525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Do You Owe the IRS Money That You Can’t Pay? Are You a Year or More Behind in Filing Your Income Tax Returns? Are You Behind in Your Payroll Tax Filings or Payments? Our Tax Relief services and Tax Resolution assistance can help you get tax relief!
Showing posts with label penalty abatement. Show all posts
Showing posts with label penalty abatement. Show all posts
Wednesday, July 24, 2024
Monday, July 1, 2024
Colorado Springs: The IRS is Charging Me a Penalty. How Can I Get the Penalty Abated?
The IRS charging you a penalty? Did you file your tax return late? Did you not pay your federal income tax on time? Did you fail to pay your taxes at all? If you answered 'yes' to any or all of these questions, then do not be surprised if the IRS is charging you a penalty. The Internal Revenue Code Section 6694 allows the IRS to charge penalties for taking unreasonable positions, reckless conduct, and/or willful conduct.
When the IRS charges a penalty, what options are available? Taxpayers can request and receive penalty abatement or removal of penalties under conditions. Consulting with an Enrolled Agent, (EA) is wise to help you navigate through the process of obtaining penalty abatement.
What are the types of Penalty Abatement?
First-Time Penalty Abatement (FTA): Available to taxpayers who have a clean compliance history for the past three years and have not previously requested penalty abatement
Reasonable Cause Abatement: If you can demonstrate that your failure to comply was due to circumstances beyond your control, such as natural disasters, serious illness, or other significant life events.
Administrative Waivers: Sometimes, the IRS provides administrative relief for specific groups of taxpayers or under certain conditions.
A tax professional like Marcelino Dodge, EA, CTRC, can review your tax records and review your eligibility for a specific type of penalty abatement. After this review, the gathering of documents is required to help with the preparation of the necessary forms for submission to the IRS. Your request is then submitted to the IRS.
You will need to follow-up on the request after a reasonable period of time. Patience is important as the IRS can take a while to process the request.
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Thursday, May 25, 2023
Colorado Springs Video: What is Reasonable Cause?
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Wednesday, May 24, 2023
Colorado Springs: Important Question: What is Reasonable Cause?
In the Internal Revenue Manual it states that penalties can be abated for reasonable cause? What is reasonable cause? Sadly, what a taxpayer thinks is reasonable cause is not considered reasonable cause by the Internal Revenue Service. Many times when requesting penalty abatement a taxpayer has to go to appeals.
Marcelino Dodge, Enrolled Agent, can help in the request for abatement of penalties. Many times the penalty is just an honest mistake on the part of the taxpayer. Other times a detailed explanation may be needed to explain the reasons why the taxpayer qualifies penalty abatement. Other considerations are 1) Has the taxpayer had this issue before and 2) What is the taxpayer's history of compliance?
There are other factors that can also affect taxpayer's claim of reasonable cause for penalty abatement. To have the best chance for penalty abatement, maintain a good history of compliance.
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com Thursday, May 11, 2023
Colorado Springs Video: My Request for Penalty Abatement was Denied, What Options Do I Have?
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Wednesday, May 10, 2023
Colorado Springs: My Request for Penalty Abatement was Denied, What Options Do I Have?
When a request for abatement of penalties is submitted, many times you will get the response that your explanation does not meet the reasonable cause standard. If you have received such a denial, do not despair. There is normally a period of time (30 to 60 days) you have to appeal the initial decision. This leaves the question: How can I win on appeal?
To start you need to hire competent tax professional such as Marcelino Dodge, EA to represent. With a proper review of your facts and circumstances, we can determine if you qualify for First Time Abatement or if a more detailed appeal is needed. On a more detailed appeal we will need all the information and documentation as to why you feel the penalties should be abate. A clear, concise letter of explanation can then be prepared and submitted with the documentation establishing your case to the IRS appeals office for review. The strong case we present the easier we make it for the IRS to approve the penalty abatement.
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Thursday, May 4, 2023
Colorado Springs Video: I Filed Late and Have a Penalty, How Can I Get the Pen...
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Wednesday, February 8, 2023
Colorado Springs: Owe Hundreds of Thousands to the IRS? What Can You Do?
