Category: Alan Mendelson

Small errors can hold up your income tax refund for weeks or even months. And in some cases, a small error including a seemingly innocent typographical error could even result in a letter from the IRS or even an audit.

What’s one of these innocent bloopers that can cause so much trouble? How about an error in a Social Security number!

An error in a Social Security number which is usually used as a Taxpayer Identification Number can lead to a denial of tax credits such as the Child Tax Credit.

Be especially careful if you’re divorced because the IRS will check to see if both parents are claiming the same child. If you do everything will come to a halt while the IRS sorts it out.

If you have a baby get that child’s Social Security number right away. You’ll need it!

And if you’re missing a Social Security number or if you and your soon-to-be ex-spouse are fighting over custody of a child and tax breaks file for an extension rather than include incorrect Social Security number information.

Remember to always consult with a tax professional. And if you have any tax issues or problems Legal Tax Defense will give you a free consultation. Call now to discuss unfiled returns, garnishments, audits, and notices from the IRS with 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. 

There is still time to do something in 2022 that will cut your 2021 tax bill. That something is to make certain contributions to retirement accounts.

You may be able to claim a deduction on your 2021 tax return for contributions to your IRA made through April 18, 2022.

An IRA or Individual Retirement Account is simply a personal savings plan that lets employees and the self-employed set money aside for retirement and it can have tax advantages.

Remember this: to qualify for 2021 tax benefits the contributions must be designated for 2021 to the financial institution.

Generally, eligible taxpayers can contribute up to $6,000 to an IRA for 2021. For those 50 years of age or older at the end of 2021, the limit is increased to $7,000. Qualified contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of the taxpayer’s compensation, whichever is less. There is no longer a maximum age for making IRA contributions.

Those who make contributions to certain employer retirement plans, such as a 401k or 403(b), an IRA, or an Achieving a Better Life Experience (ABLE) account, may be able to claim the Saver’s Credit. Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of contributions, the adjusted gross income, and the taxpayer’s filing status. The lower the taxpayer’s income (or joint income, if applicable), the higher the amount of the tax credit. Dependents and full-time students are not eligible for the credit. Remember to consult with a tax professional if you have any questions.

What about a Roth IRA? While contributions to a Roth IRA are not tax-deductible, qualified distributions are tax-free. Roth IRA contributions may be limited based on filing status and income. Contributions can also be made to a traditional and/or Roth IRA even if participating in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA-based plan).

The important thing to remember is that these tax breaks can apply to 2021 taxes even though you are taking action in 2022.

And remember if you have a tax issue Legal Tax Defense offers a free consultation. Call now to speak to a tax attorney. The consultation is free!

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 is making a big push to let taxpayers know about the big changes in the Earned Income Tax Credit. In fact, the IRS just updated its website and sent out a press release alerting the public that it has updated its website’s frequently asked questions with new and updated information.

Here are some key facts:

Many more people can now claim the EITC for the tax year 2021 and many people who did not file a tax return before will have to file a tax return now in 2022 to get this money.

The Earned Income Tax Credit is a tax credit that provides a tax break for low- to moderate-income workers and families. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The Earned Income Tax Credit may also give you a refund.

If you had low or moderate income from self-employment you might also qualify for this benefit.

For 2021, the Earned Income Tax Credit generally is available to the following eligible taxpayers who are at least 19 years old without qualifying children:

Individuals who have earned income of less than $21,430.
Spouses filing a joint return who have earned income of less than $27,380.

For 2021, there are special rules for some taxpayers who were 18 years old. If you were 18 years old in 2021, did not have qualifying children, had earned income, were homeless in 2021, or were formerly in foster care, then you might qualify for the Earned Income Tax Credit when you file your tax return for 2021.

Also, for 2021 only, the Earned Income Tax Credit now has no age limit cap for eligible taxpayers without qualifying children.

Prior to 2021, the Earned Income Tax Credit for those without qualifying children was only available to people ages 25 to 64.

The rules about the EITC are complicated. You really should talk to a tax professional about them. Low and moderate-income individuals and families should contact the various services that offer free taxpayer assistance. These services are set up to handle EITC questions.

Get this money!

And remember if you have tax issues Legal Tax Defense offers a free consultation. Call now to speak with a tax attorney. The consultation is free.

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 is getting serious about cryptocurrency on 2021 tax returns. And it starts at the very top of your form 1040 and forms 1040-SR asking about any virtual currency transactions you might have made.

All taxpayers filing these forms 1040 and 1040-SR must check the box indicating either “yes” or “no” on virtual currency transactions.

