Tax Tips

Thought to give out tax tips before tax season is upon us again. I do tax preparation in addition to full time jobs to earn extra money. Here are some tips before getting our taxes done.

1. Know the difference between Independent Contractor and Employee.

Employees fill out W-4 forms upon being hired to declare how much taxes to take out of their paychecks. They get pay stubs along with their paychecks spelling out the deductions taken out. Employers are required to issue W-2s by Jan 31.

Independent contractors don't have taxes taken out of their paychecks and receive 1099-Misc forms if they made over $600, which means they must pay estimated taxes and/or self employment tax if they made over $400 income (meaning Sales minus Expenses equals Income). Independent contractors need to keep records of expenses, business miles driven, and separate car/home office expenses into personal and business uses (insurance, electricity, phone, etc.).

Then there is self-employment who usually hire accountants to deal with all this. If you are a professional whatever and charge your customers/clients for your services, rent out houses/offices to tenants, or own the business you work for then you are self-employed and must declare your business income and pay estimated taxes along with self-employment tax. And don't think your self-employment tax is a bad thing cause it means you can collect social security and medicare when you retire. I like these clients cause they keep good records.

And finally there is paid under the table, which means employer doesn't report your income nor pay taxes on your behalf to the government. There is a thing called Labor Laws employers have to follow so this is illegal (Unemployment taxes, Health Insurance requirements go by # of employees at the company, Minimum Wage requirements, Employer Social Security Taxes, etc.). If your payroll department doesn't have you listed as being employed by them or have records they had paid you for work, you are being paid under the table by your manager and you have to pay taxes cause payroll didn't pay them. You can report employers like this to the IRS. Check this webpage to contact IRS for anything...https://www.irs.gov/help/telephone-assistance

2. When going to a tax preparation site, remember it takes usually 1 hour to complete a tax form. If you come in asking to do 3 years of income tax forms, it will take 3 hours. Many tax places offer to drop off and pick up later if you don't wish to sit around and wait. There is also a statute of limitations on income tax forms so no tax site will do a tax form beyond 3 years old. Remember tax places are busy Jan and Feb so you might want to make an appointment cause they get served before walk-in clients. Also remember that a tax preparer will not start your return 15 minutes before closing and will ask you come back the next day.

3. Be prepared with your paperwork. I have spent 20 minutes looking up college tuition and requesting IRS transcripts online because the client wasn't prepared. Many companies do not mail paper tax forms to the employees, investors, or students and the tax payer must obtain these forms online. If you haven't received your W-2, 1099-Misc, 1099-R, 1098, 1098-E, 1098-T, etc. by Feb 6, ask your employer, bank, college, etc. for the forms and if all else fails contact the IRS since copies are sent to them. Contact info website is in last paragraph of #1. A tax preparer cannot pull these forms out of a magic hat and cannot contact the IRS for copies on your behalf (you have heard identity theft, right?).

4. To get a refund, you must pay income taxes in the first place. The 1040 form determines what taxes should have been paid and then compares the amount to what is already paid through the year (through payroll and estimated taxes). If you are retired and pull money out of an IRA, you can tell the company to take out taxes on the amount withdrawn, which is usually 10% of the amount being withdrawn. People with large refunds have lots of deductions or are poor with lots of children under age 17. Refunds are not free money from the government and it's not a contest to get a bigger refund each year (you can argue Earned Income Credit and Additional Child Tax Credits are free money, but only to people who make less than their standard deduction).

5. Audits are simply the IRS saying "You took these deductions now prove you deserve them". You won't get audited if all you have is W-2 info on your tax form. If you keep your receipts and records of your tax deductions, then you have nothing to worry about. And remember that the IRS is not the Supreme Court and their decisions can be challenged in Tax Court (to do this I recommend a Enrolled Agent, CPA, or Lawyer to defend you).

6. If your electronic 1040 form is rejected, you can send a paper return in the mail. This usually happens with new social security #s of children recently born or a parent who should not have claimed a child does before the rightful parent sends in their return. You can also complete Amended Returns (1040X) up to 3 years after the due date and these must be mailed in and cannot be electronically filed.

7.If you get a letter from the IRS, take it to your tax preparer to handle. IRS letters describe in vivid detail what their issue is and how much more you owe. IRS never calls demanding money and will not threaten to arrest you (believe me that if the District Attorney plans to arrest you for tax evasion you won't get a warning so you can flee the country). You have rights with the IRS: the right to appeal their decision, the right to representation, and they have 800 numbers you can call for assistance. IRS also will not demand you pay with your credit card number over the phone nor demand you purchase gift cards to pay your taxes due. Plus, they don't email you either demanding you wire them money.

