IRS Tax Accountant Q & A From Cash Tracks Financial Lamar CO

IRS Tax Accountant Q & A

From Cash Tracks Financial, Inc.
Owner Marcelino Dodge, EA

Tax Advisor Podcast From 10/07/2021 Continuation . . . Part 5

This tax advisor information is Part 5 from the podcast transcript originally recorded Tax Answers Advisoron VoiceAmerica on October 7, 2021. This program is presented by Marcelino Dodge, Enrolled Agent, owner of Cash Tracks Financial, Inc. Cash Tracks Financial is an accounting, tax services, financial advisory, business planning, and retirement planning, insurance advisory company located in Lamar, Colorado and serving all communities in Southeast Colorado. You can find out more on this ‎IRS Tax Accountant Q & A web page.

What Is Taxable Income Or Non-taxable Income?

Tiff:
Next question, what is considered taxable income versus non-taxable income?

Marcelino:
Oh, well, first thing I will say is cash payments, I will stress this cash payments received as a sole proprietor is still considered taxable income. Okay, they talk about paying under the table, well, whether it’s under the table above the table around the table, the IRS don’t care, its income. Sure. Cash, cash payments are as much as income as anything else when you’re getting receiving money for services rendered even as a self-employed person. So that’s vital now, okay, back to taxable. Now, of course, there’s many phases to this, which include wages, of course wages you receive as an employee, if you’re receiving interest on your bank accounts.

Capital gains from sale of property could be sale of property could be sale of stock could be all kinds of different things there. Now, one that also is there is an entity flow through income. So if you’re, you have a partnership or like an S corporation, that issues you a K1 out for your business, well, you should do a k one as, an part owner of the business while that income is also considered taxable to you. Now, the interesting part on that is you may, you may have say you have $5,000 of flow through income from an S corporation, you may not even have even gotten that $5,000 Or even touched that $5,000 or been distributed that $5,000. But it’s still taxable income to you because you’re part owner in the business.

Tiff:

Okay.

What Are Other Types Of Income?

Marcelino:
And there’s a lot of other facts that come in a lot of other types of taxable income, we’re talking like most many retirement plan distributions. IRA distributions you get. Now, some of these courts we’re talking have to be also over and above the, your filing status, like married, there’s the standard deduction, they also have to exceed that as well. But many in many cases, these do so it’s just some, basically and there’s a broad, broad definition for tax for even one thing that most people don’t realize that even scholarships amounts can be considered taxable income. And there’s a little trick you can do with those to help parents and students to get some, some tax benefits even though it’s considered taxable, but there’s some tricks in there I learned this last year that are really, really good with that.

Is Social Security Income Taxable

So in some circumstances, now, as far as non-taxable, usually Social Security is non-taxable. However, there are times when Social Security can become taxable depending on income pay individuals. Yeah, so it’s and I encounter. This was several people, your here’s a, here’s a fact regarding Social Security tax ability is that Social Security became taxable back in 1986. And the amounts they use to determine that whether it’s taxable or not have not changed since 1986 . . .

Tiff:

Really

Marcelino:
. . . is the same amount. So the percentage of people who pay tax on their Social Security has greatly increased between 1986 and 2021. It’s, it’s a fascinating fact, also considered like dividends from a municipal bonds, those, are usually non-taxable. And even that includes like a mutual fund as well. Now they’re used for other calculations, but you usually don’t pay tax on it. For the most part. If a person does foster care in their home, that’s an example. That’s, that’s like a reimbursement from the county to take care of the child, you don’t pay tax on that. And then like, if you get a reimbursement from your employer for, for some business related expense you have and your employer reimburses you for that. That’s usually considered non-taxable income as well. There’s a few other areas, but those are kind of some of the main ones to kind of, kind of get a little bit of that answered there. And the most common ones that that we encounter anyway.

Tiff:

Okay, that that makes sense. So the, like, the non-taxable reimbursement and stuff would be like, if you had purchased fuel for a vehicle on a business trip or something like that, the employer reimburses you is that non-taxable?

Marcelino:
That could be now Yeah, yeah, that’s an example of that would also benefit there’d have to be like an accountable plan in the business to do such setup to do that. So in certain cases, so but, yeah, basically something, something of that nature can be Yeah.

Should I Separate Income Types?

Tiff:

Okay. Now, when we do and things that I’m learning even more now, we separate out all of our expenses in our businesses into a lot of different categories. Does income get separated? Other than taxable non-taxable? Is there any other differences in how we separate areas income basically just income?

Marcelino:
For just record keeping purposes, I suggest having like the sources of income separated, okay, times on a tax return, I’ll go in and, you know, put because there’s just one line for income, like gross income on the tax write? Well, you go in for record keeping purposes, it’s not, it’s good to know, okay, well, we made like, for this type of service, we made this much for this type of service we made this much, which is usually that’s more like a profit and loss kind of statement is where most of those are because usually, we’ll just take that number right there and just plug that in on the tax return. That’s more that’s more in the bookkeeping area, then for the tax or as far as the source of the income there. Unless, unless you’re dealing with, like inventory. And that kind of adds another little quirk into it. But we don’t need to get into that.

What Is Depreciation And How Does It Work?

Tiff:
So this, this one has always kind of boggled me a little bit, and I and I have a little bit of an understanding of it, but when and on what is depreciation applicable? And Are there reasons to depreciate things as opposed not to on your taxes? Can you or not?

Marcelino:
Well, depreciation is we do a whole show just about depreciation, frankly. But that’s kind of the short and trying to get some stuff here. Depreciation is usually on equipment and property that has a useful life of over one year. And those rules have actually, I would say, lightened up over the last few years. Because now certain, certain items that you had to depreciate that were under $2,500, you had to depreciate, but now, there are the rules, there are rules that allow you to actually deduct these items that are under $2,500 or less, which is if they have a use long, useful life, but they’re under $2,500. Usually, you can just deduct them, without having to depreciate them, you, the business can choose to depreciate these items, but and they can actually make an election to say, Okay, we don’t want to do 20, we don’t want to expense everything under $2500, we want to expense everything only $1000 or less, and then you can depreciate above that there’s some electrodes that kick in there.

But when you’re getting into larger items that are over $2500, then usually, you do depreciate them over time. And that’s where on a case by case basis is ideal with a taxpayer, because you got to do what’s best for the taxpayer, not just in the present year, but you got to do it thinking ahead to future years, as well. And so there’s a little quirk in the law for property that’s for several years of property. Right now are at least up to 15 year property that you can take bonus depreciation on, which would be 100% deduction or your course, you can take section 179 as well, if you elect out of bonus Now, unfortunately, what many tax professionals do is that a certain item will come in like a vehicle or some type of foreign machinery? They’ll just come in and just take that bonus depreciation, or they’ll just section 179 off that depreciation that item immediately.

