’s something we don’t want to overlook.
And we always want to keep in mind when we’re dealing with our clients and thinking about that now, but the client has a responsibility. You as the tax payer have a responsibility when you’re conducting such activity, keeping a good mileage record log on your vehicle, especially good to have a record at the beginning of the year. This is where my mileage started today, this here’s the date. Here’s my beginning mileage, here’s my ending mileage. Here’s where I traveled to, here’s who I cared for today, here’s the activities that I did have it as detailed as possible, is what is strongly recommended. And then also have maintenance records through third party verification. So, through the year, we all get our oil change in our vehicles and we take it to a service shop that service shop always takes the mileage down. I know I work with the place I go to they do that they take the mileage down when the and it’s on the receipt of when the date and the mileage of when the oil was changed on it. Or if you have other work done the hours, put the mileage down.

Keep Good Records

So those are good records to keep as well. When we’re wanting to do mileage as a part of any activity that we’re doing. So please just keep that in mind of how important it is to do that. And yes, you can do that. Now, sometimes ones will argue well, you were reimbursed for your mileage on the 1099. So, you can take it, well wait a minute, they added to your income on the 1099. And they reimbursed you at say 50 cents a mile while the federal rate is 56 cents a mile for the tax year 2021. What we need to keep in mind is that you’re paid on a 1099 You’re not an employee, you’re an independent contractor. So yes, you can take that mileage, even if you were reimbursed for that mileage. And if your tax preparer is saying no, you can’t. My suggestion is, find a tax professional who really knows the rules on that and can talk to you about this idea of the home, office commuting exception.

Because more than likely you can probably take that mileage. So, then the next question comes up is perhaps what is included in that mileage deduction. What does that have I’ll cover, well, that covers the depreciation on the vehicle, covers maintenance and repairs, it covers fuel, it covers registration, and insurance fees, all that’s covered by the mileage in one little area. So, you don’t have to keep records. Now, keep in mind that if you’re an individual that was taken actual expenses on your vehicle, you got to keep a mileage log anyway. So regardless of what you do, or what you’re gonna do with your vehicle, you have to keep a mileage log. Now, some points that are not kept, as part of it is the interest and personal interest. Like if you’re paying interest on the vehicle, you’ll be able to take a percentage of the interest based on the business amount of the mileage, also personal property taxes, parking fees, and tolls, if those apply in your area, it’s I can’t stress it enough, keep a mileage log.

And when you go to start to work for individuals, it can be agriculture because it’s real common if you’re in agriculture or working in agriculture for farmers to go ahead and pay you on a 1099. So just be aware of that. Also, perhaps a new business, a new small business is starting, and they haven’t quite set up a payroll yet, and they’re really watching their pennies. And they perhaps pay you on a 1099. That’s another area that you need to be aware of, and be cautious about. And once again, talk to a tax professional about it, if you’re gonna get paid on a 1099. That’s what I always recommend to individuals, when they get started or when they’re gonna get started. Is that what they need to do? When you start with someone, always make sure how you’re going to be compensated because that affects your taxes. And if you have a question about that, don’t talk to your neighbor, don’t talk to your personal viewer who you think he knows taxes or don’t talk to the employer, or the person you’re gonna work for. Talk to a tax professional. See, that’s where it is so important that we hear these all these advertisements for this, do it yourself software.

How Professional Tax Preparation Should Help You

But yeah, what help do you have through the year? What person do you have to contact through the year, be it virtually through a meeting, which I offer and make available to the clients I work with? Or someone to be able to call up on the phone? Or to go visit in their office in person? See, can you talk to those individuals? Right, you can do a lot of research online. And there’s a lot of information out there on the internet. But once again, is it correct? Is it accurate? Does the person really understand your situation? Does that article understand your information? Does that article ask you questions about your situation? And so that’s one of the areas that I always just really stress is that why it’s to me, everybody needs a tax professional, someone that they can go to not just a tax preparer, but a tax professional, one who can help them to really keep up on their tax situation and keep them informed on their taxes and be able to work with them year-round.
Now that really helps out with a 1099 any see and there’s other expenses that you may have that you can take, perhaps there’s office related expenses, maybe there’s a little a few supplies you bought, if you’re doing this on a regular basis actually, the tax preparation fees that apply to that portion can be deducted from the business. Maybe you have some incidental repairs and other supplies that you purchased. And there’s a lot of other little expenses that can come into there. Which is why you need to talk to a tax professional, because you may be surprised what you can take in such situations there. So just please, if you get these 1099s, don’t just go with what the person that is telling you there, make sure you find a good tax professional to help you through it. And now a little tip here that I tell you is that most people don’t realize is that you take your information into a tax preparer.

