Knowing Basics of Small Business Taxes Will Protect You and Your Business

Basics of Small Business Taxes

It is imperative that if you have a small business, you should have, at least, the basics of small business taxes so you can check your returns and understand why your accountant has chosen the deductions for you.

Small business taxes

Where to Get Tax Forms

All tax forms are available at IRS.gov. Search and print any form you need. Understand small business taxes, staying away from tax fraud and tax schemes by unscrupulous tax preparers. Tax publications are also available on the IRS website. 

What is a Tax Publication?

Something every small business should know about is tax publications. You can verify any major tax issue when you read a publication, they hold the IRS facts. There are publications for home selling, home buying, selling a business, running a business, tax deductions for small businesses, and much more.

All the facts are listed in the publications. So, when you are told to check your taxes, the place to verify tax facts is the IRS publications. You will have to search publications and sometimes order the one you need, but most are online at the IRS. 

Publication 17 gives you all of the general information you need to file an individual federal tax form. Small Business Publications are here to make sure you get all of your deductions you qualify for and verify your forms.

Download the Federal Tax Bulletin at IRS.gov

Basics of small business taxes

Importance of Tax Timing and Honesty

It is better to pay your taxes on time and not risk ruthless penalties than to get an extension and go over your extension or run out of money. If you are a small business, you could miss your social security contribution, and have to pay later.

You can go online to make sure you are getting credited with your social security contribution if you file an extension and the credit is not posted, this can be corrected.

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Small Business Taxes Estimated

Some new (first year) business owners forget that they have to pay taxes on profits at year-end, so they inadvertently spend all of their profits.

At the end of the first year when taxes are calculated you will be put on a quarterly estimated tax schedule and will also be told how much you owe for your first year. This means you must save funds from your first year into a tax savings account on your own.

Most first-year business owners will be safe to put aside at least 30% of their first-year profits. Now, in subsequent years you will have quarterly estimated payments you will make every 3 months, these payments are based on your previous year’s income, so be prepared to pay over your estimated taxes, at year-end, if your income skyrockets the previous year.

Who is Responsible for Your Tax Form Calculations?

It benefits you as a small business to use a qualified enrolled agent or certified public accountant. No matter who does your taxes it is important to understand that you are responsible for what is put on your tax forms.

You will have to pay penalties and interest on understated income if your taxes are done incorrectly. So, create a system where you can verify your tax deductions and the math on your tax forms.

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Every Business is Based on Profits and Losses

Because every business is based on profits and losses, the internal revenue service wants to know the details of your profits and losses. Those are recorded on Schedule C of 1040.

You should have receipts for everything you have done, and each receipt should be part of a category listed on your Schedule C. From expenses and the income you take in, you can calculate your profits and losses.

Download Schedule C at IRS.gov

1099 Income; Verify that you have all your 1099 statements

When you do business with another business and are paid income and they file a 1099 (income statement) they send you a copy. You must report that income to the IRS and claim it on your taxes.

Understand Tax Publications and Their Valuable Information

Something every small business should know about is tax publications. You can verify any major tax issue when you read a publication, they hold the IRS facts.

There are publications for home selling, home buying, selling a business, running a business, tax deductions for small businesses, and much more.

All of the facts are listed in the publications. So, when you are told to check your taxes, the place to verify tax facts is the IRS publications. You will have to search publications and sometimes order the one you need, but most are online at the IRS.

Use Free File at IRS.gov

Importance of Tax Timing and Honesty

It is better to pay your taxes on time and not risk ruthless penalties than to get an extension and go over your extension or run out of money. If you are a small business, you could miss your social security contribution and must pay later.

You can go online to make sure you are getting credited with your social security contribution if you file an extension and the credit is not posted, this can be corrected.

basics of small business taxes

Estimated Taxes for Business

Some new (first year) business owners forget that they must pay taxes on profits at year-end, so they inadvertently spend all their profits.

At the end of the first year when taxes are calculated you will be put on a quarterly estimated tax schedule and will also be told how much you owe for your first year. This means you must save funds from your first year into a tax savings account on your own.

Most first-year business owners will be safe to put aside at least 30% of their first-year profits. Now, in subsequent years you will have quarterly estimated payments you will make every 3 months, these payments are based on your previous years’ income, so be prepared to pay over your estimated taxes, at year-end, if your income skyrockets the previous year.

Who is Responsible for Your tax Form Calculations?