Now, you can yes, but is it the best thing for the taxpayer? Not necessarily. Because if a, if a taxpayer has, like $100,000 in profit, and they got that $50,000 piece of equipment, well, maybe, maybe take it off, take that $50,000 deduction on the bonus depreciation or the section 179, which actually, I’m more of a fan of section 179 than a bonus depreciation, but that’s just my personal preference as a tax professional. So in that case, I may take that, but if the taxpayer has only, like $25,000 of profit, and they got this $50,000 piece of equipment, if you take the bonus, you’re gonna have a $25,000 loss. And you’ll get no further benefit of that equipment. So what you got to keep in mind is that, and if you take a net operating loss forward, it doesn’t go against self-employment tax as well. That’s the other part that has to be considered. So what could be done is that you can either take that piece of equipment if you got to $25,000 or you can take like $20,000, a section 179. And then just depreciate the rest over time, so that you get some that year, and you get some in future years.

Tiff:
Okay, so

Marcelino:
Yes, I separate it out, because it really depends on the needs of the taxpayer, and what’s going to be good for them. That’s what it comes down to depreciation wise, which is I’m just not one size fits all and appreciation. So anyway, but you know, Tiff has been fabulous. You’ve had a great conversation here. Your questions, were just wonderful. And guess what? We’re running out of time. It just flew by, didn’t it?

Tiff:
It did. It did.

Marcelino
So you have any questions? I’m just gonna just talk to everybody have any questions about anything that came up today or even further questions, you’re always welcome to give us a call. It’s 844-394-4287. Success@cashtracksfinancial.com is our email address. And just so you know, now you could be talking to me or you could be talking to Tiff and eventually we will be so willing to help you and help you to schedule a free mutual exploration session just to come in and see, hey, is the services here Cash Tracks Financial for you, we want to help you and all taxpayers don’t matter if you’re, what part of the country you’re in.

How We Help You

That’s a great part of being an enrolled agent. We can help you get through it. We have excellent security, a secure portal to be able to send your information back and forth, cloud based software to help you on accounting and taxes. And so definitely here to help you out so we just want again, thank you so much for listening today. It’s been a beautiful session again Tiff. I thank you and appreciate you joining the team here at cash tracks financial so we’re gonna look forward to big things over the next few years as we endeavor to help people save money on their taxes. So have a good day all and thank you. We will talk to you again next week. Again 9am Pacific as always, as I thank you for listening to The Tax Answers Advisor with Marcelino Dodge on the VoiceAmerica Business Channel.

Tax Advisor Services

When you need professional expert IRS tax services, call Cash Tracks Financial Services, Inc. at our office phone number (719) 336-8739 or via our website Contact Us form at Contact Cash Tracks Financial

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117 W Beech St
Lamar, CO 81052
(719) 336-8739
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Tax Accountant In Lamar Colorado Cash Tracks Financial Inc

Accountant Tax Advisor Services Q &A

With Marcelino Dodge, EA
Cash Tracks Financial, Inc.

Tax Advisor Podcast From 10/07/2021 Continuation . . . Part 3

This tax advisor information is Part 3 from the podcast transcript originally recorded Tax Answers Advisoron VoiceAmerica on October 7, 2021. This program is presented by Marcelino Dodge, Enrolled Agent, owner of Cash Tracks Financial, Inc. Cash Tracks Financial is a tax advisor, tax services, financial advisory, retirement planning, business planning, and insurance company with corporate headquarters located in Lamar, Colorado.

Child Tax Credit

Marcelino:
Because what we do when we talk to you as the taxpayer here, whether it be through video conference, or you’re in the office, we’re going to ask these questions because it’s, it’s vital to know these things because we are subject to penalties as preparers. If we don’t do this, right, Sure, I’m not in we don’t risk and I don’t risk myself. I don’t risk, my assistant, we don’t risk we don’t take those risks. And so if it all depends, I answer the questions. And see here we got that that’s trying to think of something else on head of household. But those are the major things on, on head of household. Now there is one more provision on the head of household, which I’ve also done over the years, is that sometimes you’ll have in especially in a divorce situation, you’ll have a case where a mom has the son living with her, but she allows the father to claim the son as a dependent on the tax return.

Or, or in this case, Child Tax Credit anyway, it keeps changing they, they eliminated exemptions a few years ago, but anyway, can claim the son as a dependent for like Child Tax Credit, those kinds of deals? Well, but even though in that in that situation, though, the mom that has the son living with a can still claim head of household, because that’s on lives with her. Okay, so she’s still eligible for that filing, that’d be true. In all situations like that, and then of course, there’s another discussion regarding children and, and who can claim children based on court orders, but that’s a whole different discussion there. But anyway, for head of household, that’s, that’s kind of how a household fits in there, which is, can be very, can be a lot.

Tiff:
Right.

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Marcelino:
But these but we got, we got to muddle through that. And we have to make sure you as a taxpayer know, we’re asking these questions; you want to make sure you do it right there. So, okay, that’s let’s, let’s move on. Okay, what’s next?

When Should Married Couple File Joint Or Separate Tax Returns?

Tiff:
So I guess this kind of stems into that, if, if you’re, if you are married, technically married? Why? Is there a reason? Can you or would you ever file separately as close to married? Or what is the benefit? Or how does that work?

Marcelino:
When it comes to married filing separately that is truly a case by case basis. I very seldom do a married filing separate return because with the people we do business we’ve done business with over the years that usually hasn’t been advantageous. Now, there are circumstances where one spouse may decide, you know, I don’t want to file with my, with, with my husband or wife or whatever. And sometimes where that happens, is, especially if there’s a small business involved. Okay, so as a sole proprietorship, because what happens when you file a joint tax return is that even if the husband has a business and pays self and has self-employment tax due on the profit on a sole proprietorship, where there could be an issue is that when the wife signs that tax return, essentially, she becomes liable for that tax as well. Right.

Now, there’s other provisions, which we won’t get into that can that can help in that situation, but still, oh, but overall, she becomes liable. Okay, that means they either become jointly liable, and sometimes, they’ll, they’ll file separately for just because they don’t want to be responsible for each other’s taxes as well. Usually, there’s, and depending on, a lot of it depends on income, sometimes at income. Depending on income level, it may be more advantageous to file separately, but you’re talking usually several $100,000 of income before that happens, but it’s possible there could be as well as the fact like, if one has a lot of medical bills, or they want to do certain or do certain itemizations, there may be an off there may be an advantage to doing so. And what’s nice about when we work with people, and I get that question, actually a lot during tax season. Well, what happens if we file separately? It’s really nice angle the tax software, I press a button they say well, okay, well, and right now you’re saving $1,000 by filing jointly.

Tiff:
Sure.

Marcelino:
As well as in filing separately, there are certain tax credits and certain tax benefits that are lost file separately as well. So it’s not always advantageous. So it’s case by case and in some cases, it can work. So just depends.