And they give you the result, you know, you’re not obligated to file your taxes with that person just because you gave them all your information. They have all your documents; they did all that work. You’re not obligated to sign anything with them. What you can do is you can actually say okay, well, thank you for your assistance in this matter. I don’t agree with your result. Please give me back my documents. I’m gonna go get a second opinion.

That is really something that as many taxpayers do not realize and do not know. In fact, I just spoke to a person already this season, who had filed with another person or another place. And I said, well, did you know this? And he looked at me and says no, I did not know that I did not know I could just get up and go elsewhere which you can, I had that happen to me people have not agreed with the information that I, or the conclusion that I came to on the tax return. So, they say why, like I said, Okay, here’s all your documents back that is my company policy, here’s all of your documents back because it is your information, it is not the tax places information, it’s your information, your W-2s, your 1099s, whatever other information that you brought into that office, that is your information. And what you can do is you can take that information, and go over to another tax person attacked a true tax professional, and get a second opinion on it. So don’t be afraid now, because of all the tax person.

How We Work For You

And even myself, my obligation is that if you choose not to you file with the information that I provided there, based on the returns I provided, I don’t provide you with the tax returns, I give you back your information. So that’s what most tax people will do. And that’s what a true tax professional will do is that they’ll say okay, well, that’s fine. Here’s all your paperwork back, I truly appreciate you coming in. And I always try to and work hard to treat people very professionally regardless of what their thoughts are, because everybody needs to be treated with dignity and respect. And that’s how I do business here and do business with everybody. So just keep that in mind. So whatever tax person you go to, if you don’t like the result, you don’t have to stick with them.

You don’t have to file with that place, you can just take your information and go elsewhere. And the reason that is good to do, especially in these IRS situations, if you don’t agree with the result, you don’t want to have to file an amended return, you want to make sure you get it right the first time and get it right. So that if you have a refund coming, you’re not waiting any extra for that refund because of having to file an amended return. So just be aware of those little deals. Keep in mind too, that maybe if you’re renting out rental properties, or if you’re renting out commercial properties, you could receive a 1099-MISC for rental income. And I see many of these most people who get rentals understand, yeah, I’m gonna get rentals me, if they’re doing rentals of some sort, they know they got expenses that they can take. But yet we help with that. And it’s good to again, to talk to a professional about that, sometimes you got other areas that hidden there, like other income that comes into place as well.

So please keep that in mind, then you get 1099-DIV, that’s your dividends, qualified, non-qualified dividends. If you’re invested like in mutual funds, or maybe stocks and bonds, you get these 1099 dividends, which if you get those, just make sure you include those in and those usually take a while to get from the various companies. Then, of course, the one that I always caution people on that I see often is a 1099-C. Some people will get these and just not worry about them or think that oh, we don’t really need to worry about that. Well guess what a 1099-C, which is a cancellation of debt of $600 or more those can come back and bite you, which is I’m very careful with those. Because you see these advertisements for these companies that say or you may get these mailings, they will help you resolve your debts. Now, I don’t know how honest and upfront they are. But whenever you’re dealing with anything, where they’re talking about cancellation of debts or reducing your debt, you got to be very very cautious about those. Because what sometimes gets missed is the fact that if they counsel more than $600 in debt, you could owe taxes on that amount.
And I’ve seen that happen, I see these 1099C’s, and people will come and say, well, why did they receive that? And I’ll just sit there and explain and say, well, did you work with some type of company that said they’d reduce your debt or they’d help you with your debt? Well, yeah, yeah, that’s Yeah, well, the credit card company is not going to just take that loss, they’re gonna, they’re gonna write it off somewhere. And they write it off as basically bad debt. But yet, you get this 1099-C from them that you have to claim as income for that amount of cancellation of debt. So, you got to make sure you include those. And so, it’s neither one of those areas, if you’re talking about talking to any company, or working with anybody about debt issues and cancellation of debt. Talk to a tax professional once again, because you want to make sure you plan appropriately for that, because it’s just going to be not good at the end of the tax year. If you all of a sudden have these 1099-Cs for 1000s of dollars, then you end up owing taxes because you weren’t properly prepped for those by anybody.

