Category: Alan Mendelson

This tax tip might save you some money and some aggravation. Just about every year, most taxpayers get a refund from the IRS. Usually, about 66% to 75% of taxpayers get money back when they file their tax returns. Many taxpayers bank on that refund. Some consider it to be forced savings. Some use that refund as a rainy day fund. Some look at that refund as money to splurge with.

But this year — the refunds for 2021 might be smaller — and for some taxpayers, there may be no refunds at all. And some taxpayers might have to pay money instead of getting a refund.

And the reason that things might be different is that many Americans received advances on their child tax credits. In some cases, families got tax credits that were too much. And that could mean you owe money on your 2021 returns.  Look out for a special letter from the IRS with form 6419. Form 6419 will help you reconcile what you received for Child Tax Credits — and what you’re actually entitled to. Don’t put off reading form 6419. It’s better to tackle any surprises earlier than later.

Some taxpayers received pandemic unemployment assistance. They could raise your tax bill too. PPP forgiveness could mean additional forms you have to file this year.

So here’s the bottom line for your money — get to work on your 2021 taxes earlier than in other years. You don’t want to be surprised at the last minute.  And remember, consult with a tax professional if you have a problem or if you have any questions. You might need a tax attorney. You might need a tax defense attorney. You might have to seek tax debt relief. You might even need to seek an offer in compromise and a tax expert can help and advise you on how to lower your tax debt.

Remember, Legal Tax Defense offers a free consultation. Just give us a call today.

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’s some good news. That surge in gasoline pump prices over the past year has prompted the IRS to increase some of the mileage deduction rates in 2022.

Beginning January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) are:

58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021.

18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021.

14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.

These possible deductions should not be overlooked and they can add up to big bucks.

Let’s take the business mileage deduction of 58 and a half cents per mile. Just a ten-mile trip — five miles in each direction — is $5.85 and what business destination is only five miles away?

The business mileage deduction does not apply to your basic commute from your home to your job. But if you work two jobs — and many freelancers and independent contractors do — the business mileage deduction applies to driving from one job to another. It also applies to your job search and driving to interviews. And you can add parking fees and tolls to your mileage costs.

The IRS wants you to keep accurate records so keep a notebook in your car. Each time you make a deductible trip write down the date, your starting odometer reading, the ending reading, and the total miles driven. Note the purpose of the trip. Has an envelope taped to the notebook to hold parking receipts? Be sure the dates are visible.

You can use this same notebook system for medical trips. Medical trips include doctor visits, trips to the pharmacy, even trips to the eyeglasses store to buy a pair or to have an adjustment made on the frames.

When you drive to a Goodwill or Salvation Army donation location, the mileage is deductible. Enter this info in your notebook too.

At the end of the year that can be a very valuable notebook. And that envelope of parking receipts can also be very valuable.

I know people who have driven 300 miles for a second opinion on medical treatments and people who work two jobs every day and for them, 18-cents per mile and 58.5-cents per mile are real money.

Remember, it’s always advisable to consult a tax expert or tax attorney when you are dealing with tax issues or seeking tax debt relief or an offer in compromise. A tax expert or tax defense attorney is best suited to handle disputes because they know the laws and know how to deal with tax authorities.