Tax Documents For For Tax Returns

Tiff:
Okay. Fair enough. Um, one question in this, basically, what documents are you needed? Or do you need should you show up to your tax tax professional with? I always find my filing cabinet full of receipts and statements and this and that, and I always wonder, what, what really do I need? What do I need to keep? What do I need to present to them? And what’s the best way to go about that?

Marcelino:
Yes, that is an excellent, excellent question. And then which is why when clients ask that question, we will provide a checklist essentially, this is what you need to bring. Because, like you there’s, there’s a lot of unnecessary stuff brought most of the time, which, you know, I think everybody’s, and everybody means well, they really do. And you just want to make sure they’re prepared. But we get that we get this stack of information or papers come in, it’s like, you know, we really didn’t need this, this, this or this. And sometimes we can say, we can figure that out. Initially, when we get the paperwork, we can say, Okay, well, we look at it, we don’t need this, sometimes, we can send it back home with them.

Yes, if they bring it in live, or even if they upload it, at least if they upload, it’s all electronic, we can just kind of skip through it. Now, of course, if you come in and file taxes, of course of your if you have an employment, you use a W2 from wherever your employer is, the other the deal is 1099. Now there’s various 1099, which is as you get to know here, tip, there’ll be several of them, there’s a one for interest, one for dividends, one for stock sales, there’s ones for self-employed people, there’s a, an M, or an NEC, there’s all kinds of and you need all of those. Now, if you’re dealing with business records and your small business, usually, people really need to work on organizing those before they bring them in here, especially by category and by date is would really be advisable in your small business.

Because the bottom line, if we have to go through that, we’re going to charge it for sure. And in fact, that’s where we want to help people avoid even having to do those such those services. I mean, that’s why we provide year round services to help people stay organized. Because too many people in small businesses, they just kind of go by what’s in the checking account, they don’t really know if they’re making money or not. They just go I got X amount in the checking account. I don’t even know what my business is making. But I got this much in my checking account. So I’m okay. A lot of people do. So yeah. So definitely, if you’re doing any type of sole proprietorship, I mean, we got reasonable, reasonable rates to help one to be able to keep track of that stuff and use some cloud based software that we use. So yeah, but yeah, we usually provide will provide a checklist to help us to get organized, those are on our website in our client resources area for them. So.

Tax Advisor Services

When you need professional expert IRS tax services, call Cash Tracks Financial Services, Inc. at our office phone number (719) 336-8739 or via our website Contact Us form at Contact Cash Tracks Financial

Our Tax Advisor And Tax Accountant Services Office

Cash Tracks Financial Inc.
117 W Beech St
Lamar, CO 81052
(719) 336-8739
https://cashtracksfinancial.com
Your Professional Accountant, Tax Advisor, And Financial Planner In SE Colorado.

More Accountant And Tax Consultant Information in this Q & A series.