Got Tax Debt? Talk With A Qualified Accountant

So, what it comes down to as I’m talking about here is that no matter what you once again, no matter what you got going on anything to do with your money, before you talk to a bank or talk to an attorney, you need to talk to a tax person, you’d be amazed at how many things you can do will affect your tax and cancellation of debt is just one of them. Now, here’s an interesting point here. If you had a PPP loan, and it was forgiven, the IRS announcement 2020-12 said you should not get a 1099-C for that PPP loan forgiveness. Now, another area is sometimes individuals will get like a mortgage loan forgiven have a certain amount of forgiving on a mortgage loan due to their financial circumstances. While there is a provision in the tax code where you may qualify for forgiveness, on principle debt resonant, let me rephrase that may qualify for when you have residential debt forgiveness, this is under code section one away, you may qualify to get an exclusion have to pay taxes on that 1099-C.
And I can’t say exactly if you do or not. Or what I can say is that based on the rules, if that is your principal residence for two out of the last five years, that was your main home, as well as you own the home for two out of the last five years, there is, there’s a good chance you can get this exclusion, this debt forgiveness exclusion. That’s once again through code section 108 of the IRS Code. And I know this can happen because I have done this for individuals actually filled out that form and help want to get forgiveness for this type of 1099-C when they’ve had this cancellation of debt of not having to pay the tax on that cancellation of debt. So, it just varies from circumstance to circumstance where once again, having a true tax professional can help you to work through all of these areas there. Now something that you may have received and some people may be getting and maybe you filed your taxes already. But then all of a sudden you get this thing called a 1099-K.

Impact Of Hobby Business

Well, let me sit and ask you have you been selling clothes, a hobby and for just little hobby things you do maybe jewelry, or just about anything using one of the online marketplaces be it like eBay, Mercari or one of the other areas that you can sell your product, your stuff online? Well, last year in 2021, it was passed where if you sold more than $600 of basically product or pretty much anything online, you’re going to get a 1099-K So what does this mean? 1099-K? Well, he just means that you sold it basically it’s become a reportable event. You’re selling of your stuff, especially if it’s hobby income, you may not have to pay any self-employment tax on it, but you still got to report it.

And if you don’t report it, you’re gonna get one of those letters from the IRS who knows when, under the current circumstances but you could a few months down the road a year down the road, say, hey, you had $1,000 been reported income here, and we’re gonna charge you $100 of tax plus another 10% penalty and all this other. So, if you get a 1099-k, and you’ve already filed your taxes, you probably need to file an amendment and do some repayment there, at least that’s my recommendation, once again, a tax professional to help you to resolve those issues. Of course, many of our retirees will get a 1099-R for distributions from their retirement plan, or an IRA. Now, of course, if you did a rollover from an employer of your 401-k into an IRA, you’re going to get a 1099-R for that. So be on the lookout for that before you file. Also, if you had to take a distribution from your IRA, for a home purchase or whatever you’re doing, you may qualify for an exception to the 10% penalty.
But once again, you need to talk to a tax professional. Before you do these withdrawals, at least that’s always my recommendation, especially anything with an IRA or a pension, you need to talk to a tax professional to see how that affects your taxes. Because it can just be a tremendously bad effect on you, and can even jump you a tax bracket if you’re not careful. So, we certainly encourage you to be very very careful and cautious and always talk to your tax professional, before taking any money out of retirement plan, there may be a better option. And they may have other ideas of what you can do. Also, if you’ve left the job, when you have money in a 401-K, do not cash that out, talk to a tax professional before you cash that out. Because once again, it could be not good when it comes to state and federal taxes. Because sometimes they don’t hold out any state taxes on those which so you got to be just extremely, extremely careful. And so that’s once again talking to a tax professional before making these major moves. So that you can do right as well as there’s different things you can do.

Place Cash In An IRA

Maybe you’ve left the job, but you want to use the money. Maybe a better alternative is instead of cashing it all out, maybe a better alternative is first, to roll it over into an IRA, get full control of it. And then work with your tax professional, on how much to take out at a time. Maybe perhaps trick I’ve done with some is that maybe instead of putting it all in one year, maybe depending on the amount with the amounts you’re working with, maybe split it between a couple years, especially if you’re toward the end of the year. Or maybe if you can say okay, well, I’m gonna need X amount now. Well, I’ll just take out that amount now. And then after January 1, take out what you need then or maybe you will need it by that anyway, just some thoughts there of possibilities for you.
Now also this year, we’re keeping in mind and I’m reminded ones on several occasions about virtual currency transactions, you could be getting a 1099-B for those transactions from Coinbase or one of the other virtual wallets because every time you sell virtual currency that is essentially a tax reportable event. And there is a question specifically asked, did you buy or sell or get some type of interest in virtual currency during 2021? That is on the tax return that actual question. So, if you haven’t dealt with that yet, and you’re you haven’t reported your virtual currency, you need to be reporting it. Because they’re doing a lot of what they call John Doe Summons with a lot of the virtual wallets, coin base. And so be ready. If you haven’t been reporting, you could be getting a letter from the IRS at some point, saying you didn’t report this, we’re going to charge you taxes. Also, a 1099-B, like if you sold stock, or some other security, you’re gonna have a 1099-B as well for that stock to be able to report that and now you don’t want to be overlooking that either.