8. All tax preparers who complete more than 5 returns must be registered with the IRS. A tax preparer must put their PTIN (Personal ID #) on the form. You can lodge complaints on tax preparers on...https://www.irs.gov/tax-professionals/make-a-complaint-about-a-tax-return-preparer. You can also find a directory of tax preparers on...https://irs.treasury.gov/rpo/rpo.jsf

9. State Income Taxes are not connected to the IRS. All 50 states have their own Tax Revenue Office that collects sales tax, liquor/tobacco/gas taxes, and income taxes. Some states don't tax income and usually have higher sales tax percentages. So if you move into another state during the year, state income taxes likely won't be exactly the same as each state has its own laws on deductions and income tax rates.

10. Make sure your college attending dependent knows they are your dependent because dependents cannot claim education credits on their form. I had many college students want a bigger refund by claiming the regular standard deduction and education credits and their parents get angry at the tax preparer for letting them do that cause their return gets rejected if dependent form is sent before theirs. As I said above, these cases can be handled by mailing paper returns and amended returns.

Christmas Letter 2019

Merry Christmas to my dear friends and family.

My New Year began with getting two kittens from a relative. Unsure if they were male or female so called them White Nose and Gray Nose until gender was established. Two days after picking them up, they had eye goo and vet diagnosed them with a respiratory infection. Vet affirmed their gender to name White Nose as Bilbo and Gray Nose as Misty. My ferrets were bigger than the 6-week-old kittens and would drag them under the sofa. Started tax preparation with an income tax preparation company. Lost female Beta fish Ananke that I got as a baby and was growing bigger every day. Took Mom to my Dad's cousins’ reunion at a pizza place. Lost male Beta fish Atlas Jr that I got full grown. My ferret Luthien was dubbed The Brave when she was the only ferret to go outside during the polar vortex, then I knew it was freezing when even SHE refused to go outside. Got new Beta fish Aeneas and Pandora, both full grown. Adopted 2 Bonded Buddy dogs from the shelter during one of their specials. I kept them a single day after they peed on my furniture and growled at the ferrets/kittens. Once a dog attacked a kitten, I had to take them back. I was not the right home for them.

Had freezing rain and thunder in February. I didn't know what was worse: the hills, the curves, or the potholes. Then it turned into snow to make it more fun to drive through. We finally got enough snow for ferret Boromir to experience his 1st snow tunnels. Eowyn and Luthien had to show him how to dig them first. Neighbor with a snowblower had been doing my driveway this year. Guess he got tired of watching me rest on my front stoop. I offered cocoa, but he won't accept it. Celebrated ferret Boromir's 2nd Birthday with Valentine cupcakes (ferrets love frosting) and a romp in the snow complete with cocoa (ferrets love cocoa w/marshmellows). Spent Valentine's Day working 2 jobs and dropping off candy package for my Mom in between. Sister reached the Big 5-0 to celebrate at an Italian restaurant where I tasted my first calamari (tasted like fish sticks). Lost red female beta Nyx I had a couple years and white female Beta Pandora I got a month ago. Got new female Beta adults Danae (blue) and Leda (white). My male blue Beta Erebus I got as a baby a while ago died and replaced with blue/white male Beta named Achilles. Celebrated ferret Luthien's 3rd Birthday with cupcakes.

Received my annual review from my manager to receive a raise. The Friday before my job raise was to start, I and 5 other coworkers were fired from work not coming in like they thought. I was told to gather my belongings that moment and leave. I emailed my manager apologizing for not completing my work that day. She gave me a hug good-bye. Tax manager was happy to give me extra hours since we have two weeks left of the season. Tax season ended to be completely unemployed. Had phone interviews and in-person interviews this year to receive rejection emails.

Kittens celebrated their 1st Easter catching The Bunny with help from the ferrets. The family celebrated my niece #1 giving birth to a girl named Piper Maeve. We celebrated my nephew’s confirmation. Nephew worked on my yard during his summer vacation. Then both niece #4 and nephew got jobs at the local amusement park games area so be less available. Nephew worked at the Iowa State Fair a few days skewering chickens for a vendor. Planned an 80th Birthday bash for Mom with help from my siblings and Mom's sister. Made my first gluten-free doll cake that everyone thought was beautiful. Got so much rain that I got mushrooms all over the front yard. Roses blossomed to make my heart sing. My male Beta fish Achilles and Aeneas died. New fish were named Achilles Jr and Aeneas Jr. Changed my first dimmer switch and managed not to get electrocuted (I flipped the breaker box switch). Kittens experienced their 1st fireworks. They looked out the window but couldn't see anything to cause all that noise. Kittens learned to climb the black walnut tree in back yard and climb back down. Celebrated 4th of July watching the Urbandale parade with Mom and sister’s family. Saw the fireworks half hour early when dark clouds moved in making it dark faster.