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Taxpayers may be able to claim various federal income tax credits depending upon individual circumstances such as having dependents, being an active member in the armed forces or qualifying for student loan interest deduction. Deductions reduce taxable income; thus reducing overall tax liability. Eligibility for these deductions depends largely upon taxpayer’s income level and type of expenses like medical care costs, charitable donations etc., incurred during that year. It must be noted that timely filing helps taxpayers realize maximum benefit from these credits and deductions since any delay might result in loss of potential savings made through them. Understanding one’s eligibility status requires knowledge about different types of credits and deductions available along with careful financial planning throughout the course of the year. Additionally, it pays off greatly to maintain accurate records so that relevant information can easily be accessed at the time of filing taxes without going through unnecessary hassle. This ensures efficient utilization of potentially applicable benefits while also avoiding any kind of monetary penalty due to delayed filing process. Deadlines For Filing Different Forms Deadlines for filing different forms vary each tax year and depend on whether you are filing as an individual, a business or other entity. Filing taxes late can result in hefty fines and penalties, so it’s important to stay informed of the relevant deadlines for your situation. Here is an overview of some key deadlines: Individuals Federal Taxes: The deadline to file federal income taxes is April 15th (or the next available weekday if this date falls on a weekend). If you need extra time to file, taxpayers may request an automatic extension until October 15th. However, any taxes due must still be paid by the original due date. State Taxes: Most states have their own income tax system; therefore, state tax return due dates differ from those of federal taxes. It’s best to check with your local government website or contact a certified public accountant to know what applies in your area. Estimated Tax Payments: Individual taxpayers who expect to owe more than $1,000 in taxes after subtracting withholding and credits must pay estimated quarterly taxes using Form 1040-ES. Estimated payments are typically made four times per year on April 15th, June 15th, September 15th and January 15th of the following year. Businesses & Other Entities Corporations: Generally speaking, corporations should use Form 1120 and report profits as part of their annual returns. This form must be filed no later than March 16th (or two months before the extended deadline). Partnerships & LLCs: Partnerships and Limited Liability Companies should use Form 1065 which generally has a due date of March 15th (or three weeks before the extended deadline). Trusts & Estates: Trusts and estates use Form 1041 which usually needs to be submitted by April 17th (or one month before the extended deadline). It is essential that all individuals and entities understand these deadlines in order to avoid penalty fees or additional interest charges resulting from late payment or nonpayment of income taxes owed. Furthermore, being aware of when various forms are due will ensure timely compliance with IRS regulations while avoiding costly mistakes during filing season. Get tax relief and tax remediation from Cash Tracks Financial Colorado Springs. Penalties And Interest For Late Payments Failure to file your taxes on time can result in significant penalties and interest charges. Depending on the amount of money owed, you may be subject to late filing fees as well as an accuracy-related penalty for underpayment or negligence. The IRS also has a Failure-to-File Penalty that applies if the return is not filed by the due date – even if no tax is actually owed. This penalty is 5% of any unpaid tax balance for each month that a tax return is filed late (with a maximum penalty of 25%). In addition to these penalties, interest will accrue until the entire debt has been paid off. Currently, this rate is 6%, compounded daily from when payment was due until it’s received. For those who are unable to pay their full balances immediately, the IRS offers several options including short-term extensions and installment payments plans. Taking advantage of these programs will help minimize additional financial burden resulting from penalties and interest charges. Extension For Submission Of Returns The tax filing deadline is a well-known date, but what happens if taxpayers are unable to file their taxes by the due date? It may be possible for individuals and businesses to receive an extension on submitting returns. The Internal Revenue Service (IRS) allows extensions of time to file tax returns, however this does not extend the time period in which payment of any owed taxes must be made. Extensions generally apply only to Form 1040 series, 1065 Partnership Returns, 1120 Corporate Tax Returns and other related forms. When requesting an extension for submission of returns, it is important that taxpayers provide sufficient information about why they need extra time; typically requests should include estimated amounts of income or deductions that will appear on the return as well as expected sources of income or deductions. In some cases additional documentation may be required from those seeking relief from IRS deadlines. Taxpayers who have received an extension maintain responsibility for accuracy of their filings including applicable interest and penalties where errors occur or late payments are made. Therefore it is important for taxpayers to understand how much money they owe before applying for an extension so that proper payment can be remitted when necessary. When To Hire A Professional Avoid tax penalties and tax audit by using Cash Tracks Financial Colorado Springs for your tax preparation and filing.Filing taxes is a complex and often arduous task. Many people are unaware of the tax laws, deductions, and credits available to them. For this reason, it can be beneficial for individuals to hire a professional when filing their taxes. A professional can provide valuable advice that will help maximize refunds or minimize liabilities due at tax time. When hiring a professional, there are several points to consider: Experience: Choose an accountant or lawyer with expertise in the area of taxation you need help with. They should have experience dealing with similar cases as yours and understanding local regulations. Fees: Ask about fees ahead of time to ensure they fit within your budget before engaging the services of a professional. Reviews & Testimonials: Research reviews from past clients to get an idea of what kind of service they offer and if they meet expectations. Hiring a qualified professional who understands both the legal details and practical considerations involved in filing taxes can give taxpayers peace of mind knowing their returns were filed accurately and on time. Furthermore, these professionals may be able to identify opportunities where taxpayers may qualify for additional deductions or credits to lower any associated liability amounts owed at year end which could result in greater savings overall. It’s important therefore that taxpayers take into account all potential options when filing their taxes each year; including consulting a knowledgeable expert if needed. Impact On Credit Score The importance of filing taxes on time is not limited to timely payment of the tax obligation. Filing taxes on time also affects one’s credit score, which is an important measure used by lenders when evaluating a person for loan eligibility and setting interest rates. Credit scores range from 300 to 850; higher scores indicate greater financial stability, while lower scores may lead to higher interest rates or even loan rejections. A late tax filing can have a negative effect on credit scores because it indicates that one lacks financial responsibility and is more likely to carry large amounts of debt. Therefore, it is essential to file taxes on time in order to maintain a good credit rating as well as protect one’s ability to obtain financing from creditors. In addition, failure to file taxes on time can result in harsh penalties imposed by the IRS, including hefty fines and potential criminal charges for willful violation of federal law. Thus, timely filing of income tax returns helps ensure compliance with government regulations and prevents significant repercussions both financially and legally. Resources For Troubleshooting Errors When dealing with any errors or discrepancies in the filing process, there are a number of resources available to facilitate that process. To begin, taxpayers should be aware of their rights and responsibilities when it comes to filing taxes as outlined by the IRS. Taxpayers must know what information they need to provide when submitting documents and how to verify accuracy before sending them off. Additionally, there are several online tools that can help with troubleshooting any issues encountered during tax preparation and filing: The IRS website provides comprehensive guidelines on who is required to file taxes and when those filings must be completed. There are also interactive tax-filing applications such as TurboTax which offer helpful tips for navigating the process safely and efficiently. The IRS e-file system allows users to electronically submit all necessary paperwork directly from their computer. This is especially useful if one’s situation is more complex than usual due to investments or other income sources. Professional tax preparers provide assistance with understanding particular circumstances and correctly filling out forms accurately. Lastly, free tax clinics may be available through local community centers or libraries depending on where one lives in order to receive personalized guidance regarding their individual return. It is essential that individuals are familiar with these services prior to commencing the filing process so they can ensure their returns will be completed accurately within the given timeframe allotted by law. Taking advantage of any applicable resources is recommended as this could save time and money while avoiding costly penalties later down the line. Strategies For Staying Organized Organization is essential to successful tax filing. Without a structured approach, taxpayers can easily become overwhelmed and miss important deadlines or make costly errors. While there are numerous strategies available for staying organized during the tax season, some of the most effective include utilizing an electronic system for tracking documents and using reminders to remain on track with due dates. Electronic systems offer several advantages over manual paper-based methods for monitoring activities related to taxes. Electronic records are easier to search through than physical files; additionally, they can be backed up in multiple locations as insurance against data loss from fires or floods. Furthermore, many software programs provide helpful features such as automatic calculations that reduce potential mistakes resulting from mathematical errors. Finally, digital recordkeeping allows users to access their records remotely, which makes collaboration between two individuals more efficient than if both parties relied solely on printed versions of documents. Reminders also help ensure that key steps in the filing process do not go overlooked. Taxpayers should begin by establishing a timeline of tasks that need to be completed before the filing deadline arrives; this timeline should include any payment deadlines associated with estimated taxes or other liabilities owed throughout the year. From there, it’s possible to set up alarms or calendar appointments based around these milestones so that all obligations can be met ahead of time without any surprises at the last minute. By taking advantage of reminder tools, taxpayers may avoid penalties or interest charges caused by late payments. Record Keeping Methods When filing taxes, it is important to maintain proper records. Proper record keeping allows taxpayers to accurately report their income and expenses, making the tax preparation process more efficient. It also helps ensure that any applicable deductions are maximized in order to reduce overall taxable income. Taxpayers should keep all relevant documents including receipts, invoices, bank statements, W-2s