It benefits you as a small business to use a qualified enrolled agent or certified public accountant. No matter who does your taxes it is important to understand that you are responsible for what is put on your tax forms.

You will have to pay penalties and interest on understated income if your taxes are done incorrectly. You could get arrested if the IRS suspects tax fraud or a tax scheme. 

So, create a system where you can verify your tax deductions and the math on your tax forms. So, knowing the basics of small business taxes will protect you and your business. You can protect yourself against tax fraud and tax schemes, which are huge.. 

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Knowing Basics of Small Business Taxes Will Protect You and Your Business

When It Is Right To Use Credit Cards

There are times when it is right to use credit cards, but if you use credit cards, it must be done correctly. Credit cards serve several purposes. These include credit cards to rent a car, a credit card to reserve a hotel room, your credit card to dispute a poor product, or using a credit card to break up a large purchase.

Others use credit cards religiously to get frequent flyer miles or rewards points to purchase goods or services. 

I am a firm believer in limited or no credit card use. You should only keep 2-3 credit cards at the most, and those should be major credit cards. Also, making the minimum payment could prove to be disastrous. You should have a plan in place to pay off your credit card in a few months if you have to use it for major items.

Some balances paid with the minimum payment due would take as long as 20-50 years to complete. Because of that, when it comes to credit cards, I feel you should only buy what you can pay for in 30 to 90 days, 120 at the most. In other words, don’t run credit card balances long term to help stay out of debt.

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Many major credit cards offer a small interest rate when you first sign-on, and then increase the interest payment later. The increased interest rate is sometimes as much as two and a half times the original rate. These are just some of the nuances of credit cards you must learn upfront by reading the fine print.

So, when is it appropriate to use a credit card?

1. A Credit Card With Car Rental

Some travelers don’t know you need a credit card with car rental pickup. Car rental agencies require a credit card on file to rent a car. I witnessed a young couple at a rental agency in line before me on one of my business trips. They won a trip for two to a popular vacation spot, which happened to be my town, including a rental car, from a radio station.

When they displayed their winning information, showing they won the right to the rental car and vacation, the agent said this is fine, we will honor it. The only problem is, you still have to leave a credit card on file. They did not have a credit card. I am not sure what happened, I rented my car and was on my way.

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2. Credit Cards To Get Frequent Flyer Miles or Rewards Points

Some people insist on getting frequent flyer miles or reward points with credit cards. This is generally not a good idea since the cards with frequent flyer miles tend to have higher interest rates. For some, using credit cards to get frequent flyer miles or rewards points works because they understand the process. 

In the process, if you can work to pay off the balance by the due date, the interest rate is not an issue. You will actually get free rewards or frequent flyer miles in that case.

3. Credit Cards and Product Disputes

In the rare instance, a store or company will not respond to your complaints of a poor or defective product, you can use your credit card company to dispute a poor product. The credit card company will investigate and determine if the company has wronged you in some way. You usually have at least a few days to return a product. If the product is defective it could be longer. 

In most cases, they will run interference for you and solve the problem.

4. Hotel Room Reservation and Credit Card

You need a credit card to reserve a hotel room. When you call to reserve a hotel room they will ask you for a credit card to put on file. If you skip out on your room, the hotel can charge your credit card.

In most cases, the hotel uses your credit card to auto-charge your room when your stay is over. There is an exception when it comes to small, inexpensive hotels by the day or week, they sometimes take cash upfront. This is convenient for you and them.

5. Credit Cards and Large Purchases

Occasionally you will need to make a large purchase, but will not have the cash upfront. In this instance, you can charge the payment and pay the balance in 2-4 months. If you are not satisfied with your purchase, the credit cards and large purchases, or any purchases mandate, can be put into effect. Therefore, your credit card can be used to make a large purchase possible. 

Try not to go over 4 months. In the case, you feel you need to go over three months you may question if you really need the item or save your money to purchase the item cash.

Credit card interest is expensive and debt snowballs. Use credit cards or other debt only when you have to.

When you run up a balance, pay off your credit card balance with actual cash. Do not take out another loan to pay off a credit card balance, which is a loan itself.

If you can’t make your monthly credit card balance at any time, contact your credit card company immediately, they want to work with you.

If you are addicted to using credit cards or have a tendency to think credit is cash, don’t use credit cards at all, for obvious reasons of course. Create
a budget that works without credit cards.

Use my Minimum Payment Credit Card Calculator to see how much you need to pay in order to nix your bill in record time. 