Finished the summer celebrating nephew's 15th Birthday, going to the amusement park, and Iowa State Fair with family. Had to fix the clothes washer hose connection with 5 trips to the hardware store. Sister planted marigolds near my house and those blossomed beautifully this fall. I got 2 pansies bloom, the only blooms in my flower pots this summer. My new female Beta fish Danae died, then got Danae Jr to have her die a few weeks later. My Mom wanting to thank me for her birthday party cooked a birthday dinner for me instead of going out to eat. Planted new iris bulbs and pray they bloom next year. Celebrated ferret Eowyn's 6th Birthday (ferrets live 5-8 years is she is an old lady). Received my last unemployment check and cancelled the cable TV. At least I went to the Joan Jett/Heart Concert before falling despair (I bought the tickets before losing my job). My female Beta Leda Jr died so I guess my life is just cursed.

After a hailstorm, had 2 roofing companies drive by asking to inspect my roof for damage. Sure, why not. One company I never heard from again. The 2nd had me call my insurance company to make a claim. The insurance guy came out to inspect the damage and guessed my roof was 12 years old. He must have called the roofer cause, they showed up at the same time (and I know I didn't set that up). Insurance guy agreed to a new roof so got a new roof. Bought concert tickets to see Elton John next summer with nephew. Had powdered sugar snow fall on the grass a few times, ferrets love the snow and cats not so much. Had one single Trick or Treater come to my door. Celebrated cats Bilbo and Misty's 1st Birthday. Fully grown cats now and kittens no more. Got them some new feather teasers they love chasing. Celebrated niece #4's 16th Birthday. We made a joke out of her professional made cake stating "Swee 16".

Spent Thanksgiving at my brother's house with our sister's family and Mom. Played games and looked at ads. Spent Black Friday shopping with sister’s family. Preparing to be a tax preparer next tax season. Decorated the house for Christmas and got up on my roof to put back the icicle lights that I had to take down so the roofers could replace the shingles. I hope next year is a lot better, as they say: “Everywhere from here is up”.

Have a Wonderful New Year,

Jordan

Bilbo (cat)

Misty (cat)

Eoywn (ferret)

Luthien (ferret)

Boromir (ferret)

Leda (fish)

Aeneas Jr (fish)

Achilles Jr (fish)

Happy Thanksgiving

After a hail storm, had 2 roofing companies drive by asking to inspect my roof for damage. Sure why not. One company I never heard from again. The second one had me call my insurance company to make a claim. The insurance guy came out to inspect the damage and guessed my roof was 12 years old. He must have called the roofer cause they showed up at the same time (and I know I didn't set that up). Insurance guy agreed to a new roof so got a new roof. Roofers broke my gutter guards so waiting them to be replaced. With all this snow and cold, I might have to wait a while for that. I informed the insurance guy of my plight and he agreed not to release any funds until I am satisfied.

Canceled the cable and sent back the box. It is weird watching antenna TV and some channels don't come through. I notice a lot of rerun channels that play reruns from 50's, 60's, 70's, etc. all day. Bought concert tickets to see Elton John with my nephew. Paid nephew a few times to rake leaves, mow the grass, and he winterized the mower. Put away the bird feeder and got suet cake holders out. Still toss peanuts on ground for squirrels. Took Mom to an appointment since we hate her driving alone (cataracts). My sister usually does those things, but she was busy.

Had powdered sugar snow fall on the grass a few times, ferrets love the snow and cats not so much. Had 1 Trick or Treater come to my door with plenty of decorations in the yard celebrating Halloween (which screams I have candy). Celebrated cats Bilbo and Misty's 1st Birthday. Fully grown cats now and kittens no more. Got them some new feather teasers they love chasing. After 2 years of searching, I finally found the furnace filter slot (it was covered up by a slat of metal) and replaced the filter. Old one was filthy. Celebrated niece's 16th Birthday at Cracker Barrel. We made a joke out of her cake that stated "Swee 16". Received 3 Rejections for job interviews (2 were with a temp agencies).

Spent Thanksgiving at my brother's house with our sister's family and Mom. Played games and looked at ads. Took niece and nephew Black Friday shopping and bought their Christmas gifts. Taking classes to be a tax preparer next tax season. Once home, started putting up the Christmas decorations. Finished up today. Got up on my roof to put back the icicle lights on the shingles and gutters that I had to take down so the roofers could replace the shingles.

Now watching my Christmas movies on DVD as I write out my Christmas cards.