and 1099 forms for at least three years. These documents should be stored securely in a safe place such as a file cabinet or safe deposit box. Taxpayers can also use digital storage systems such as cloud computing services to store documents online with greater security than traditional paper documents. Utilizing these methods makes finding needed information much easier when filing taxes year after year. Filing taxes on time requires adequate planning and organization with accurate record keeping being essential for success. By taking advantage of available tools, taxpayers can simplify the process while ensuring compliance with federal regulations. This will help save money by avoiding potential fines due to late payments or miscalculations as well as maximizing deductions thereby reducing overall taxable income. Tips For Reducing Stress The theory that filing taxes on time reduces stress is true. It can be difficult to stay organized and prepared while dealing with the complexities of tax season, but it’s crucial for any taxpayer to take proactive steps in order to minimize stress levels when filing their taxes. First and foremost, organization is key. Taxpayers should gather all relevant documents such as income statements, bank records, receipts, etc., prior to completing their taxes. Furthermore, taxpayers should double check all information before submitting so they can feel confident knowing that everything is accurate. Additionally, taxpayers may also want to look into different tax preparation options like software or hiring a professional if needed; this could help alleviate some of the burden associated with preparing one’s own tax return. Taxpayers should also take advantage of online tools provided by organizations like the IRS which make it easier to access important documents quickly and accurately. Finally, those who find themselves feeling overwhelmed by the process can set aside blocks of time devoted solely to completing their various tasks related to tax preparation in order to ensure deadlines are met without added pressure from other obligations. Taking these steps will allow taxpayers to have an efficient and less stressful experience when finalizing their returns each year. Frequently Asked Questions How Do I Know If I’m Eligible For Tax Credits And Deductions? Tax credits and deductions are important tools to reduce the amount of taxes owed. Eligibility for both depends upon several factors, including income level, filing status, age, family size and other factors. To determine eligibility, review the Internal Revenue Service (IRS) website or consult a qualified tax professional. When claiming tax credits or deductions it’s important to properly document any income earned or expenses incurred during the year. For example, those who are self-employed must keep detailed records of their business activities throughout the year in order to fully maximize their potential savings when filing taxes. Additionally, there may be special considerations such as state requirements that also come into play when claiming certain credits or deductions. It is essential that taxpayers understand these nuances prior to submitting claims as incorrect information could cause delays in processing returns or result in costly penalties from the IRS. In summary, understanding whether one is eligible for credit and deduction opportunities can help individuals save money on their overall tax burden and should not be overlooked when preparing returns. Taxpayers should take time to review all applicable rules and regulations pertaining to credits and deductions before making any claims so they can receive maximum benefit from them at tax time. What Are The Most Common Penalties And Interest For Late Payments? Late payment of taxes has serious consequences. The Internal Revenue Service (IRS) imposes a variety of penalties and interest on taxpayers who fail to pay their taxes in full and on time. Here are three of the most common: Failure-to-pay Penalty: A penalty of 0.5 percent per month is assessed if any part of the tax due remains unpaid after April 15th, up to a maximum 25% penalty for longer periods of delinquency. Late Filing Penalty: A 5% monthly late filing penalty applies when returns are filed more than 60 days past the due date, with no upper limit imposed by the IRS. Interest Charges: Any amount that is owed but not paid is subject to interest charges at the federal short-term rate plus 3%. These rates change periodically and can be found online or through your accountant or lawyer specializing in taxation matters. It’s important to understand these penalties and keep them in mind before filing your taxes late as they can quickly add up over time and increase what you owe exponentially beyond just your original tax bill. Additionally, it’s essential to consider seeking professional advice from an experienced attorney or accountant so that you stay compliant with all relevant regulations, thereby avoiding unnecessary fees or fines which may result from noncompliance or incorrect filings. Not only will this save you money but also provide peace of mind knowing that everything was done correctly according to legal standards associated with taxation law. What Do I Do If I Need An Extension To Submit My Return? A stitch in time saves nine; filing taxes on time is no different. There are several consequences for not submitting a return or paying taxes by deadlines, and one of the ways to avoid these penalties is getting an extension from the IRS. The process for requesting an extension can be done online through the IRS website or by mail using Form 4868 – Application for Automatic Extension of Time To File US Individual Income Tax Return. You must submit this form before the usual April 15th deadline and you will typically receive six more months to file your return (until October 15th). However, it should be noted that an extension does not mean extra time for paying any taxes due: all payments associated with your returns need to be made within the original April 15th date to avoid incurring interest and late fees. Filing an extension may provide additional benefits such as avoiding underpayment penalties if you’re expecting money back from the government but do not have enough funds available to pay your full tax bill at once. If there’s still some uncertainty regarding how much you owe, then making a payment towards what you estimate is owed could help protect yourself against potential penalties and mitigate levies imposed on assets like wages or bank accounts. Additionally, applying early gives taxpayers more flexibility when planning their finances during tax season so they’re better able to manage cash flow without fear of owing too much later on down the line. How Will Filing My Taxes On Time Impact My Credit Score? Filing taxes on time can have a positive effect on one’s credit score. A timely tax filing is an indication of financial responsibility, as it ensures that any outstanding liabilities are taken care of in a timely manner and shows that the individual has been proactive with their finances. Late filings or non-filings may result in negative consequences such as penalties and interest charges, which will reflect negatively on one’s credit report. There are several ways to improve your credit score by filing taxes on time: Maintaining good payment history – Payment history is the most important aspect when it comes to building up a good credit score. Filing taxes on time helps demonstrate fiscal responsibility to lenders and creditors, showing them that you make payments regularly and responsibly manage debt. Improved ratio of debt-to-income – When paid off debts show up on a credit report after filing taxes, this reduces the amount of debt relative to your total income and increases your chances for loan approval from banks and other lending institutions. Positive impact on public records section – Tax liens reported in the public records section of a person’s credit report can be damaging but they won’t appear if all dues were cleared through the timely filing of taxes. Ability to get rewards cards – Many people strive for higher scores so they can secure more favorable terms like lower interest rates or even access exclusive rewards cards offered by major companies; all these become easier when one files their taxes promptly every year. In addition to improving one’s financial stature, there are multiple advantages associated with filing taxes on time such as avoiding late fees and having peace of mind knowing that everything is in order come April 15th each year. There are also programs available for those who need assistance preparing their returns or require additional time due to extenuating circumstances beyond their control. Taking advantage of these resources can help ensure proper completion and timeliness when filing returns annually, providing further benefits down the road when trying to build or maintain positive credit ratings going forward into retirement years. What Strategies Can I Use To Stay Organized And Reduce Stress? Satire is a great tool for getting people interested in the topic at hand, and filing taxes on time is no exception. It’s April 15th, you’re stressed out about meeting your deadline and can’t seem to stay organized. Well fear not, as there are strategies available to help make tax day go more smoothly! The key to staying organized during this stressful period lies with preparation and planning ahead of time. Start by gathering all required documents such as W-2 forms, investment statements, mortgage interest payments etc., and put them into one place so that they are easily accessible when needed. Additionally, it may be useful to use an online software program designed specifically for tracking finances or creating an Excel spreadsheet which can assist with keeping records sorted and updated regularly throughout the year. These tools will prove invaluable come tax season as it allows taxpayers to have their information readily available instead of scrambling around trying to locate each piece of paperwork. Having a clear plan also helps alleviate some of the stress associated with filing taxes correctly and on time. Make sure steps are taken to ensure items like estimated taxes are paid quarterly, deductions are maximized legally, credits aren’t overlooked; these factors play a huge role in making sure nothing major is missed come tax day. Finally having someone else review everything before submitting would also act as another layer of protection against mistakes or possible errors since two sets of eyes tend to be better than one when dealing with important matters like this. By following these simple tips – preparing ahead of time, using helpful programs/spreadsheets, crafting a comprehensive plan before filing and seeking assistance from experienced professionals – taxpayers can reduce the amount of anxiety caused by Tax Day while increasing the chances that their filings will be accurate and timely. Conclusion The importance of filing taxes on time cannot be overstated. By doing so, taxpayers can reap the benefits of tax credits and deductions while avoiding costly penalties and interest fees. Furthermore, timely filing may help to improve one’s credit score. Strategies such as maintaining organized records throughout the year can go a long way towards reducing stress during tax season. Taking the necessary steps to ensure that taxes are filed correctly and on time is vital for anyone who wants to remain in good standing with the IRS. Those who require an extension should make sure they understand all rules and regulations before submitting any documents or payments. It is also important to remember that extensions only apply to returns; payment dates still must adhere to established deadlines. Overall, by taking proactive measures like staying informed about eligibility requirements, having all relevant documentation ready, and ensuring that forms are completed accurately, individuals can rest assured knowing their financial obligations have been fulfilled properly and in a timely manner–a win-win situation for both taxpayer and government alike! Get More Information About Tax Preparation And Filing You can find out more about Cash Tracks Financial Colorado Springs tax accountant services at the Tax Preparation In Colorado Springs web page. Our Location And Contact Information Cash Tracks Financial Colorado Springs 525 N Cascade Ave #200 Colorado Springs, CO 80903 (719) 359-8789

