What Will the IRS Find If They Google You?

March 11, 2014 at 5:30 pm (Adult Industry, Business, Business Taxes)

The Internet is a wondrous world where people may become anyone with any lifestyle that they desire. People create alter egos for a plethora of reasons. Some do it to exercise other personalities within themselves, researchers and writers do it to learn more about a particular group or culture for their work and others do it to speak their thoughts without the fear of recourse. Of course there are also those that do it to deceive and thieve. In this great web of information, some is true and some is not. Anyone can say anything about themselves or others be it true or false.

We all know that the IRS will go to great lengths to find in depth information about taxpayers’ modes of income and lifestyle including “Googling” their websites and blogs. However, it has come to my attention that they are delving further into taxpayers’ online life than suspected. They are hunting to uncover other possible identities and lifestyle via message boards, social media and individual postings. To some that may not be much of a surprise, but it may come as a surprise that the IRS is also taking to subpoena companies to answer questions about your membership. Regardless of the intent or context, some IRS agents are willing to use taxpayers’ own words and the words of others against them in an audit, be those words true or not.

Many might think, “Well, if you aren’t doing anything wrong, then why worry?”. There is much cause to worry as many people share the same name or pseudo name in real-time and online life. Identity mix-ups happen all the time and now with ease of the Internet and ID theft, the danger of being misidentified is higher than ever. You must protect yourself and one way to do that is to be truthful when preparing your tax return or when having it prepared.

I am a tax preparer who believes that client transparency is the key to a water-tight and legal tax return while also helping to legitimize the Adult Industry. I advise those clients with non-legal income to separate it out, report it and handle it appropriately within the tax law. Know that you and you alone own your tax return and will be held responsible for any and all information on it. Be truthful and keep excellent notes for each tax year in your records.

It is good practice for any business to have a business plan. I advise that if you own a business, that you at least write a detailed description of what your business is, what it offers and doesn’t offer and how it is run. It doesn’t hurt to also have a mission statement as well. Make certain that all of your online and real-time actions clearly and closely represent this description and mission statement.  Keep a copy with your tax documents as it may be crucial to your case in the event of an audit. In this way you will have written it when you are relaxed and eloquent and not when you are under audit, scared and stressed. It is also important to “Google” yourself regularly to keep a close eye on what is out there about you.

In an IRS audit it really is a “crap shoot” whether or not you are assigned a fair agent. With that in mind, do you really want to gamble with your personal and tax information as well?

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You know you’re a corporation if:

August 22, 2013 at 4:23 pm (Business, Business Taxes)

You filed an “Articles of Incorporation”
You have to file a tax return for the biz that is separate from your personal return
You are paying payroll even though you are the only person in the company
Your IRS EIN letter states that you need to file an 1120 or 1120-S
You filed Form 2553
You hold required, formal meetings and might be the only person attending
Your state or another is demanding a yearly corporation filing fee
Your filing date is March 15th (Sept. 15 with an extension)
Your tax professional says so

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Lost or Misplaced Your EIN?

June 13, 2013 at 6:04 pm (Business, Business Taxes)

via IRS

If you previously applied for and received an EIN for your business, but have since misplaced it, try any or all of the following actions to locate the number:

  • Find the computer-generated notice that was issued by the IRS when you applied for your EIN. This notice is issued as a confirmation of your application for, and receipt of an EIN.
  • If you used your EIN to open a bank account, or apply for any type of state or local license, you should contact the bank or agency to secure your EIN.
  • Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at (800) 829-4933. The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistor will ask you for identifying information and provide the number to you over the telephone, as long as you are a person who is  authorized to receive it. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.

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Ability to e-file may depend on the length of your name

May 16, 2013 at 1:39 pm (Business, Business Taxes, General Tax Information)

The Modernized E-file System (MeF) that the IRS, states and all tax software use has a required limit of 35 characters for a name, title or description (some states limit to fewer). The main problem is e-filing an application where your name or the name of your business/nonprofit will be set in stone based on what you put in that box, as with an Employer Identification Number (EIN). The IRS, however, only looks at the first 4 characters of the name when an actual return is e-filed. In many cases if your name is too long, you can paper file your application. However, in the case of an Exempt Org. postcard, you have no choice but to e-file.

Therefore, before registering or incorporating your business or nonprofit, you will want to keep the character limit in mind. It is a good idea to also ask the state where you may need to apply for certain tax status or numbers their character limitation as well. If you want to keep a long name, then create a shortened version of it as a DBA to use on your applications and returns.

