Author: Alan Mendelson

2022 will be a special year for filing IRS tax returns because the pandemic made new tax breaks available. Because of these tax breaks, low-income persons who weren’t required to file tax returns before will want to file returns now for the tax year 2021.

You need to file a 2021 federal income tax return to take advantage of key tax benefits included in the American Rescue Plan and other recent legislation.

Even if you have little or no income from a job, business, or other sources you may be able to take advantage of these laws. Claiming these benefits could put money in your pocket.

These benefits include:

An expanded Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
An increased Child And Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.

A more generous Earned Income Tax Credit: The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children.

The Recovery Rebate Credit: Those who missed out on last year’s third round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.

A Deduction For Gifts To Charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.
If you have any questions talk to a tax professional. The IRS provides free assistance especially for low-income Americans and there are now expanded help times on Saturdays.

And if you have a tax problem, Legal Tax Defense will give you a free consultation. Call now to speak to a tax attorney. It’s free and we can help you with tax audits, garnishments, and filing back taxes to get the refunds you are due.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

While it’s important to file your taxes on time to avoid penalties, and while some folks want to file early so that they get their refund faster, it’s also very important that you don’t file your tax return prematurely.

If you file before you have all your payment information such as 1099s it could delay your tax return.

And you certainly don’t want to file your return before you have all your tax deductions sorted out. Missing deductions could cost you money.

Here are some of the important forms you must have:

• Forms W-2 from employer(s)
• Forms 1099 from banks, issuing agencies, and other payers including unemployment compensation, dividends, and distributions from a pension, annuity, or retirement plan
• Form 1099-K, 1099-Misc, W-2, or other income statements if you worked in the gig economy
• Form 1099-INT if you received interest payments
• Other income documents and records reporting virtual or cryptocurrency transactions
• Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
• Letter 6419, 2021 Total advance Child Tax Credit Payments to reconcile advance Child Tax Credit payments
• Letter 6475, 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit

Remember that the IRS gets copies of these forms. If you omit them it will prompt the IRS to delay your return processing. Legal Tax Defense offers a free consultation on tax issues. Call now to speak to a tax attorney.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

Because so many of us worked from home during the pandemic we might be entitled to home office deductions. So, just what is and is not tax-deductible?
Generally, you can’t deduct expenses related to the rent, purchase, maintenance, and repair of a personal residence. But if you use a portion of your home for business, you may be able to take a home-office deduction if you meet certain requirements.

Deductible expenses might include the business portion of real estate taxes, mortgage interest, rent, utility, insurance, depreciation, painting, and repairs.

Those who work out of their homes are entitled to deduct ordinary and necessary expenses related to the business.

Your deductions are limited to a specific area of your home that is used only for trade or business. And “regular use” means it’s used regularly, not just occasionally or incidentally.

And that’s important because both conditions must apply.

Also, if you work as someone’s employee, you can claim this deduction only if the regular and exclusive business use of the home is for your employer’s convenience, not yours, and your employer does not rent the business portion of your home. If your employer told you to work from home during the pandemic the employer’s convenience is established.

Here are some business uses that are acceptable for deductions:

You meet or deal with patients, clients, or customers there.

You have a separate, free-standing structure not attached to the home, such as a studio, garage, or barn that you use exclusively and regularly for your trade or business.

You have a separate, identifiable part of your home that you use regularly for storage, such as inventory or product samples, as rental property, or as a home daycare facility.

Remember that personal, family, and living expenses are not deductible under any circumstances.

A common error is to deduct expenses for a portion of the home that is not regularly used or exclusively used for business.

It’s important to understand the rules, compute the deductions correctly, and keep accurate records for these deductions. It is always advisable to consult with a tax professional.

Remember that the tax attorney at Legal Tax Defense offers a free consultation about tax issues you might have. Call now for your free consultation.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

The IRS has announced changes that can really help low and middle-income workers. It involves changes to the Earned Income Tax Credit. If you know anyone including seniors who struggled to work in 2021 and had low income these changes can put money in their pockets.

This is from an IRS news release that summarizes some key changes:

“For 2021 only, more childless workers and couples can qualify for the EITC, and the maximum credit is nearly tripled for these taxpayers. For the first time, the credit is now available to both younger workers and senior citizens.”