Expert Tax Advisor At Cash Tracks Financial Lamar CO

Tax Advisor Q &A

With Marcelino Dodge, EA
Cash Tracks Financial, Inc.

Tax Advisor Podcast Part 2 10/07/2021

This tax advisor information is a Part 2 form the podcast transcript from Tax Answers Advisor on October 7, 2021. The program presenter is Marcelino Dodge, Enrolled Agent, owner of Cash Tracks Financial, Inc. Cash Tracks Financial is a tax accountant in Lamar Colorado, providing tax services, financial advisory, retirement planning, business planning, and insurance company.

Podcast Transcript- Part 2

Tax Answers Advisor Introduction

Good, fabulous day and welcome to The Tax Answers Advisor, this is Marcelino Dodge, we are so happy to have you listening to this program today, whether it be live or On Demand at a later time. We’re just going to keep rocking and rolling here, as we’re on show number 44. And a little tidbit that I just am amazed that in this program is that it was one year ago today that I did the first program. My very first Tax Answers Advisor and it is so exciting to still be with you here a year later, with a worldwide audience throughout the United States, Canada, China, Sweden. It’s amazing who wants to listen about taxes, US income tax that just totally amazes me.

Tax Advisor Podcast

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Marcelino:
It’s interesting how many people will have like their friend, I will say, friend, do their tax return through some type of do it yourself software. And you sit here and think how secure is your information with your friend shared doing your tax return that says, Oh, I can do that. And I can do it for whatever I can do it for free? It’s like how’s that? How secure is it? So that’s my big, that’s my big thing, as well. Now another area, as we talked about, using the professional like an enrolled agent. Have you ever heard of Enrolled Agent before you came, came here Tiff?

Tiff:
I heard of the term but didn’t it just never really occurred to me what I was looking for it just I’ve heard the term and it to me it was just what you were supposed to be?

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Marcelino:
Yeah, wow. And I’ve discussed this on other podcasts of how an enrolled agent is, is really under what’s the word here under publicized or just not really recognized as a tax professional. Even though myself as an enrolled agent, I am licensed, which means I’m licensed directly by the IRS. I mean, I got a little bit difficult on my wall. And I do continuing education every year, they only require 24 hours, but guess what I do probably about 50 Just trying to keep up with everything that I do. So that’s what the EAA after my name means there’s other terms that one’s you. There’s other Wow professionals such as a CPA, which get all the publicity. But one thing most people don’t realize about CPAs they do a great job, but not all CPAs do taxes. Okay. Is that Is that something new to you then about not all CPAs do tax?

Tiff:
Yes, yes it is.

Enrolled Agent Certification

Marcelino:
Yeah. Because not because some Hey, some do taxes and they do a great job. But others focus in other areas like auditing or international stuff. They, they thought there’s CPAs even broader, much broader than an EA is so okay, but if you’re really when a person is really looking for someone to do their tax return, that’s why an enrolled agent like myself is someone to go to because we Our specialty is, is taxes. Okay, that’s what we go in and do. Now granted, I admit, I don’t know everything about every type of business or every type of tax situation, but I’ll tell you, I think a lot to maintain. And to be able to keep up there. We think about it, when I first become an enrolled agent, when I, in 2006, is when I got the finally got the certificate, but I had back then you had to go to Denver, and sit through two days of testing, written tests, multiple choice tests for tests over four areas of taxation at the time, they’ve updated. Now they’ve changed the reading, go to a testing center, and actually do over do only three tests. But still, it was a challenge to do. Sure.

There. So it’s, it’s a big thing to think about when you’re using a professional because you want someone who’s going to do it. Now, other areas that we’re going to talk, talk about, and something that as far as what we do here, which is I’m going to work on getting up to speed on is that we work also a lot more in the planning area, you’re around serves, that’s how a tax professional can really do service for their client, not just during the tax season, but you’re around, give them education. For the reasons I do this program is to provide taxpayer education.

Tax Preparation Experts Consulting

But the direct people that I do business with, I want to help them throughout the year, through consultations through tax planning. But we just need to just keep working together because the constant changing and constant efforts that people make, need to be done, but we need to just keep up with it. And that’s what we’re gonna work to. That’s what we work to do here.
So what if I’ve been doing all the talking here? A lot of the talking anyway. So what, what I of course, I know you were just looking for a job and everything and but what, what excites you about being here? What do you like about working? Are the, the opportunity to come here and work here with this in this office?

Tiff:

Yeah, the, I’d say one of my strong suits. And one of the things that I enjoy, I enjoy numbers, I like clean cut. Here’s the, you know, the end it’s, it’s you get these two numbers equal these two numbers, and it just everything is pretty clear cut. I like that part of it. Like having answers. I enjoy working with people. I’ve gotten used to that in previous jobs. I like just keeping in touch. And I like the fact that like you said, you keep in touch with your clients throughout the year, not just during the busy season. I like building that relationship with them and knowing what’s going on in their world as well.

Tax Advisor Services And Communication

Marcelino:

Yeah, yes, we’re trying. That’s what we’re endeavoring. That’s what we tried to do letters. Now one thing. We use letters and emails, of course, to contact people. But one of the interesting things that happens in the tax business is the fact that people will my clients do this, and it’s it is what it is, but some of them will open the letter, look at it, put it back in the envelope, and then bring it with their tax stuff. And it was meant for them just to for educational purposes. But hey, everybody’s, everybody’s different. Sure, so, okay, so, So Tiff let’s, let’s go into some of the questions that you, you have to kind of help you to, to understand things, then, of course, help those listening to this to understand a little bit, a little bit more about where we’re going and some of the things that that may come up along the way there. So let me open up the floor to you.

Tiff:

Okay, um, one thing that I’ve always heard mentioned, and just never looked into it, because I never thought it pertained to me, particularly, but was interested to know, what actually makes you head of household when you file for taxes. I’ve heard the term use but never, I guess really knew what it meant.

Taxes For Married Couples

Marcelino:

Yeah, that is a very important term in the tax thing, because everybody thinks, Well, I make the most money or whatever. And I’m head of household. And you know, what we’re comes up a lot is with married couples. Okay, married couples, especially if there’s one individual in the home who makes more money or the universe supports the home they think, Well, I’m Head of Household Well, in some senses, yes, you are. But when it comes to tax purposes, you are not. Okay. This is when it comes down to now because if you’re when a person when a couple is married, and this could be married either through common law, or through just regular marriage certificate kind of thing, because and the definition of common law, of course, varies from state to state, so really can’t do it.