Because those once again, can come back and not be looking good down the road, if you don’t report those on your tax return. So, make sure all those transactions once again, you use a good tax professional to do that. And then others of course, there’s a 1099-S, for real estate proceeds. Yes. When you sell real estate, you’re gonna get a 1099-S, from the title companies and different title companies do a different way some issue it right away, some issue it right after January, so right into January, I should say. So just be aware, be looking for those if you sell a property, if you’re involved in any sale of real estate, always ask for this form. Because you don’t want to get hit later on going what in the world going on this and I have actually encountered this, where an individual has sold a home for whatever reason they didn’t get the 1099-S, maybe they forgot about I don’t know it just it’s a circumstance we’ll just say the IRS sends him a letter saying you received $300,000 on the sale of this home.

Factors Involved In Tax Obligation

Where’s the tax and of course, the IRS always assumes your basis is zero. So, they send you this huge bill that says you owe 1000s of dollars for the sale of this home. Wow, there’s a lot of factors that come in there. Of course, if it was your primary residence, you get the home, the exclusion of $250,000 single and $500,000 exception of gain that you can exclude on gain on the sale of a home. So that kicks in there, for some for a lot of transactions, those. So those aren’t even going to come in as far as gains for people, they’re going to be able to exclude it. But sometimes the title company will issue it anyway. And you just need to make sure it’s on your tax return correctly. Once again, tax professional will be able to take care of that for you. Or perhaps if you sold a rental home and you get a 1099-S, once again, you got to be very careful there and make sure that gets done properly as far as your basis.

And maybe if you’ve been renting out there’s an adjusted basis. So, there’s a lot that falls into there that you want to do. Because once again, you don’t want to rely on software. Just to do this, you need a tax professional because I’ve had to correct some tax returns on this in the past where people have relied upon software and just relying on the software, the software got it wrong. So, these are some of the 1099 that you can get are the most common ones, at least I’ve encountered. There’s a few others that perhaps you can get for various circumstances. But yet each circumstance is different. That’s why I just really personalized service with individuals to be able to help them to do what they need to do in paying as little tax as possible. Here’s some other reminders here. And many of you have received the 6419 letter for the Advanced Child Tax Credit, make sure that is right, review it. And if you are a married couple that received that just keep in mind that both of you should be receiving that form. Because if they split it up between the spouses on there, so just keep that in mind. Also, there’s the letter 6475 for the stimulus checks, which many of us could easily have forgotten those back issue. They’re issued back March, April, May of 2021, $1,400 per person. So, keep that in mind that you need those letters as well. Your tax professional should be asking for those. That’s on our checklist of information that we ask for on a regular basis when people bring in their information.

When Are My Taxes Due?

Here’s interesting fact about this year, April 18 2022 is Tax Day. These are always easy, these extended tax seasons. Well, I guess if you look at it, that’s actually kind of a shortened tax season compared to the last couple years. So, April 18 is actually early. But on the normal calendar, it’s actually late. So anyway, keep in mind as the IRS continues to work through this season, yes, they’ve issued out millions of refunds already this season with those who have filed and they’re starting to come in, trickle in as we go as we move continue to move forward. But sadly, there’s still millions of people waiting for their 2020 refunds. In fact, some individuals are having trouble filing their 2021 tax returns, because their 2020 Return hasn’t been fully processed yet. Now, many of those individuals trying that could probably avoid that issue if they use a tax professional. If you’re trying to call the IRS, well, I wish you the best, because they receive approximately 1500 calls per second on some days.