When you apply for a number with your legal name, you may want to adjust it to fit the character limit as well so that your name, once altered, is as accurate as possible.

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Calculating Quarterly Estimated Taxes for the Self-Employed

March 20, 2013 at 9:00 am (Business Taxes, General Tax Information)

It’s that time of year again when taxpayers often pay an underpayment penalty with their tax due and then decide that this is the year that they will plan ahead and pay estimated tax payments to thwart that penalty next year.

Estimated Taxes:

To know if you need to pay estimates, you need to calculate if the total tax you’ll owe on your tax return will be covered by the amount of tax you have already had withheld (if applicable). If you only have self-employment income, then you need to figure out what your tax liability will be after deductions and credits you may receive and then cover that.
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This is what the IRS states about it:

Generally, you should make estimated tax payments if you will owe tax more, than an amount specific by law, after withholding and credits, and the total amount of tax withheld and your credits will be less than the smaller of:

1. 90% of the tax to be shown on your current tax return, or
2. 100% of the tax shown on your prior year’s tax return, if your prior year’s tax return covered all 12 months of the year.
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Estimated tax is the one area where you may call the shots to the IRS. Generally you are able to choose when and how much to pay. Your options are Apr 15, June 15, Sept 15 and Jan 15, 2014. You can pay quarterly, just once, twice or three times and decide how much.

To help you calculate how much you should be paying in estimated taxes in a given quarter after possible deductions and credits have been deducted from your income, consult the IRS Tax Tables found in this pdf for 2013. More information can be found in the IRS Form 1040-ES instructions.

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Tax relief for those affected by Hurricane Isaac in Louisiana and Mississippi

September 7, 2012 at 8:16 pm (Business Taxes, General Tax Information, IRS Information, Personal Taxes)

Via IRS.gov

Tax Relief for Victims of Hurricane Isaac in Louisiana

LA/MS-2012-15, Sept. 5, 2012

NEW ORLEANS — Victims of Hurricane Isaac that began on Aug. 26, 2012 in parts of Louisiana may qualify for tax relief from the Internal Revenue Service.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Louisiana will receive tax relief, and other locations may be added in coming days based on additional damage assessments by FEMA.

The President has declared the parishes of Ascension, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, and St. Tammany a federal disaster area. Individuals who reside or have a business in these parishes may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 26, and on or before Jan. 11, 2013, have been postponed to Jan. 11, 2013. This includes the quarterly estimated tax payment due on Sept. 17, 2012.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 26, and on or before Sept. 10, as long as the deposits are made by Sept. 10, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The parishes listed above constitutes a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and is entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Jan. 11, 2013, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Jan. 11, 2013.

The IRS also gives affected taxpayers until Jan. 11, 2013, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 26 and on or before Jan. 11, 2013.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before Sept. 10 provided the taxpayer makes these deposits by Sept. 10.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “LOUISIANA/HURRICANE ISAAC” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, IRS.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Tax Relief for Victims of Hurricane Isaac in Mississippi

LA/MS-2012-14, Sept. 5, 2012

NEW ORLEANS — Victims of Hurricane Isaac that began on Aug. 26, 2012 in parts of Mississippi may qualify for tax relief from the Internal Revenue Service.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Mississippi will receive tax relief, and other locations may be added in coming days based on additional damage assessments by FEMA.

The President has declared the counties of Hancock, Harrison, Jackson and Pearl River a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 26, and on or before Jan. 11, 2013, have been postponed to Jan. 11, 2013. This includes the quarterly estimated tax payment due on Sept. 17, 2012.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 26, and on or before Sept. 10, as long as the deposits are made by Sept. 10, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitutes a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and is entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Jan. 11, 2013, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Jan. 11, 2013.

The IRS also gives affected taxpayers until Jan. 11, 2013, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 26 and on or before Jan. 11, 2013.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before Sept. 10 provided the taxpayer makes these deposits by Sept. 10.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “MISSISSIPPI/HURRICANE ISAAC” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, IRS.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

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The new 1099-K form FAQs

February 16, 2012 at 6:07 pm (Adult Industry, Business Taxes, General Tax Information)

What are the new 1099-K forms and how are they different from the 1099-Misc that I get?

1099-K = Gross amount of income from credit card transactions when using a payment platform (Niteflirt, Keen etc). You deduct the fees on your tax return.

1099-Misc = Net amount of what you were actually paid by the company itself (Papillon, 121 etc.). If this is wrong, you need to take it up with your company. If they won’t help you, you can always deduct those fees from your income on your tax return. It is better that you report what the 1099 says than to under report it as that creates a ‘red flag’ with the IRS.