Where do you start? First find a tax professional such an Enrolled Agent to a complete analysis of your specific situation. With the analysis you will compare what you spend with what the IRS allows. There will be an analysis of assets to check on equity you have in any real estate, including the home you occupy. There is also an examination of the amount time left on the collection statute. A proper analysis is necessary to know exactly what you can and cannot due.
Can some type of loan be used to help make you uncollectable? Will filing the state tax returns first help you with the IRS? These are just two of the questions that can be asked during the representation process.
Marcelino Dodge, EA can complete the analysis and help you get your tax issues resolved.
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
Monday, November 28, 2022
Colorado Springs: Welcome to The Tax Answers Advisor Podcast!
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One of the many challenges I've seen in my years of
experience in doing income taxes, and in meeting with my clients is that
oftentimes, because of the way the tax code is written, and even how oftentimes
some tax people explain many terminology, and such as it's just difficult for
many people, and meant just simply to understand what is happening on their tax
return. And so what I'm working to do today, and as I go through this show, is
to help ones to understand it better by putting it in basically, everyday
language, because how we talk is the best way for us to be able to understand
what is happening with our tax return, not just okay, this item on line seven
is this and this item is line eight.
But what does that mean? And I see that look on my
clients faces many times as to what is that? Was I what that is? Well, yes,
that's what that is, well, why did my tax person not explain that to me, all I
can do is turn around and give them back a blank stare, saying, I don't know
why that wasn't explained to you. So that's my goal is to try to help ones to
better understand what is actually occurring on their tax return.
Also, what I encounter a lot in my business, and a
part of the purpose of this show, is to dispel common myths that exist when it
comes to income tax, in particular, federal income tax. One of the most common
myths that I encounter and even many people here is that the rich people do not
pay their fair share of taxes. That is really a tax myth. And why is that?
Well, when we look at actual figures from the Internal Revenue Service, the IRS
which can be our friend can be our enemy just as easy.
What we can certainly appreciate when we look at
this, though, think about this, people who make more than $500,000 a year make
up 1% of taxpayers consider that. But they pay and this is according to 2017
figures, they paid just over 38% of the federal income tax that was collected.
So is that fair? 1% of the population pays 38% of the taxes. That's fact as of
2017. Now, not to go too many figures here, but just a couple more, if they're
in the top 10% of taxpayers, which are basically those who make more than
$140,000 a year they paid 70% of the taxes, federal income taxes collected.
So once again, you got 10% of the population paying
10% or sorry, paying 70% of the taxes, federal income taxes collected. Is that
fair? Now, here's this and I know this figure is absolutely true based on my
own practice in doing income taxes, the bottom 50% or 50% of taxpayers or just
under 50% of taxpayers pay 3% just a little bit over 3% of the federal income
tax that is collected. So once again, is that fair? That just under 50% of the
taxpayers pay only 3% of the federal income tax.
You got to decide that yourself based on what the
IRS his own numbers are. And I know this is true because many of the people
that I do taxes for who make who would fall like under 100,000 or even around
150,000 in a year, pay no federal income tax. So yes, I do know there's are
many, many taxpayers who pay no federal income tax. So basically, the myth
about the rich not paying their fair share is a myth, they pay the vast
majority of income taxes that are collected.
Another common myth that I encounter in my tax
business has to do with people who get married in the latter part of the year. They
think many people think, and it is very common that well, I got married in
December or November of the year, I was single most of the year. So I should be
able to file a single or if I have children, I should be able to file this head
of household. Well, according to IRS tax code, this is also a myth that is
commonly propagated, and some people have filed their tax returns just simply
wrong.
And with that, because it is wrong is because the
federal tax code states that if you get married basically on December 31, you
are considered married for the entire year. So it doesn't matter when you got
married during the year, whatever your status is, at the end of the year. That
is what your tax filing status is, which means you either are filing, married,
filing jointly, or married filing separately, there'll be some other specific
items, I'll get into another shows about tax filing statuses.
But that is one, once again, if you are married, at
the end of the year, you are considered married, even if you're married 306. If
you were single, 364 days, you're considered married for the whole year, you
got married on a 365th day of the year. So just another myth to keep in mind.
Now many times people come in and ask or I get many phone calls. This is a myth
too, that I get this immediate tax deduction. Because I bought a house. Well,
there, the possibilities are there. But under current tax code law, there is no
credit for buying a house. Now there can be maybe some energy credits that you
may qualify for.