Now. I’ll come back to this other point later, I’m just thinking of a sticking on the head of household bought here is that to be head of household. The first thing is you have to be unmarried or considered unmarried at the end of the tax year. Which basically means you have to be you have to be a single person. Okay, or considered to be a single person. And so I see the thought or the look in your eyes go on, okay, what’s considered single are considered unmarried, that’s like a whole that is a whole different can of worms there. But that’s where it gets a little complicated considered unmarried. Now, just to help you out with that one, this is a provision in the tax law where it’s kind of like an exception to the married rule. Okay, but there’s qualifications for it to be considered unmarried, you’re your spouse, the person you’re married to, has to be out of the house between July for from July 1, through the end of the year, the last six months and they cannot be in the same household they cannot if they cannot even stay in that household one night, okay.

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Married Or Unmarried IRS Tax Return

They you have to be you can be considered unmarried even though married now I do encounter these situations from time to time in divorce situations. Usually, if a divorce is coming up, or some cases abandonment, right, I’ve had some in the past where, for whatever reason, Mom has left home with the kids, but Dad went off who knows where and has been gone for the year. So and she has no contact with the more so, so that’s where unmarried considered unmarried must have. And that is the IRS is very specific about that. So that’s, in fact, this head of household is so important that when people come to this office, they have to fill out a Due Diligence Questionnaire professing that they are unmarried or considered unmarried. And there’s a form that us as tax professionals have to submit with the tax return. Saying that we’ve done due diligence on it.

Tiff:

On that fact . . .

Taxes For Head Of Household

Marcelino:

That particular deal, there’s a column for Head of Household on the, it’s an 8867. Paid prepares due diligence form basically is what it’s called. So yeah, so you have to be considered unmarried, but that’s only the first step at a household, okay, okay. To be head of household, you have to also have a dependent, okay, which would be a qualifying child, which of course could be son daughter, in your home living with you six months or more during the year, you must have that must have that individual. Now there could be there’s another, another area called qualifying relative. Now that could be that could actually be like a parent could be a niece and nephew and uncle, someone that’s related to you in some way that you provided support for 50% or more of the support for through the year, as well.

So you got to have that other individual to be able to consider head of household. It’s, it’s very, very specific on that as well. And of course, you got to be providing 50% or more of the support for your home, as well for whatever home that you’re providing there to be head of household. Now this does get a little tricky when you have two single people living together. Right? Yeah, that’s where can get a little, little tricky, is because they both can’t they could they and if children or if they each have their own children, too, and they’re living together that really gets a little tricky. Yeah. Yes. But the way that I do I always deal with that type of situation is okay, you have to single people, like each of them may have their own child from, from whatever circumstance. And then they come to file tax, and they try to boot file, file had houseless like, well, there’s only one household, there’s one address, so they both can’t be head of household according to tax rules.

So usually, the one that gets the head of household will be the one that has the higher income. Okay, that gets that. And so with that the other one could still claim their child or whatever, but they would be considered single, it does affect, of course the refund, but that’s where as coming in as tax professionals, and when anybody who does business with this office, when we talk to you, we will ask all of these questions.

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Tax Advisor And Tax Accountant Lamar CO

Tax Advisor And Tax Accountant Q &A

With Marcelino Dodge, EA
Cash Tracks Financial, Inc.

Tax Advisor Podcast 10/07/2021 . . . Part 1

This tax advisor and tax accountant material is a transcript from Tax Answers Advisor Podcast on October 7, 2021. The program presenter is Marcelino Dodge, Enrolled Agent, owner of Cash Tracks Financial, Inc. Cash Tracks Financial is a tax accountant, tax services, tax advisor, financial advisory, business financial planning, retirement planner, and insurance company with corporate headquarters in Lamar, Colorado.

Transcript

Tax Answers Advisor Introduction

Marcelino:
Good, fabulous day and welcome to The Tax Answers Advisor, this is Marcelino Dodge, we are so happy to have you listening to this program today, whether it be live or On Demand later. We’re just going to keep rocking and rolling here, as we’re on show number 44. And a little tidbit that I just am amazed that in this program is that it was one year ago today that I did the first program. My very first Tax Answers Advisor and it is so exciting to still be with you here a year later, with a worldwide audience throughout the United States, Canada, China, Sweden. It’s amazing who wants to listen about taxes, US income tax that just totally amazes me.

And when I started this program a year ago, it was of course with the goal to just talk to you, the taxpayer, whether you’re an individual or a business, and just put it in a way that you can understand and then show that indeed, we can be here to help you. And, of course, he listened to this on one of many platforms, probably either Apple podcast, or Spotify, or maybe even through IHeartRadio, but wherever you’re listening to it, once again, thank you. And I do a lot of work. And I do work throughout the country through the wonderful, wonderful web got a lot of cloud-based software we use and so you’re always welcome to contact me anything we discussed on the program here today or on previous programs, the email success@cashtracksfinancial.com, the phone number 844-394-4287.

Tax Advisor And Tax Accountant Website

And of course, our website, which is https://cashtracksfinancial.com and with that, in any of those means you can call, you can set up a free mutual exploration session with us. And we’ll be happy to do it through Zoom meeting or another type of web conferencing, just to get to know you a little bit to see if the programs we have to offer here are what you’re looking for and trying to do some tax planning and just have general business success and taking care of a lot of financial different matters for you. Today, we’re going to do something a little different there and having tax questions and answers with a tax answers advisor.

Yes, it is an exciting day here for me. And it’s been exciting because I’ve for a few months now I’ve been looking for someone to really help me out and help to grow this business. And tell you what, I think I found the right person, took a lot of patience. A lot of all just grinding the axe trying to find them you know just going through those resumes and everything and which is kind of which is in a way a pain but in a way fun to do. But then when you find a nice person like I’m going to have my new assistant today helped me out with some stuff. This is Tiff Tilton joining me today. So, Tiff I just want to say thank you, and welcome to the program today.

Tiff:
I’m happy to be here.

Tax Advisor and Tax Accountant Video

Find more information on this tax specialist video

 

Marcelino:
Yes. So just moved down to our area because we’re in little southeast Colorado is where we’re located. And Tiff was moving down here. And I really needed somebody to come in, and man, she just is going to be great. So, I asked him to join today just so she can get out there. And people can get to know who else is here in this office, especially if you’re calling the office always good to know who you could be talking to. And you’ll either be talking to me you’ll be talking to Tiff so if you’re watching this on Facebook Live or through YouTube later, these are the faces you’ll see.

