It seems that all too often in this space I end up writing about tax scams and things that the IRS will not do. That space is warranted, as it has sadly become much more likely that you will hear from a tax scammer than from the IRS. I have come to realize, though, that I don’t spend a lot of time on what the IRS will do, and I thought that deserved to be highlighted.

The first step in almost all issues one has with the IRS comes in the form of a piece of actual mail. This is why you can default to not believing many phone calls that say they are from the IRS if you are not aware of any issue. If you happen to receive such correspondence in the mail, really read the letter and understand what the situation is. It is possible that you have made a payment that for some reason did not get recorded or got incorrectly recorded. Some situations can be fixed without too much of headache.

Even if you find that you are in a spot where you owe money, though, do not ignore the situation. Procrastination can open you up to owing more money through penalties and interest.

If you dispute what it says, this is when it becomes important to keep those documents squirreled away that we talked about a few weeks ago. If you hold onto them, and you know that everything in your return is legitimate, these can be used to dispute the IRS’s claims in the letter.

More frightening can be when an IRS representative actually shows up at your business. This does actually happen, and they may even be there to try to collect on a tax debt. If this happens, though, know that they will be carrying official credentials, and you should ask to see them. Legitimate officials will understand you are only carrying out a standard level of due diligence (if you respectfully voice the request).

But know that the IRS will only ever instruct you to make payments to “United States Treasury.” There are many different ways this can be done (debit card, credit card, check, wire, etc.), but it is the only place where legitimate tax payments will be sent.

I also want to mention here about calling the IRS. In general, this is something that is not always necessary, and is probably also something that you want to avoid. Their correspondence often will contain enough information to let you know what your next actions should be. There is a lot of information provided by the agency online, as well, which can answer questions that you have. If a call is necessary, however, I am sad to say that I can only confirm some of the horror stories you may have heard about how long the wait times can be.

I want to close by saying that I understand dealing with any of this is not a happy thing, (I’m pretty sure the only positive experience most ever have with the IRS is when you receive a tax refund), but it should not be seen as frightening or ominous. Handling it timely and with the proper steps will lessen any potential hardship. As always, if this is something you need help navigating, please do not hesitate to contact us.

Over the past week or so, it was announced that H&R Block is closing hundreds of locations as it prepares to file fewer tax returns this coming year following the passage of the Tax Cuts and Job Act. Now I’m sure you can imagine that I don’t often like speaking about the big tax return factories, and I won’t be able to completely hold my virtual tongue here as I discuss them, but I have to do so as  I find this to be interesting news.

First off, this is not completely surprising. The thinking is that more people will have less complicated tax returns because of the increased standard deduction. And yes, there are going to be more people who no longer will itemize their deductions, and their tax returns will become that much simpler. I believe, however, that if clients receive a higher level of service, they will not simply abandon their tax preparer.

If you feel your preparer is only putting the right things on the right lines of a tax return, then I can see why going it at it by yourself makes sense if you are anticipating having fewer lines to put numbers on. I, however, aim to give my tax clients more than this.

One of the best parts of tax season is making people aware of things we can use in their tax return that they were not even aware of. For it is one thing to be the person who can make sure you put all the right numbers on all the right lines, but it is much more gratifying to add in new numbers on new lines that can lead to a bigger refund.  And this is a dynamic that is not going to go away with a new set of tax rules.

I believe that my clients should leave with the confidence that they are filing a tax return that utilized the tax rules to their greatest possible advantage. For really, if someone misses something on a tax return it’s usually not unreported income, but deductions that are not being used (at least if it’s all done ethically and legally). These things are missed because tax law is complicated. It was complicated before, and it is still complicated now.

So even though many tax returns will become simpler under the new rules, don’t you still want to file a return that reflects the best possible situation for you? Even if you only end up taking the standard deduction and there is little else needed to report on your return, is there not comfort in knowing that was your best possible choice?

I mean, we are months after the passage of the TCJA, and the IRS is still releasing notices advising on how many of the rules will be applied. If they are taking this long to figure things out, can it really be that simple?

And sure, my view on this is far from unbiased. I trust, however, that the level of service I provide to my clients will lead them to agree, and we will remain committed to getting through the new law together.