But that's a whole another discussion. But yet, you
also may get a deduction for your interest on your home, depending on how much that
is and other deductions that are still limited on the itemized deductions. But
yet, it doesn't give you an immediate credit and improvements on a home Don't
give you a tax deduction either. Because many times with those improvements,
they just add to the basis of the home, but they don't give an immediate
deduction. And once again, can get in those more details another show.
And another common one I hear coming in is people
come in and say, Well, this place over here told me I'm getting X amount or $2,000
per child on my tax return. Well, there's a whole lot of information that goes
along with that and a whole another discussion. But you do get a child tax
credit, which is $2,000 per child now that is there. But yet what most people
don't realize that's a nonrefundable credit, which basically means it only goes
against tax.
Now there is a refundable portion of that, which
I'll get into more detail later. But yet that that's a greatly reduced amount,
and certainly more understanding. And sometimes you need to actually be looking
at the form to better understand that. What we need to keep in mind, too, is
understanding another understanding I want to create with this show has to do
with Tax Cuts and JOBS Act. There's so much misinformation out there about that,
like the biggest one here is that it only benefited the rich.
Well, I can tell you from my tax practice, and from
my tax season since that was filed in both filing 2018 and 2019 tax returns
that did benefit many, many people who made $100,000 a year last even $150,000
a year or less. How does it do that? Well, it did that because one of my
previously just mentioned was a $2,000 child tax credit, which previously was
only $1,000. So that doubled right there. So that benefited a bunch of people
already. Also the tax rate dropped.
I don't know how many clients I did, who their tax
amount that they actually owed at the end of the year was less into for 2018
than it was for 2017. And when I explain that to the taxpayers, they were like,
well, that makes sense. Thank you for explaining that to me. And then the last
thing I want to mention here before the break is most people rely on some type
of software in doing their tax return. Well, sometimes say, well, the tax
software company should know.
But one thing I do know, in doing using professional
level tax software is that you still need to understand the loss nor the tax
software is doing because the calculations which tax software is great for
that. However, it doesn't always put it in the exact place where it needs to
go. So he just can't rely on software to do it, maybe on some very simple
returns, it could work. But in general, tax software, you need a little bit,
you need some good knowledge to be able to put it into the right place,
especially when you start dealing with small business, rental houses, and other
challenges and other things that can make a tax return much more complicated.
So we want to keep these purpose in mind. And these
are some of the points that we're going to cover in more details in the show as
we go along over the next few weeks. Now, as I mentioned earlier, my name is
Marcelino Dodge and who am I to be doing a show like this? Well, one area is
I'm a tax professional with 20 plus years experience in the tax business. Also,
I am an enrolled agent with the Internal Revenue Service, which basically what
that means is that I am licensed to represent taxpayers before the Internal
Revenue Service also indicates that I take regular continuing education classes
each and every year.
Earlier I neglected to mention that we're
going to talk about business taxes as well in the course of this show.
So that if you have a Corporation, Partnership and
LLC all of these we're going to touch on all of these at some point in some
show during the course over the next few weeks. Now back to a little bit more
about who I am as Marcelino Dodge and why I'm doing this show and why I am
doing this show. One is the fact that I just love taxes. Frankly. I've been
doing it income taxes, since the 2000 tax season.
It's been a great time I like solving problems for
people, I like looking for the answer, I like looking for that tax deduction.
In order to become an enrolled agent back when I took the test with the IRS
initially in 2005, it's been altered since then. But at that time now, it was
four tests, four different types of tests that the IRS administered at that
time. And they were all written tests that you went to in this case.
I went up to Denver, and spent two days in Denver, a
morning and an afternoon over two days taking these tests on various tax
objects, from individual to business, to ethics to just general tax law, and so
on. And they were pretty cumbersome at the time anyway, got through those and
passed the background checks that the IRS does. So I had the privilege of being
an enrolled agent since the spring of 2006.
And since that time, I've taken a lot of continuing
education courses, I take many, many hours, probably about 40 to 50 hours a
year, in education credits, just to keep up with all the changes that happen.
And especially after the Tax Cuts and Jobs Act in 2017. That was a busy season
going into that next tax season. So certainly, we covered a lot and we continue
to do so. Now something interesting that I find with me is the fact that when
it comes to most tax people that going to do taxes, that's like the first thing
they do when they come out of college.