The IRS news release continues:

“For 2021, the EITC is generally available to filers without qualifying children who are at least 19 years old with earned income below $21,430; $27,380 for spouses filing a joint return. The maximum EITC for filers with no qualifying children is $1,502, up from $538 in 2020. There are also special exceptions for people who are 18 years old and were formerly in foster care or are experiencing homelessness. Full-time students under age 24 don’t qualify. There is no upper age limit for claiming the credit if taxpayers have earned income. In the past, the EITC for those with no dependents was only available to people ages 25 to 64.”

That completes the excerpt from the IRS release.

Remember Legal Tax Defense assists taxpayers with IRS and other local tax issues. They do offer a free consultation. Call now for your free consultation.

Always consult with tax professionals when you have tax issues. Always consult with professionals who are in good standing with the IRS. You don’t want to fall victim to tax scams such as having your refund stolen.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

Do you read the want ads? You should. You never know when a job opening will be posted that will help you make a career move. By the way — job search expenses can be tax-deductible even if you don’t find a job.

Job search expenses include subscriptions, printing resumes, mailing resumes, hiring someone to write your resume, traveling to interviews, even buying lunch for a headhunter. Job search expenses also include taking out a position wanted ad, having professional headshots taken, or paying a job service.

But let’s get back to reading the want ads.

Sometimes the want ads will tip you off to what other businesses are doing. If your competition is hiring shipping clerks perhaps that’s a sign that they just landed a big sales contract.

Sometimes the want ads will tip you off to what the IRS is doing. Well, the IRS just posted some help wanted ads for 200 lawyers. And why does the IRS want 200 more lawyers?

The IRS wants those lawyers to go after abusive tax shelters.

Some of those tax shelters use bogus, inflated, and unwarranted tax deductions.
Some abuses involve land schemes.
Some abuses involve insurance schemes.
The IRS wants the 200 lawyers to come up with regulations to stop these abuses and the IRS wants the lawyers to take the cases to court.

So reading the want ads tells us the IRS is stepping up its work against tax shelters and abusive business transactions. And that’s a warning.

Now, if you’re facing a tax issue, and if you don’t have a tax lawyer to call — call us now for a free consultation. We’ll let you know if you need a lawyer. Or even if you can resolve the tax issue on your own.

Call now for a free consultation with Legal Tax Defense.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

Here are some very important tax tips to follow before you file your return. While these might seem obvious it’s surprising that they aren’t always used or followed.

1. File an accurate return and use e-file and direct deposit. If you do these three simple things you could receive your refund in three weeks or less. Rember: be accurate, file online, and use direct deposit.

2. Make sure you have all your records and tax documents before you file. Remember if you forget a 1099 form you’ll face a delay because the IRS will have their copy and they’ll want to know why you didn’t include it. If you omit income not only could your refund be delayed but you may receive a bill from the IRS or even trigger an audit.

3. Be sure your stimulus payment and any advance Child Tax Credit information are correct. Look for letter 6419 that the IRS sent in December that gives you the information you need to file your return properly.

4. There’s also an IRS letter 6475 that will include information about economic impact payments you may have received.

5. Try to use the IRS.gov website to find information. Calling for information could take hours. And I mean hours.

And here’s one more tip. If you have any tax issues, call Legal Tax Defense for a free consultation. Call now for any questions including questions about unfilled returns or bills from the IRS.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

One of the biggest mistakes a taxpayer can make — and it’s a mistake that can trigger an audit by the IRS — is overlooking or ignoring a W2 or 1099 earnings statement sent by an employer or business.

Copies of those forms are sent to the IRS where they are loaded into computers and held. It’s also been the law since 2015 that copies of your W2 income statements also go to the Social Security Administration, and that helps you get your benefits.

But let’s talk about the copies sent to the IRS. They are there waiting for your tax return to arrive. And when your tax return arrives the IRS will check to be sure that what’s on your tax return and what’s in their computers match.

It’s the match game that decides if your tax return and refund will sail through, or if you will get a letter and a bill from the IRS or even an audit notice.

January 31, 2022, is the deadline for businesses to send out those tax forms but in some cases, businesses can get an extension for sending them out.

Once they arrive the tax season officially starts.

It’s also the start of the IRS fraud and fraud detection season. Those computer files verify refund claims also. Fraud has become a big problem but these computer records can stop it.