Now that most of you have filed your 2017 taxes, few of you want to think about them anymore. But if you had to do go back to them, could you? After all, you occasionally do need some information from a return, so you should keep a copy on hand.

The IRS actually recommends that a taxpayer keeps copies of at least the last three years of tax returns. This obviously gives you a chance to pull information off past returns, but can also help with preparing future returns. These may also be necessary when applying for certain loans or a mortgage. Also, in the unfortunate occurrence of an audit, quick access to your information can help you get ready for it faster.

As a further addendum to that official word, you should keep any documentation that went into preparing the return along with it. Granted, the chances are very, very high that you are never going to need to use those pieces of paper again, but it is much better to hold onto things you likely will not need than to try to get a copy in the rare instances when you do need it. Just put them all in a folder, file it away, and throw them away years down the line. Or, you can also store them digitally for even less clutter.

If you don’t have copies of your tax return, they are possible to get. If you have used any online tax software to prepare them, they are saved there, which can be a fine repository, or you can print a copy if you feel safer with a-hard copy. If you had your return prepared by a professional, they will keep copies of them for a number of years.

For those who did not use either of those avenues, though, transcripts and copies can be obtained from the IRS. The first thing to know about these is that a transcript and a copy aren’t the same thing. A transcript isn’t a full copy of a return, but will include most line items and most likely will contain any information you actually need when you wish you had a copy of your return.

A benefit to the transcript is that it can be obtained for free from the IRS for the current year and the past three years. One can even be requested online through a pretty simple web form. The agency does warn, though, to plan ahead, for it could take 10 days to get a transcript from the time the IRS receives the request, which means up to a 30-day wait for those requested by mail.

If you do need an actual copy of the return, this can also be obtained from the IRS. These do cost money, however, at $50 per return. They are available for the current year and as far back as six years. This requires filling out a form that must be mailed in, and can take up to 75 days to receive.

Overall, just know this is one of those areas where a little bit of diligence in keeping necessary historical records can hold off a lot of future headaches.

Now that the calendar has turned to June, we have reached the time when many people start to pick up some part-time work in the form of a summer job. The timings leads students (and even some teachers) to seek new positions in the work force, even if just for two to three months. This can feel so small that it is easy to overlook some longer ramifications, but it is good to keep in mind that wages earned in that time will, in all likelihood, end up being taxed.

So as a first note, it can be worth using the IRS’s withholding calculator to make sure enough taxes are being taken out of these paychecks to ensure a surprise doesn’t come at tax filing time. Granted, some of these jobs won’t even result in making enough money to need to pay taxes, but it is better to have confidence in that than just guessing it will be the case.

And for those who are picking up extra work at this time of year in addition to some larger wages being earned elsewhere in other months, that is a situation where you want to know if you should be having some extra money taken out of your check for tax obligations.

Some will turn to the growing gig economy for their summer work, and a little extra vigilance can be food for those not getting a traditional paycheck. If no taxes are coming out of the money you earn, and you receive a 1099 on it early next year, the IRS is going to know about it, and expect you to pay. Again, the calculator can let you take a good guess at what your obligation will be, so you can set aside enough money to pay the eventual bill, or make some estimated tax payments during the year.

As always, we are happy to work with anyone who has questions on how certain events will change your tax picture, even if they are small ones like this. Having power helps you make the right decisions, and the right decisions can’t always be reached by worrying about your tax situation once a year when it comes time to file.

And a final note on this to my business customers – if you can, give someone one of those summer jobs. Trust me, I personally know that running a small business can leave you feeling a little ragged, and wouldn’t a little help be nice? While running that ragged, we can lose track of the fact that in all that work we have picked up knowledge and skills that can be passed on. Wouldn’t doing that while getting that influx of some extra help be a nice thing?

Taking on new employees can be daunting (Can I afford it? Will I find the right person?), but this temporary setup can shrink the size of some of those questions, and give you a chance to be a short-time mentor for someone who could really use it, and bring what they learn into their future. Beyond that, it will bring new eyes to your operation, for this type of relationship works best when the learning goes both ways.