Well, frankly, for me, that is not the case. In
fact, I was in other businesses for several years, after I got out of college.
And after I got out of college, graduating with a bachelor's degree of no things,
Radio and TV, it was a Mass Communications Major I had. But I ended up doing
taxes, which is great. I've been very happy in what I do. But also in that
time, actually, before I got into taxes, I was also I had also gotten into the
investment business. I'm doing investment advisory work.
I'm also Life Insurance Licensed as well. So I can
speak authoritatively in those subjects as well. And I'm going to work those
subjects in with this business, of taxes. And with this show, because of being
together of having a unique mix of the tax background, of the life insurance,
and annuity background of the investment background to be able to work and see
how all those will work in harmony, especially when we come in and look at
things like IRAs and other plans when we look at how strategies ones can come
together to help them to save money on their taxes now and even in retirement.
How you can save money, planning ahead for
retirement? So indeed, these are some wonderful things to keep in mind. And as
I mentioned at the outset of the show, this the main focus of this show is
income taxes. Now, one thing we got to keep in mind, though, and even in the in
the show, it talks about Tax Answers Advisors, the word “tax”, it's a three
letter word. But I have never seen a word that has so much misunderstanding
behind it. Because when you say the word tax, there is any number of actual
taxes you could be talking about.
Yes, I focus in on income tax, that is my main line
of business that I do. Now, there are other taxes that we pay that often people
don't, don't realize that fall into that and one is sales taxes. Now, I'm not
going to really get into sales taxes in this show. And the one reason is, is
because of the 1000s of jurisdictions that exist in this country when it comes
to sales taxes, because not only do each state has its own sales tax, all 50
states, then you got counties, then you got municipalities, all of them have
their own version, or own rules in regards to sales tax and they have their own
percentage rates.
So in general, we're not going to talk much about
sales taxes except in the term of income tax of where their deductibility comes
in. Another area that we're going to touch on a little bit, but we're not going
to get too much into payroll taxes. But that's also that can also be another
topic that kind of relates more to income taxes, then what actually sales taxes
do what we're concerned about with payroll taxes, and we'll probably touch on a
little bit then because where it falls in with income taxes is the fact that
many employers over the years have tried to get out of paying their payroll
taxes.
Now what is of course, Payroll Taxes? Well, that is
what the employer contributes on behalf of the employee for their social
security, for their Medicare. And then oftentimes, and then depending on the
state, there could be unemployment taxes that they pay for, for this state.
Also, there's some federal unemployment tax, which is very, very small amount
compared to what you paid in most states. But the key thing to keep in mind
with payroll taxes, many employers, they play a game with that.
And that's not a good game to play. And sometimes
what they do, and many times they do is that they pay people as an independent
contractor, so that they don't withhold taxes for the people. And also so that
the person ends up paying all of their own taxes, they're own both Social
Security and Medicare taxes. Now, that is a very dangerous game, see, where
most employers fail to realize those that they think I don't want to pay these
taxes?
Well, first of all, what they got to remember is
that when it comes to payroll taxes, is that you're better off treating that
person as an employee when they are an actual employee. And the reason is, is
because if the IRS catches you, not compensating this employee properly, the
penalties they can charge are outrageous. Now, another point with that is the
fact that if you give them a 1099 as an employer, and they are really an
employee, if the person that you're having an independent contractor, but
they're really an employee, but they got a 1099.
If that person goes to a tax preparer, like me, who
then says, What's going on with this? And, and really, the, the tax preparer
really looks at it closely, and says, gets all the details from the individual.
What kind of job did you do and get learned does really, really does the
homework that a tax preparer should do in the matter. The tax preparer could
look over the IRS guidelines as far as employee classification, which is a big,
big matter with the IRS is improper employee classification.
The tax preparer like myself could look over the
circumstances and go, you know, Mr. client, you are not an independent
contractor. Why did you get a 1099? They say, well, that's just how they paid
me, which is true. It's just how they paid them. Well, I want to inform you and
advise you that because based on the circumstances you described, and based on
IRS guidelines, you are actually an employee. Now, here is your options.
And this is something that I that, sadly, I have
noticed is not done a lot in the tax industry is Alex, that they're not
explained to them. This is how, this is what you can do. As my client, these
are the options you have. I tried to explain all of the options to my clients.