January 31st is coming. Get ready.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

Should you really be worried about being audited by the IRS? Overall, only about 1% of tax returns are audited each year.

But here are the red flags that could put you at the head of the line for an audit.

Reason #1 If the IRS thinks you are claiming too many deductions or you’re failing to report all your income you could be flagged.

Reason #2 There are math errors on your tax return.

Reason #3 You failed to report income on tax forms like 1099s and W2s. The IRS gets copies of those forms that are sent to you.

Reason #4 Too many deductions than other taxpayers like you.

Reason #5 If you deduct too many miles on your vehicle for business use.

Reason #6 You have a cryptocurrency account and you fail to report your transactions.

Reason #7 If you have a cash business you could be flagged for an audit.

Reason #8 If you claim the Earned Income Tax Credit you could be audited because the IRS wants to be assured you’re entitled to the tax savings.

Reason #9 Self-employed taxpayers could be flagged for an audit because they may have lots of deductions.

Reason #10 If you deduct a home office you could be flagged.

Those are the top reasons for an audit. But don’t be afraid to claim deductions and tax breaks that you are entitled to.

Still not sure what to deduct for your current income tax? Call us today for immediate help. Our tax attorney and tax professionals can get you the best deduction.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

Let’s talk about IRS audits and your chance of being picked for an audit.

I’m not a tax professional but as a news reporter, I’ve looked into this subject for years and years. I’ve interviewed tax professionals and IRS officials and I’ve been through tax audits myself, so this information is pretty good.

First of all, your chance of being picked for an audit overall is pretty slim. In general, fewer than one out of a hundred tax returns are audited.

But in reality, every tax return is checked over by the IRS and if the IRS finds an error you’ll get a letter and a bill from the IRS. But if the problems stand out you’ll get picked for an audit.

Let’s talk about the basic simple errors that will result in a letter and a bill from the IRS.

Number one — you omitted a tax form. These tax forms might include 1099 for a part-time job or for bank interest. Or maybe you forget to include a tax form for a casino jackpot.

Remember, when a tax form is sent to you, a copy is sent to the IRS.

Number two — you made a math error. You’ll get a letter from the IRS.

Now, what might trigger an actual audit? Well if you admit too many casino jackpots or claim too many deductions for your kind of job the IRS will want to talk to you.

Years ago when I got my tax audited, the first thing the IRS auditor asked me was “how are the kids?” I said they were great. I also said it was nice of you to ask. And that’s when I was told that some people who claimed they had kids might say “what kids?”

This year the IRS will be looking closely at cryptocurrency, home office deductions, taxes on unemployment insurance benefits, and also profits on real estate and taxes.

Remember if you have tax issues Legal Tax Defense will give you a free consultation. Call now for your free consultation.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 

During the pandemic, a lot of us lost our regular jobs and many of us took part-time jobs or we entered the gig economy. The IRS is well aware of the change and now the IRS has a section on its website with all sorts of information about the gig economy — and you guessed it — the information is there to make sure that the IRS collects taxes on the gig economy.

The IRS says you must file a tax return if you have net earnings from self-employment of $400 or more from gig work. Gig work includes a side job, part-time work, or temporary work.

If your gig work means you are an employee then your employer should withhold tax from your paycheck. There’s been a lot of controversy about whether or not drivers for ride-sharing services are employees or not. If you are working as a gig worker for a business ask about your status. Will the employer withhold taxes or are you obligated to file your own estimated taxes each quarter?

There are all sorts of jobs that are considered gig jobs and with those jobs come taxes.

Gig workers who drive passengers or make deliveries have to pay taxes.
If you rent out property or part of your property — you rent out your house or a room — you’re part of the gig economy. Be ready to pay taxes.

You sell goods online or you rent out equipment — you’re in the gig economy.

You do freelance work writing ads or painting signs — you’re in the gig economy.

Since you’re in the gig economy you should be keeping track not only of your income but also keep track of your expenses. Those expenses can help lower your tax bill.

Remember that quarterly tax payments are expected.

And if you worked for a business you could receive a 1099 or a W-2 by the end of January.

The bottom line here is to keep track of your expenses. I’ll say it again — keep track of your expenses. It’s tough these days and you don’t want to pay more taxes than you have to.

Remember, Legal Tax Defense has a tax attorney that offers a free consultation if you have tax problems. Call now for your free consultation.

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.