A virtual currency transaction includes many kinds:

The receipt of virtual currency as payment for goods or services provided;
The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
The receipt of new virtual currency as a result of mining and staking activities;
The receipt of virtual currency as a result of a hard fork;
An exchange of virtual currency for property, goods, or services;
An exchange/trade of virtual currency for another virtual currency;
A sale of virtual currency; and
Any other disposition of financial interest in virtual currency.
If an individual disposed of any virtual currency that was held as a capital asset through a sale, exchange, or transfer, they should check “Yes” and use Form 8949 to figure their capital gain or loss and report it on Schedule D (Form 1040).

If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1).

More information on virtual currency can be found in the instructions for Form 1040 and on the Virtual Currencies page on IRS.gov.

Remember if you have any tax issues you can talk to a certified enroll agent at Legal Tax Defense. They’ll give you a free consultation. Call now to connect with a tax specialist.

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. 

There are certain myths about how to speed up your IRS tax refund. They’re myths — so that means don’t bother trying them.

In fact, trying to speed up your refund might actually slow down the refund process. In some cases, trying to speed up your refund could stop your refund process dead in its tracks.

Here are some of those myths. Do not try them:

1. Calling the IRS. First of all, it could take you two hours to reach a real person when you call, and that person will not be able to help you.

2. Calling your tax preparer. Give them a break. It’s out of their hands.

3. Ordering a tax transcript from the IRS. Where did this baloney come from? Ordering a tax transcript will not speed up your refund.

4. Filing your tax return without all of the required 1099s won’t help either. Some taxpayers think they’ll get their refund based on a partial return — but they won’t. If your return lacks all of the required income reports it will be delayed.

The good news is about 70% of taxpayers do get a refund.

The Internal Revenue Service says the fastest and easiest way to check on tax refunds is by using the Where’s My Refund tool on IRS.gov.

This year, more than ever before, those who don’t normally have to file a tax return may wish to do so to get child-related tax credits that were expanded by the American Rescue Plan.

The fastest way to get your refund is to file a complete return electronically and use direct deposit.

Most tax refunds are issued within 21 days, however, some may take longer. There are several reasons this can happen:

The return includes a claim for the Earned Income Tax Credit or Additional Child Tax Credit.
The time between the IRS issuing the refund and the bank posting it to an account may vary since many banks do not process payments on weekends or holidays.
The return may require additional review.
The return may include errors or be incomplete.
The return could be affected by identity theft or fraud.
The IRS will contact taxpayers by mail if more information is needed to process a return.

Remember that Legal Tax Defense offers a free consultation if you have tax issues. Call now to speak to a tax attorney to help with tax debt, an audit, or wage garnishments. Go to www.LegalTaxDefense for more information.

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. 

There is free taxpayer help. Most taxpayers know they can call the IRS directly with their questions but the reality is when you call the IRS and you owe money the information you’ll receive is probably limited to how to pay it.

But what if you question a bill from the IRS? Who is there to help you?

Of course, you should always use a tax professional — but what if you can’t afford a professional’s charges?

That’s where the Low-Income Tax Clinics might be able to help you. The Low-Income Tax Clinics are funded by the federal government as part of a taxpayer advocacy program and it is independent of the IRS.

LITCs represent individuals whose incomes are generally at or below 250% of the federal poverty guideline and who are seeking to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. LITCs can represent taxpayers in court as well as before the IRS. They also can provide information about taxpayer rights and responsibilities in different languages. LITCs provide services for free or a small fee. They receive IRS grants but work independently to assist and advocate for taxpayers. The LITC uses volunteers.

For the list of LITC locations and phone numbers get IRS publication 4134.

Community organizations and unions often offer tax help services. The AARP has a well-known tax help program and local governments also set up free tax help clinics.

Do a Google search for “free tax help near me” for a quick guide to what’s available.

But what if you have a tax issue or problem involving unfiled returns, wage garnishments, money owed, or an audit notice and you can’t get help from the Low-Income Tax Clinics or another free source?

You don’t have to wait in line at some free clinic. Instead, call Legal Tax Defense for a free consultation. You’ll talk to tax professionals and the consultation is free. They’ll listen to your problems and issues and in many cases, they can tell you how to resolve your issue at no cost. Legal Tax Defense has tax attorneys and Enrolled Agents who know how to deal with the IRS.

For your free consultation call 800-231-3321. Don’t wait in line at a tax clinic and don’t wait for those tax clinic days. Call now to speak with a tax attorney.

There’s also free information on the website www.LegalTaxDefense.com but nothing beats that free phone call.

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 best way to keep certain daily expenses and certain income for filing your tax return is to keep logs. Logs along with official receipts are also some of your best defenses if you are selected for an IRS audit.

Logs of expenses and income can be kept using simple notebooks or as notations in a daily calendar or diary.

Here are some of the logs you should keep:

If you work at a job that involves tip income you should have a daily log of cash tips, tips left on credit card payments, and tips you receive as part of an employee pool.