And in this particular case, the option I explained to them is the fact that
this is the form we can file. This is how we file the form. And this is what
the repercussions are of filing this form. Now, usually they because there was
no withholding on the tax or withholding on it.
They end up paying some tax because they did that
Social Security, Medicare wasn't initially withheld from their check. So then
they end up paying that in but yet instead of having to pay the other half, we
put in all the employer information. And then the employer is contacted by the
IRS saying okay, what's going on here because in addition to sending that
information in, we also send in another form that says, here's all the details
of what this employee what this person did in working for this answering such
question is, who controlled the activity, who scheduled the hours, who set the
rate of pay?
And there's a whole list of questions you go through
on that form. And so what we want to do is go through that. And then as I tell
a lot of people the fact that you fill out this form, the IRS will take care of
it and I don't know how many instances I've done over the years where I have
completed the forms in this matter and the IRS has taken care of it. So payroll
taxes are a very important thing. Another show are probably touch on it more in
in more detail.
But that is one of simply stated, that is one of my
pet peeves when it comes to payroll taxes is that employers need to not shy
away from them, but they need to actually pay him because in reality, the
employer is really protecting themself by doing that, because the potential
risks that an employer is taking by not doing that properly, are just
outrageous is not a good thing. So please, I urge all employers to make sure
you a whole, you do proper payroll tax withholding.
And then another type of tax, that we're not really
going to, again, touch on very much in here, but it is one that may come up.
Now, some said, some cities, some larger cities, in particular, have their own
local income tax that's held out of a check, we're not going to really talk
much about those because those rules vary so much from municipality, to
municipality from one side of the country to the other, those are, those are
particular to the to the rules. And the same thing is true even with states.
Now, of course, I could talk about the state that
I'm in Colorado, because I'm, I've been here I've done taxes for Colorado for a
lot of years, and maybe even touch a little bit on some other states. But in
general, if you're in a state that, that I'm not too familiar with, then I'm
not going to comment on because I don't know that much about that state. But
there's always ways to find out. But anyway, we're going to not shy away. And
then the same thing comes like with local taxes.
I mean, we think about other local taxes, that one's
paid course I mentioned about the local sales taxes, you got local property
taxes, you got local excise taxes, you got other taxes that all fall in there,
we're not really going to go into those type of taxes, because once again,
those fit into an area that are more specific to a certain area, or certain
part of the country. So we're gonna mainly just sit here and we're going to look
at the federal income tax code in a way that is just what it is, what the code
is, what it actually says, not what you hear people in any anywhere say, but
what the code actually says from a very objective standpoint.
One of the biggest challenges I encounter in doing tax
returns is the fact that I have people come in during tax season. And they say,
Well, I started a business last year. And I'm just like, you started the
business. And in some cases, it's people I've done business with for a while.
And then my next question is, you started a business last year.
Why didn't you come see me? And then they just kind
of give me that deer in the headlights look like, anyway. But yet, where the
challenge comes in with that is the fact that oftentimes, they want you to fix things,
or they want me to fix things that they try to make sure they don't pay that
much tax on their business. Well, we're talking, okay, the year ended on
December 31st. And you're in, in here in the office, like, say, February 20th.
If you'd have been in here, like two months ago, we
could have done more. But we're gonna have to run with the numbers that you
have right now, which is going to be x amount of tax that you're going to end
up owing, because we didn't sit down together ahead of time, which basically
leads back to the part I'm going to cover here, which has to do with proper tax
planning for the lowest income tax. And in the case of a self-employed person,
would also be self-employment tax.
Now, a little bit about self-employment tax is a
that's we need to make sure you understand is that self-employment tax is the
Social Security and Medicare taxes that you normally have held out of your
check when you get a W two from your employer, that 6.2% to 1.4, or 5%. Now,
self-employment tax also takes in the portion that the employer normally
matches on your behalf. So when thinking about that, which is bad approximate
about another 15%, there's a calculation the IRS doesn't there, but I just
usually just throw out 15% just for simply planning and simplification purposes
with my clients, so that we can help plan a properly.
And so as we look at tax planning, overall, whether
you're self-employed, or you're working for an employer, minimizing a person's
tax liability, is absolutely essential and absolutely possible. Now, there's a
number of circumstances and a number of factors that can play into what can
minimize your tax liability. And even when you file your tax return of how to
make sure that when you do file your tax return, that either ideally you break
even, or you pay very minimal tax, or you maybe get a little bit of a refund.