Why does the amount on the form include the fees etc. that I paid already?

Companies are required to file the gross amount of payments that a contractor received (income that includes all fees that were taken out before payment). This is the amount that includes the fees, bids etc. that is withdrawn before a payment is made to the contractor.

How do I deal with this form on my tax return?

You report the gross amount exactly as it is stated on your 1099-K form. If you have kept accurate records of your income and expenses, it will be easy to pull out the fees, bids or any other amount that you have already paid before you received each check from the processing company. These amounts are deducted on your tax return just like any other expense.

I’m not sure what that means. IRS Won’t Require Reconciling 1099-K Reports on Credit Card Payments with Gross Receipts  Tax Domme, does this mean no more 1099-K or a change to how earnings are reported on the 1099-K?

To ‘reconcile’ in accounting means to balance payments and earnings. You reconcile your checkbook at the end of the month to match the checks that you’ve written, deposits made and other transactions with what your bank statement says to make sure that they balance. Same thing here. The IRS is saying that taxpayers do not need to show their records to match the gross earnings (gross means all income without taking out fees and expenses paid) reported on the 1099-K. This means that you need to accept what the 1099-K states, report that amount on your tax return and then deduct any amount that pertains to fees etc. from that income on your tax return.

It is still a good idea to keep accurate records though regardless of what the IRS says. In the case of an audit, you would still have to show support of your expenses paid.

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Tax Exempt Orgs, Your Filing Day May Be Approaching ~ May 15th

April 1, 2011 at 4:53 pm (Adult Industry, Business Taxes, General Tax Information)

If your organization normally has gross receipts of $25,000 or more ($50,000 for tax years ending on or after December 31, 2010), you must file a 990 (or 990-EZ if allowed) Return by the 15th day of the 5th month after the end of your organization’s fiscal year. Many organizations begin their year on January 1st and therefore must file by May 15th. However, a three month extension may be granted by filing Form 8868 before the due day without having to explain why it cannot be filed on time. An additional three month extension may be granted if your organization can prove reasonable cause why you cannot file on time.

* Small organizations whose annual gross reciepts are normally less than the threshold are not required to file annually, but may be required to file a notice by e-postcard.

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Understanding Self-employment Taxes

January 27, 2011 at 11:26 pm (Business Taxes)

All self-employed individuals who have earned income of $400 or more are required to pay self-employment tax. This tax covers your Social Security and Medicare payments that your employer would normally cover if you were an employee.

You figure and file your SE tax on Schedule SE along with your 1040 form. The rate at the moment is 15.3%. This is split into two parts, 12.4% for social security and 2.9% for Medicare (hospital insurance). It is important to note that he SE tax rules apply no matter how old you are and even if you are already receiving social Security or Medicare payments.

It is possible to get a Self-employment tax deduction. You can deduct half of your SE tax when you calculate your adjusted gross income. This deduction only affects your income tax however; it does not affect either your net earnings from self-employment or your Self-Employment tax.

When do you pay your Self-Employment taxes? Well, our system is a pay-as-you go or pay-as-you-earn. This means that you pay your taxes as you acquire income throughout the year. If you expect to owe $1000 or more in taxes, including SE taxes, then you must pay quarterly estimated tax payments in relation to the income you receive during the year. It is important to understand well the concept of this tax and when and how much you need to pay so that you won’t find yourself with a hefty penalty when you file your next tax return

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Congratulations, you’re in business!

January 27, 2011 at 11:25 pm (Business, Business Taxes)

Are you among the self-employed? Well, if you are in business for yourself, work as an independent contractor or a combination of the two, then yes, you are definitely self-employed. You are still self-employed for the income you receive from your business even if you are employed as an employee at another job from which you receive a W-2 statement at the end of the year.

Operating a business comes with a plethora of responsibilities of which many people overlook. It is important to remember to acquire all the necessary licenses and permits, acquire the appropriate tax identification number for which you qualify, keep good and accurate records throughout the year, file the appropriate tax forms and pay the necessary taxes for your business in a timely manner. These responsibilities do not stop at the federal level. It is vitally important to find out what is required of business owners in your particular state, and in some cases, those of your city as well. Disorganized records, taxes filed late and paid late or not at will cost you dearly in fees and fines.

Taking care of the necessary research and creating an organized, well-maintained business, no matter what kind of business, will reward you far beyond the financial profits you will accrue. Take pride in the fact that you are the captain of your own financial ship, navigating that ship through the Sea of Success!

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