If you want to talk video conference, or at least the face to put with the, with the voice when you call. So, it’s always good to know these things. And so, Tiff is a little new to the tax business, a little bit of accounting background she has. So, she can be learning a lot over the next few weeks and months. But I tell you what, she’s going to be there. We’re going to get some good training up and going. But so, we’re going to answer some of her questions today that she has no, and it’s great because she’s going to look at it and help us as someone coming in from the outside.

Like if someone walks into our tax advisor and tax accountant office, like what are these questions? So, you know, it’s going to be really it’s going to be nice just to help you to understand a few things here. When I started this program, I always like to dispel various myths that are out there. And one that I’m going to dispel again is the one that talks about the rich people do not pay their fair share. It’s interesting, they talk about the taxpayer and Jobs Act which is passed at the end of 2017. Now, these are facts these are directly from the IRS, you make your choice and what you think.

But these are the facts that you can go to the IRS website and look them up, which is where I went and got these details from, for example, the top 1% of taxpayers, which is the top 1% of the richest people in the United States, they pay 40% already of the federal income tax. Now, an interesting point about that is that that’s for 2018, which was the first full year of the tax cuts and Jobs Act, they actually paid a higher percentage of the taxes in 2018, than they did in 2017 2%. Because it was 38% in 2017, they paid 40% in 2018.

Interesting is interesting, supposedly, it was a rich payer, tax cut for the rich, while it looks like they paid a little bit more of their share, then you go into the top 10% in 2018. They paid that group, which is the top 10% of all taxpayers a paid 71% of the federal income tax, of the total federal income tax base, which is more than what they paid in 2017, who’s only 70%. So, we see these two groups, whether you’re in the 1%, or the 10%, or if you’re not, not in either of those groups, but you’re you hear all this information out there. It’s interesting that a, such a small percentage of the population pay such a large percentage of the federal income tax.

Tax Advisor and Tax Accountant Services

When you need professional expert IRS tax services, call Cash Tracks Financial Services, Inc. at our office phone number (719) 336-8739 or via our website Contact Us form at Contact Cash Tracks Financial

Tiff:
Sure. Yeah. Definitely lots of areas to make mistakes.

Marcelino:
Yes, lots of areas for mistakes there. It’s, it’s there. So yeah, we keep looking, we keep working, we keep improving, and it’s a constant learning process. And something. Also, there’s a lot of they talk about the, the like, the plan, the President is talking about the American family plan or whatever, there’s a lot of tax provisions in that, that most people don’t realize, in the other part of it is that there’s a good chance that if that does pass, which, who knows if it will or not, but if it does pass, taxes will be going up for some people.

And the sad part about it is from what I’ve read, and what I’ve done about it, if you’re in a self-employed person in particular, an S Corp, for example, like was with this businesses. It could, it could be increasing my taxes. It could be making, like S Corp shareholders, who take distributions can now could, if that passes become subject to self-employment tax, which that’s a whole other discussion, but still just show, it’s just trying to keep up with this isn’t law yet.

But it’s one of those things that could become law as a 2022. So, and there’s a few other things in there, we might get into a good discussion about or I might go ahead and bring out for you there. Now, another point I want to make here. As you go out, and you talk to people talk, talk to tax professionals there. Is there anything in particular you think about Tiff and you think about having someone do your taxes?

Tiff:
One thing that was really interesting to me when I first started talking to you, for the job, as well as just the taxes in general was the amount of security that your office provides, and that you the way that you go about things and that things are not just sent through email, and that everything is secure here, so that all of the information. So I think that’s important. When you do look for someone, that it your information is secure. That was that was a learning curve for me.

Tax Services

When you need professional expert IRS tax services, call Cash Tracks Financial Services, Inc. at our office phone number (719) 336-8739 or via our website Contact Us form at Contact Cash Tracks Financial.

Our Tax Advisor And Tax Accountant Services Office

Cash Tracks Financial Inc.
117 W Beech St
Lamar, CO 81052
(719) 336-8739
Your SE Colorado Tax Advisor and Tax Accountant

Next Tax Advisor Information in this series Q & A

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A Brief History Of Income Tax From Cash Tracks Financial Colorado Springs

Find Out What You Know About Income Tax History

If it seems like the income tax has been around forever, well, it’s sort of true.

The modern Form 1040 was unveiled in 1913. After paying for the Civil War, Americans were required to pay income taxes to the federal government. With the April filing deadline right around the corner, this fun quiz, first printed in our Newsletter, will test your knowledge about this very first individual income tax form.

With inflation still upon us, included are some great ideas to help manage your money and tips to help reduce your monthly bills. All this and suggestions on identifying and managing scams that are all too frequently targeting older Americans round out, read this month’s Newsletter.

As always, feel free to pass this information on to anyone that may find it useful and call if you have any questions or concerns.

The 1040 Individual Tax Form

The modern 1040 individual income tax form was introduced in 1913. Here’s a short quiz to see how well you know what was included on this very first tax form.

Tax Quiz

The Very First Form 1040

The Very First Form 1040. While Lincoln introduced the country to income tax to fund the Civil War, the modern 1040 individual income tax form was introduced in 1913. To find out what was included check out the remaining Q & A.

What was the due date of the initial 1040 tax form?

March 1, 1914. The first year Americans were required to report their income was 1913, with the tax return due March 1, 1914. Failure to file on time could lead to a fine of between $20 and $1,000. A 30-day extension could be granted by the tax collector because of sickness or absence. Today we have an additional 45 days to file our tax return (March 1 to April 15) and can file for a six-month extension.

What tax rate was applied to most incomes on this first Form 1040?

The tax rate applied to most 1913 tax returns was 1%.

If you had taxable income that exceeded $500,000, you became subject to the Super Tax. What was the rate on these earnings?

The tax rate was 6%. The maximum tax rate of 6% applied to taxable income that exceeded $500,000. The 1913 tax brackets were 1%, 2%, 3%, 4%, 5% and 6%, compared to our current tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Was a marriage penalty built into the original Form 1040?

Yes. If single, your exemption amount was $3,000. If you lived with your spouse, your exemption amount was only $4,000. If you and your spouse worked (a rare event in 1913), you could divide the $4,000 exemption any way you wanted to minimize your taxes.

Name items that weren’t taxed on the original Form 1040 but are taxed on today’s form.

The most common untaxed items were dividends and net earnings from corporations. The double taxation of corporate earnings we experience today started in 1954.

True or False: All the original tax returns required a signed affidavit before an authorized officer of the government before being filed.

True. All properly-filed tax returns required affidavits made before an officer authorized by law to administer an oath of accuracy. This could be a justice of the peace, a magistrate, or a certificate from a court clerk. Mailing in your tax return was not an option.

Resources For Colorado Springs

Our Colorado Springs Location Information

Cash Tracks Financial Colorado Springs
525 N Cascade Ave #200
Colorado Springs, CO 80903
(719) 359-8789

 

Our Colorado Springs Location Map

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