In Summary of It’s Right to Use Credit Cards

Use credit cards, not only to make large necessary purchases, but credit cards can be used to acquire frequent flyer miles or rewards points if done right.

You will find that credit cards and product disputes go hand in hand. You now know that hotel reservation and credit card are necessary in major hotel chains.

And, of course, you must have a credit card with car rental permission. There are small exceptions to these rules, for instance, if you put a very large deposit down you can “sometimes” rent a room in a marginal hotel or rent a used car.

when it is right to use credit cards for car rental and hotel reservation

10 Ways To Save Money In Any Economy

Many Americans complain they are having a tough time paying bills and can’t save money because of the economy, but for many of the complainers, their bill paying was tough in a good economy. Why? They overspend no matter how much money they make.

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Therefore, I will show you several ways to save money in any economy. If they under spend when the economy is good, they can save money when times are good and then live off the savings when the economy is tough.

Also, when the economy is tough, your good habits will be rewarded with financial peace of mind, transferring the good habits you learned from the better economy to the poor economy. Since the U.S. economic status fluctuates every 2-20 years, it is best to keep a sound financial budget in good times and bad.

1. Put away your credit cards

Paying off your credit cards is one of the best ways to lower financial stress and save money. You can’t pay them off if you are constantly adding to the balance. Carry only one for dire emergencies, and pay more than the balance, to pay off the balance in a reasonable time span.

Make sure you tell the company the additional payment goes toward your balance and check your statement when you get it, to verify you were properly credited with the over-payment.

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2. Lower your cable cost

This is one of the more obvious cost cutting features. Get the bare minimum and put the additional money toward your credit card bills.

3. Plan your meals

Plan your meals for the lowest cost possible, and shop from a Specific grocery list generated from your menus. Food cost vary widely but you will save a substantial amount of money if you shop wisely from a planned menu and shopping list, and cut out prepackaged and junk foods and non-nutritious drinks. Get a free meny planner here.

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4. Click coupons

Coupons are available everywhere, newspapers, magazines and the internet. Many coupon products are new and not always necessary. Make sure the coupon product is something you need and will use after purchase.

5. Loose the “I’ve got to have it syndrome”

Women are blamed for overspending on items they don’t need, but men are just as guilty. Women have a tendency to shop constantly, while men shop occasionally on much large priced items. It you refuse to recognize the fact that you have the “I’ve got to have it syndrome” you are your own worse financial enemy and financial peace and happiness will allude you forever. Get help with saving money, here, find your best finances.

6. Lower your rent

If paying your rent is stressful, shop for lower rent in a good area until you find reasonable living.

7. Pay attention to gas prices

When I’m out driving sometimes I notice five gas stations within a block or two, some prices are lower than others. Concentrate on the lower priced high quality gas.

8. Cell phones and contract prices vary

Many folks have several cell phone minutes left each month because they are not using what they pay for. Get the lowest available cell phone contract for your needs.

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9. Turn off your lights, heat and air

Using too much energy is environmentally wasteful and uses unnecessary money. Don’t overuse on home energy cost or car air conditioning.

10. Sell your car

If your car note is difficult to pay, and you don’t owe more than it is worth, sell your car and buy one you can afford. Look at certified used cars, or a car owned by someone who kept it in good condition. Be careful to verify the car is in proper working order before you purchase. One idea is to seek a traveling certified mechanic who will go to the site of the car owner and run test to verify its quality. Get help getting out of debt here.

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10 Ways to Save Money in Any Economy

Powerful Positive Money Affirmations

Powerful positive money affirmations are necessary to remove lifelong negative affirmations that dominate your thinking. Because negative financial affirmations start as a child, they become deeply embeded. If you have positive, thoughtful money affirmations placed by your parents and others, you will be positive about money.

Unfortunately, many of you have negative financial affirmations, placed by your family. The good news is negative affirmations can be replaced by positive money affirmations if you are willing to work at it.

What type of work does it take to replace the negative with the positive? It takes a lot of work to change old financial tapes in your head. But you can do it if you make it a concentrated task over time.

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Examples of Negative Money Affirmations Growing Up:

1. You will always be poor

2. We will never get out of debt

3. You’ll never work hard enough to get ahead

4. You will always be a factory worker

5. We will never get ahead in life we were born that way

6. The money is not there, and it will never be

7. Success is not for people like us

8. It does not do any good to get an education

9. If you save and budget, the money will get away from you anyway 10. The more you try, the worse off you will be

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Your First Positive Affirmation Task

The first task it to become familiar with positive money affirmations. Some of you have been programmed with negative thoughts for so long that you must search for the positive ones deep in your head. Here I have compiled a list of positive money affirmations I created, so you can move forward.