So that's what I try to work with my clients to help
them to work to do is to just get that nice balance in there. So basically,
you're not giving the government, the IRS a non interest bearing loan for six
months, three months or whatever. We want to make sure you get the maximum
amount throughout the year. And that's through proper planning. And so in
minimizing that, what I try to do and working with people is to review a plan,
is to sit down and make a plan. Part of making out a plan is to help you to
establish goals. Where do you want to be? Where do you want to go to? What's
your goal?
Next year, two years, three years? What do you want
to eliminate? We sit down, I want to look over not just consider your taxes,
but your over-all financial focus to help you get better cash flow. Now, what
we do when we do that is we sit down, we work together, we review look over the
current year and also look back perhaps. What did we do in the prior year,
which is many times what I'm having to do with clients that we stopped we look
at, this is what you did, in this case 2019 did this work?
And the vast majority of time, you know what the
answer is? The answer is, it did not work. That's why we're sitting here now is
because we need to figure out how to fix that. And we don't want to be doing
that in November, which is next month, frankly, now we would actually want to
be doing that like, right? Right after tax season. And even through the summer
sitting down looking at these areas, having regular meetings to make sure that
you are saving time, and that you're saving money.
And basically, what I'm talking about here is that
we what we do is we take on a year-round approach, we just don't stop and look
at it at tax time, because by the time we get to tax time, it's basically too
late. Now, though, there are a few adjustments we can do at tax time, like
perhaps make a contribution to an IRA, deductible IRA, or in the case of some small
businesses, you might be able to do like a SEP IRA.
But those are adjustments, those help. But yeah,
with some better planning, and looking at things that it's better time of year,
we can do some better tax planning, do some saving. Now in the case, for those
who are self-employed and have a little like sole proprietorship business
they're operating, that's taking good advantage of their deductions. Of course,
some of that also is not just going off what you have in the checking account,
that's were working together, and having you to have a good profit and loss.
So that you know how much money you're actually
making, not just saying, Oh, I got money in my checking account, I must be
doing just fine. Well, the money in your checking account is great. And it's
wonderful. But it's not an actual position of where you are financially and
where your business is made for the year. Because oftentimes, as a sole
proprietor, what are you doing, you're taking money out for where to live. And
as you take money out to live, basically, you're like drawing on the profits.
And so because that money that comes out, like that
is not a business expense. And that's money, you could possibly pay self-employment
tax on at the end of the year. So where we got to come back, and that's where
working together and planning throughout the year, we can make sure that either
if you need to make like an estimated tax payment through the year, you're able
to do so. And we get it set that way.
Because you'd be amazed how often I've seen tax
returns I've come through a business makes several $1,000 or 10s of $1,000 in a
year. The individual brings their paperwork in and brings in their the profit
and loss that they determine that they made. And they know they made money. But
yet they're paying out several 1000 in taxes, not just income tax. They're
paying out self-employment tax, and their strategies that we're going to
discuss as we go through that can help ones to perhaps minimize that, and be
able to do even more.
And so part of our whole plan in working with people
is to not only help you save on taxes, by developing good tax strategies for
you. We want to help you save time. Yes, help you save time, we want to help
you to automate, because there's a lot of work that you do in your business.
And you're good at what you do whatever that business is. I mean, there's
people here that do that I work with that do great work on truck, on diesel
trucks, great work. But that's what their business is. And that's what they
know, they don't know what I do.
They love what I do for them because it allows them
to do what they do. Got people who do great work on tree trimming, trim trees,
that's what they do. They love that they're great at that, boy, it comes to the
numbers like what I do. It's just not their thing. And I can go on and on and
on about examples of ones who are good at what they do. But yet the items that
I help them with, and I work to streamline, automate, help that busy work so
that they can concentrate on what they're doing.
And then so you can concentrate on what you're
doing. My goal is to help you to make money, not just file your tax returns.
That's a part of what we do. So let's keep this in mind as we work to not just
have a little bit of planning, but to have a whole plan throughout the year.
Have a plan that helps you to grow your wealth faster. We'll work on
establishing goals. You may have some pains that you have to deal with some
things we got to work to eliminate?