And the answer fewer than 20% of those calls. And whether it’s me calling or it’s been one of my clients trying to call them, I know that is absolutely true. There has been some reports I’ve seen where they have a two to 3% Answer rate. Now, keep this in mind is that the IRS is facing major challenges. We had a recent op-ed that was written by the IRS Commissioner Charles Rettig in Yahoo money, while the IRS is in a lot of ways trying to do the best that they can. And I’m not meaning to defend them here. But there are some challenges that exist. And part of that is 20% of their budget has been cut in the last 10 years. So, if you have less money, you can’t necessarily provide the service that you should be providing or, or could be providing. Also, here’s an interesting thought there’s fewer employees at the IRS back in the 70s than they had in the 1970s, fewer employees, even though the US population has increased by 60%. Also, we think about 90% of the returns are now electronically filed. But millions of returns are still filed on paper. And that takes time to process those returns.

Be Careful When Claiming Dependents

Now, sadly, I know that some of those returns are filed because of individuals who claim dependents, they should not be claiming. Yes, early in the season, I’ve already had this happen on a few clients where a dependent was claimed on their tax return that perhaps a former spouse has really no right to claim but they do anyway. And thus, my client has to mail in their tax return because of that. And so, it’s sad when that situation comes up. And sometimes they get processed right away. Sometimes they don’t. It’s just a matter of what happens and how quickly and what pile they end up in the IRS because there’s still unopened mail that we have. So, I absolutely encourage if you can file electronically, do it, you stand a much, much better opportunity of getting your refund on a much more timely basis there. So, we want you to be sure to also keep in mind that with less staffing that the IRS has and includes less staffing at Taxpayer Assistance Centers, so they’re not able to help you if you go to a tax center, they’re not able to help you is as good as a good in the past all because they’re also short staffed there. So, the question again comes up, how can I get through this tax season and be a little bit smoother?

A Professional Tax Preparer Communicates With You

Well, filed electronically use a tax professional. Use an individual or a place that can help you that asks you good questions and doesn’t just prepare your tax return, but speaks to you, talks to you, helps you to truly maximize your refund with good questions. And also tries to help you to pay as little tax if you’re in that situation by asking you questions, providing new suggestions, offering you year-round services. Now of course, I offer those services here not all my clients accept those. But be available, be available, have a person that’s available, you to use your-around. Also, direct deposit of your refund. Some people I understand they still like the checks, that’s their choice, but it’s going to take longer to get your refund if you do that. But use direct deposit completely if at all possible. Also, please keep in mind, pay attention again to those Advanced Child Tax Payments and Stimulus. Those notices, those letters you’re getting make sure you have those and all that keep those with your tax information if you haven’t filed already, and if you have keep them with your tax information anyway.

Now, another announcement that came out recently that some aren’t aware of is that there has been a suspension on some automated collection notices from the IRS including balance due notices unfiled tax returns. You still may receive some of these which I think I had a client receive one of these the other day, we’re still gonna check into it and see just to make sure what’s going on, because there’s still millions of original and even amended tax returns that haven’t been processed because of the pandemic challenges. So, the This is keep in mind, I don’t know how to ask to put up, we just got to get patient, if you’re still waiting for a refund, I mean, I got clients that are still waiting for refunds from last year. You call them and all they say it’s still being processed, which it is. It’s still being processed. So just be there. And because of our budget allocations and budget amounts, that’s why we have trouble talking to ones with the IRS. So, there’s budget considerations there.

How Can I Check For My Refund?

So, if you want to talk to anybody are concerned with what’s going on with the IRS, talk to those who create the budget for the IRS, use the “check my refund” tool on the irs.gov to check the status of your refund. And hopefully it says something other than still being processed. But usually, it’s going pretty good. Now, one thing I think most people don’t understand. Here’s the fact that as a tax professional, there’s a lot of scams that even come to tax professionals, tax payers have had a lot. But as a tax professional boy, I get these all the time. I haven’t seen this particular one yet, but the IRS is very good at sending out these notices, these warnings. This one is what they call a spear phishing scam that we were warned about, sends out a claim for apps that my account is talking to me as a tax professional, my account has been put on hold, they tried to make it look official with the IRS logo, they perhaps will try to imitate my software provider, which I’m very very cautious on any emails that come in, regardless of where they’re from, I delete so many emails.

We Protect You, Our Client

And when I take this extra care, it’s really to protect you, as a taxpayer making sure that you are properly protected, keeping your information safe, which is what my goal is all the time. So that’s why I always look at every email, I hover over things, I don’t click on stuff, I hover over it to make sure that the source of the email because so many times some of these do look official, but the source of the email is not a government website. So, it’s very, very, very important. That’s a precaution I take here to have your security and your confidentiality always maintained. Also, what I’m going to recommend at this point is that you as a taxpayer, it’s good to check your withholding. And what I mean is that you as a taxpayer, it’s important that what you do is that whoever does the payroll for your company, they’re going to put in the information that you put in on the W-4 form.