If you gamble you should have a log of your daily wins and losses, and receipts from ATMs and those W2Gs you receive for jackpots. Remember your losses can be used to offset those jackpot wins. Keep track of the casinos and the dates. By the way, that casino log will give you an up-to-date reminder about how your blackjack card counting is working — or isn’t working, and if that Roulette system was really worth the $49 you paid for it.

If you use your car for work or to look for a job you need a log to track your mileage. You also want a record of your mileage driving to doctors and pharmacies and hospitals.

If you drive for a charity, keep a log. If you drive to donate merchandise, keep a log.

Note the date, time, reason, odometer readings, and purpose in your car logs. The time spent doing this is worthwhile because gas prices are high and the IRS has increased the value of mileage deductions for 2022.

I find that keeping an envelope to hold receipts along with your notebook or notebooks makes record keeping easier.

If you have business expenses, keep a log.
If you buy tools for work, keep a log.
If you have expenses regarding your investments such as buying investing magazines, keep a log.

Logs are best kept when your boss or a business doesn’t keep track of details for you.

Sure, a casino will give you a win/loss statement every year — but if you’re audited by the IRS it’s better to have your log because that win/loss statement from the casino might not be accurate.

And remember, the cost of buying notebooks or diaries for your logs are tax-deductible expenses for tax preparation.

And what’s better than a tax-deductible expense? How about a free consultation from Legal Tax Defense. If you have any tax issues call now to speak to a tax attorney for free. Also, go to their website www.LegalTaxDefense.com for more free information.

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. 

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 is reminding individuals that they could receive extra money from the economic stimulus programs that paid out money in 2021. Some individuals did not receive all they were entitled to. And the only way to get that money now is to file a 2021 income tax return.

In some cases, individuals who normally don’t file a tax return because of their low income will have to file a tax return now to get this special pandemic payment.

If you think you are missing any of the pandemic stimulus payments you should check into this.

It might be worthwhile to seek free help from the IRS to check into this. Or ask a tax professional.

The 2021 Recovery Rebate Credit — that’s the pandemic money — can reduce any taxes owed or be included in the tax refund for the 2021 tax year.

You may have received Notice 1444-C from the IRS during 2021 as well as Letter 6475. Show these to your tax professional. They will help you know if you’re entitled to more money.

Letter 6475 will be sent out through the month of March so you may not have received it yet.

Remember, low-income individuals who usually do not file IRS returns will have to file in 2022 for the tax year 2021 if they want to get the stimulus money they missed in 2021.

And if you do have to file, file electronically and use the direct deposit option to speed your refund.

And remember that tax attorneys at Legal Tax Defense offer a free consultation on tax issues and problems. Call now for your free consultation. And go to www.LegalTaxDefense.com for more information.

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. 

Did you know the IRS has a whistleblower office? Did you know that if you blow the whistle on a taxpayer or a business that you could be paid a whistleblower reward? Did you know that the whistleblower reward could be as much as 30% of what the IRS collects?

Okay, it’s time to ask yourself do you want to turn in your boss who you know has been cheating on his taxes?

You can also call the whistleblower law the revenge law or the snitch law or even the jealousy law.

Call it what you like but it all starts with IRS Form 211. You fill out Form 211 to report a cheater.

That cheater could be the boss who fired you. That cheater could be the guy at the casino who has been running a scam with a stolen ID when he wins jackpots.

Now you understand why the whistleblower law has nicknames like the revenge law or the snitch law.

The IRS Whistleblower Office pays monetary awards that generally fall between 15 and 30 percent of the proceeds collected. But it could be a long time before you see any money.

The IRS says awards can only be issued once a final determination can be made, and as such, award payments cannot be made until the taxpayer has exhausted all appeal rights and the taxpayer no longer can file a claim for refund or otherwise seek to recover the proceeds from the government.

You start the whistleblower process by filing Form 211 and ensure that it contains the following:

A description of the alleged tax noncompliance, including a written narrative explaining the issue(s).
Information to support the narrative, such as copies of books and records, ledger sheets, receipts, bank records, contracts, emails, and the location of assets.
A description of documents or supporting evidence, not in the whistleblower’s possession or control, and their location.
An explanation of how and when the whistleblower became aware of the information that forms the basis of the claim.
A complete description of the whistleblower’s present or former relationship (if any) to the subject of the claim (for example, family member, acquaintance, client, employee, accountant, lawyer, bookkeeper, customer).
The whistleblower’s original signature on the declaration under penalty of perjury (a representative cannot sign Form 211 for the whistleblower) and the date of signature.
It’s not easy being a whistleblower.

But here’s something easy. If you have tax issues or problems you can get a free consultation from a tax attorney at Legal Tax Defense. Call  now for your free consultation. The tax professionals can help you with unfilled tax returns and IRS garnishments and audit notices and they can help you collect refunds from tax returns you didn’t file.

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.