Well, we can work to eliminate those pains for you
so that you can focus again, on growing your wealth. And even in these times
that we're in right now going through this COVID. Having to stay home, maybe
we've had more time to look at some of this information. But yet, we still need
to think about taxes, and something I'm going to discuss in a later show is
unemployment. Many people probably listening to this show, receive that extra
unemployment from the government.
Now, one thing that I don't know how many people
realize, or even understand is that extra $600 a week that was paid is
considered taxable income. Now, there's other effects I'm going to discuss in a
later show that it also has. And so these are things maybe that need to be discussed
and sort of work out. And so we want to help you to be proactive, not reactive.
We want to be proactive in our approaches, so that you pay as little tax as
possible, as well as the fact that you can grow your wealth.
We help you develop strategies, help you to be
compliant, because our overall goal is to help you as our clients to do the
best you can financially and to grow your wealth because we don't, we believe
that you don't have to be rich and famous to be able to get the help you need.
We want you to be able to get that help and get better results simply by
getting some proper planning done and working together with a professional who
can help you not only to file a good, accurate and complete tax return the
first time while at the same time also helping you to effectively grow your
wealth.
We've covered a lot of information that is,
regardless of the purpose of this show and how we're going to help you to
better understand your individual tax return. How could prepare a good business
tax return as well so whether you're an Individual, you have a Corporation, an
S Corporation, a Partnership, an LLC.
We're going to be able to cover a lot of information
on the shows coming up. To be able to help you to both tax returns, and there's
just so much information that it's going to take multiple shows us to cover
multiple subjects but we do really appreciate you being here. A couple things I
just missed earlier I wanted to touch base on. One, is a myth that I missed
that I wanted to mention is the fact that many times during the course of the
year.
This often happens with children. I have a client
come in, and what happens is that they'll say well this other tax preparer says
such child was claimed on a tax return, and there's nothing I can do about it.
That's because if a child has been claimed on a tax return because they're
electronically filed that means if the return was rejected because said
dependent or said child was claimed on a tax return and most commonly this
happens in the case of divorced parents, although sometimes it does happen when
there's individual who shouldn't be claiming the child, claims child are trying
to get away with claiming the child now.
They always look back at them with the confused look
when they say that because I'm like, that is really unusual. But whoever that
is, would say that, because I deal with this, I have at least one or two of these
cases, each and every taxes. And I always say, Well, no, that's not true and it
isn't true, and I know it's not true. You can fix that situations if your
dependent has been falsely claimed on a tax return that are basically you can
even say fraudulently claimed on another tax return that they're not supposed
to be claimed.
And I've helped many, many parents especially single
parents in this case, they're sometimes married because it's like a second
marriage for some fix that so that they get the money they deserve because the
child that they claim that they're eligible to claim we'll get more into this
in another show. But yet, if a child was claimed on another tax return, simple
matter is. Yes, it can be fixed, and I certainly help once to fix such matters.
Now I touched a little bit earlier on tax software, and why it's not important,
not completely rely on the tax software. Well as a professional that we're
using as a professional grade tax software, and one who's gone to many
different seminars over the years and I've actually heard from several
instructors, where they encourage you not only to get know the tax rules and
understand the tax rules, but really make sure your tax software is putting
things in the correct place. Now there are many types of TAX software and
there's some design for individuals, and some that ask them questions and
supposedly though we ask those questions, it'll put it in the right place.
Now one thing on some “Do It Yourself” software, they
do ask questions but if you don't answer those questions right. Who knows what
the tax software puts it? So that's why it's not always good in some situations
to rely on this just the software, knowing where it goes, knowing how it's
supposed to be put on is vitally important that I've had to actually fix tax
returns on a numerous occasion that were initially prepared on “Do It Yourself”
software, and it was simply because the client, and they're doing the best they
can.
These are great people. They just didn't understand
they thought, this is the software and it should be putting it in the correct
place. And I looked it over and I said, no this software didn’t put it in the
right place. And this is how we got to fix it, which then I make a
recommendation, especially if it's gonna make a significant difference that the
client file an amended tax return. And then we file the amended tax return and
the client either pays a little bit of extra tax they owe, or in some cases
this is actually what happens in many cases.