What you need to do though, is look at your pay stubs, look at your pay stubs and see okay, are they holding out federal tax? And if you’re concerned about the amount of federal tax or holding out, what I would recommend you do is talk to your tax professional and say, Okay, here’s my pay stub am I going to be okay? You understand my circumstances, you know, my situation? Am I going to be okay with the amount of taxes that’s being held out on my check? That’s what I recommend. Recommend you do, don’t talk to your payroll department, talk to your tax professional because a payroll department all they’re gonna do is they’re gonna put in the information that you put in off the W-4. And there’s charts there that calculate all of that from the IRS. So put that in.

And then if it’s not, if you don’t think it’s right, or whatever, well talk to your tax professional first. Have them go over your pay stub with you. And then say, Okay, well, you know, you need to adjust your W-4 form to this, maybe, instead of putting the 2000 Child Tax Credit on it, maybe put it down to zero, or maybe you need to put down here an extra $50 per paycheck to be withheld. Or maybe you need to adjust maybe the state, whatever state you’re in, some states have separate forms for that, and then you can put it on the state. So then yeah, do those deeds, this little steps to take to protect you, and to help you as a taxpayer till you can grab on, basically grab, grab the reins, and take control of your tax situation, by working together with a good tax professional. And when we’re talking about a tax professional.

What qualifications does a tax professional have? Is the type of business person you’re working with? Are they a CPA or an attorney? Are they an enrolled agent with the IRS? Are they doing the annual filing season program with the IRS? Those are the individuals that you need to look for. When you’re doing a tax professional. What kind of tax professional do they have a good history? What’s their background? Do they sign the tax return? See, there’s people that claim to do taxes but yet they don’t sign the tax return. With all they do is they go in, they’ll use like One of those free online tax preparation software is put your information in, and then charge like 25 or 50 bucks or whatever, but they don’t sign a tax return. Because at the bottom, it says, self-prepared. And that’s not the type of person you want doing your taxes, because I’ll just plug it in. And that’s just a taxpayer, you need a true tax professional, this individual that you’re working with, do they have the P-10 number or the repair tax identification number, which, if you’re preparing taxes, you are required to have service fees? Well, some charge, some low amounts, some charge outrageous amounts, it just really depends on what they’re doing.

So, you got to be very, very careful. Do they electronically file their return? Or do they come up with some reason why they can’t. So that’s something you got to decide I’m looking at, something our office does for most clients, we do provide them with the paper copy, but we also provide them with electronic copy. I don’t know exactly what happens in each situation, I don’t know, each office may have their own procedures, but you just need to be aware of good questions to ask. But in the port, one of the most important ones to me, is this tax preparer available year-round? Or are they only seasonal? I don’t know. That’s what you got to ask him. We pride ourselves on being available year-round, being available throughout the year, of course, I take a vacation that time.

So, I’m not always necessarily available. But I am available in general through the year you can call up and schedule an appointment to go over information and review things. And also, if you run into an abusive tax preparer need to report them to the IRS. And I stress this part about using a tax professional because it is just so important to have an individual that you can trust, that you can use that really is interested in you and a person not just running you through and getting you through, getting you done quickly. And just moving on to the next person there. We want to make sure that we look at you as an individual, we review, we plan for the current year and take a year-round approach.

Our Goal For You

That’s my goal with everybody I work with is to take a year round approach help you to establish goals, set up a good plan for you also offer as I mentioned, as I talk to people around the country doing virtual tax preparation, which is so easy to do now through meetings, virtual meetings, such as this through some type of online platform, having interviews, being able to get your signature electronically have you to be able to upload your documents because our goal here is to provide you the best service possible and to provide you the just do the best job for you on taxes and most accurate tax returns.

Contact Us If You Have Questions

So yes, I certainly appreciate all who listen to this program and invite all to give me a call here it’s 844-394-4287 you can visit me at Cash Tracks Financial Inc., email is Success At Cash Tracks Financial. If you have any questions about anything that I have discussed today, or about any of my other programs that I have had on all the other 50 some programs that I’ve run, you’re certainly invited to give me a call, invite an email me, let’s have a sit-down meeting let’s discuss what we can do to help you either individually or help your business to pay as little tax as possible and to be having a good and efficient accounting system. I want to express my gratitude to you all for listening today. And again, thank you to for listening to The Tax Answers Advisor with Marcelino Dodge on The Voice America Business Channel.

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