The client actually gets a bigger refund than they
would have originally gotten. So it's really tricky on software and so that's
why I'm always going through reviewing the rules, looking at my software going
okay is this in the right place and vast majority of the time it is, but
occasionally I do find where even the professional software, sometimes it's
just not in the right place. Sometimes just the fact of getting familiar with
your software as well, and doing it multiple times within your software.
But yet, it is still vital to know the rules which
is why I stressed the importance, especially if you have anything like small
businesses, some type of farm. If you have rentals, if you are involved in some
type of partnership, or an S Corp, or even a nonprofit. I haven’t mentioned nonprofits
yet, you're a nonprofit, it's really good to have a tax professional. Do your
tax return. Now an important part here of why it is so important is because as
an enrolled agent like myself.
I can be there to back you up and I back up my work
to represent you before the tax return. That's the challenge if you use “Do It Yourself” software is who's going to represent you? Or if you do certain other,
or if you have your neighbor do it, or if you have this person that claims they
know how to do it which we'll probably talk about this more in another show
what's known as the “ghosts tax preparer”. The chief person down the street who
uses a “Do It Yourself” software, but then doesn't sign the tax return.
And then you get a letter from the IRS about it, and
they're like, you're not responsible because they didn't find the tax return as
the paid tax preparer, actually that's a whole another subject but that is
something you got to be aware of and watch out for. So watch out for those
things and keep in mind please that once again as we go through this show,
focus on your personal and business income taxes. We want to help you. We want
to help you learn about deduction.
We want to help you to know how to use your vehicle,
or your vehicle can be deducted, legally, that's what we focus on is how you
can do everything legally and not just go with well my neighbor's that I can do
this, or this person has been doing it this way, or whatever the case may be,
you, you cannot rely on Mr. Joe down the street. It says well my accounts been
doing it this way for years. Well, one thing I've learned is that many, there
are many people who do taxes.
And sadly, sometimes they just don't do them right.
And they're supposed to be professionals. So it's very, very, very cautious,
which is why we really take this seriously and why we work and do this show to
help once you understand that, as well as I'm going to talk about here in the
last few moments about as I emphasized about planning, advising. That's what we
want to work with ones to help to do, is to do their Planning and Advising in
advance, for the tax year.
Doing it, do the tax year throughout the tax year,
so that they can be best prepared, have their goals established, make
adjustments on your withholding with your employer, so that maybe you can take
advantage of the new W-4 form which in itself is very confusing. But yet, we
can help ones do that and we will help ones do that as part of our Annual
Planning Program. And then of course always review in November so that last
minute adjustments can be made.
So each of these areas here we want to help you to work on, and to continually work as we work as a tax answers advisor here for you to be able to maximize your cash flow, help you to grow well. And of course, make more money, focus on guarantees and have good cash flow throughout the year and eliminate any and all pain. This is Marcelino Dodge, I really appreciate you listening to this first show of The Tax Answers Advisor, and we're going to come back again, and share even more down to earth, common language tax information with you, as we'll discuss about dependents on your personal tax return. Again, thanks for listening so much to The Tax Answers Advisor. I'm Marcelino Dodge.
525 N Cascade Ave
Suite 200
Colorado Springs, CO 80903
(719) 359-8789
Wednesday, July 20, 2022
Colorado Springs: How Can I Get My IRS Penalties Reduced or Eliminated?
Is it really that easy to get your IRS Penalties reduced or eliminated as some advertisements claim? In a previous blog I discussed the reasons why the Internal Revenue Service charges penalties to taxpayers.
Some penalties such Failure to File, Failure to Pay, and Failure to Deposit can be abated under some circumstances. However to qualify for abatement, taxpayers must meet some specific criteria including not being penalized in the prior 3 years. Marcelino Dodge, Enrolled Agent is well versed in this process and can help you to get these penalties abated if you qualify.
If a taxpayer does not qualify for the penalty abatement discussed above, then you may need to use the IRS appeals process. In this all the penalties can be appealed and used in the negotiation progress with the possibility of abatement during this negotiation time, which may include the filing of an offer-in-compromise. I recommend that taxpayers do not try to navigate these waters on their own. The recommendation is to find an Enrolled Agent or CPA that works in tax resolution to guide you through this process.
Marcelino Dodge, EA
525 N Cascade Ave
Suite 200
Colorado Springs, CO 80903
(719) 359-8789
(Call for an appointment)
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