If you consistently repeat these positive money affirmations, you can rid yourself of the constant negative affirmations and thoughts about money, personal finance, and financial behaviors.

You may feel that this is basic information that most of you know. I have bad news for you, it is not. Because many of my clients I have spoken to do not understand where their bad financial behaviors come from I recommended you do a backwards analysis.

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Financial Habits Backwards Analysis

This is where a backwards analysis comes in. You look back at everything people close to you have said about money, so you can change those tapes.

We do the analysis to pinpoint the exact times and places the negative thoughts were programmed in your head. Let us move forward and change your financial behaviors for the better by understanding that your money affirmations can be changed by you, and only you.

Examples of Positive Money Affirmations From Parents, Teachers, Grandparents, or others:

1. You are smart enough to be a businessperson

2. The hard work you do will be rewarded

3. If you continue to build on your abilities, you will never be poor

4. When you work hard, as you do, the rewards will follow

5. Honesty pays off, stay honest and work hard

6. A formula of a smart girl, common sense and hard work is what you have, and it will take you far and wide. 

7. You will be extraordinarily successful one day and will have all the money you need.

8. You have the brain to create powerful finances, just keep doing your research

9. If you understand how to save and budget money, you will have great finances

10. Be consistent, the harder you work at it the better your chances

Here is Your Positive Money Affirmation Challenge Exercise

Choose one of the affirmations a day for two weeks, write about it and repeat it three times a day. You will slowly change the way you think. Do each of the following positive affirmations until you are done with the list. This positive affirmation challenge will take the better of 9 months to totally change financial behaviors, but sooner with many of your financial behaviors.

Of course, if you double up on your affirmation duties you can do it in half the time. The key to success with affirmations are 1. Be consistent 2. Complete the task 3. Continue to study the most powerful ones for the rest of your life 4. Document how you will use them to change your financial life forever.

Free printables for small business and personal use at MsFinancialSavvy; Daily Action Form, Budgeting Form, and Savings Form

22 Powerful Positive Money Affirmations by MsFinancialSavvy

Money Affirmations to Get Started, “I Will”…

Not create emergencies with irresponsible behavior

Create at least 3 savings accounts
and account for all the money I spend

Use my income for my needs first,
I realize I work to pay my bills

Only rent an apartment I can easily afford

Not let a salesperson determine my needs,
Purchase what is best for me, not him or her

Budget my budget

Marry a financially responsible person

Money Affirmations Half Way There, “I Will…”

Always understand quality items lasts long, and low quality must be replaced fast

Not go into business until I understand basic business accounting principles, customer acquisition, and business rents and leases

Spend money according to me income, not my credit card

Be prepared for most financial emergencies.

Not spoil my kids, unless I want to create a monster

Always understand that predatory loans can ruin my life for a long time, sometimes forever

Budget my time, energy, and money

Keep a budget for all phases of my life

Positive Money Affirmations That Change Your Life, “I Will”…

Create a savings account for emergencies only

Save first, invest second, keep debt low and start to build wealth

Dream it, then do it, after a lot of research preparation and thought

Understand that I alone am responsible for my finances,
Another person in the picture ads flavor to the mix

Learn basic investing skills, to protect my money and my retirement

Not believe anything I hear, and only half of what I see, I will do my research

Be the captain of my ship and the driver of my bus, I will take care of my finances

The More You Know, The More You Grow – Your Finances

MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency

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Creating a Sustainable Budget in a Time of Financial Crises

Creating a Sustainable budget is defined as a budget that works to meet all of your short-term and long-term needs. It keeps you feed, clothed, gas in your car, your mortgage or rent current, whether you have a lot of money or times become lean.

To create the lasting sustainable budget you must plan, and do it early. You don’t start when you lose your job, get into a car accident or have any other time of financial crises.  Creating a sustainable budget will take care of those issues.

The money you have in good times is budgeted heavily so it will last during bad times. I see too many people who though “caution to the wind”, when it comes to spending. They think they are so special that they will never hit hard times with a job loss, contract loss, or medical emergency.

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Don’t be fooled, it happens to folks of all income levels. So, it does not matter if you are low income or uber high income you have budget your money.  You never know when the, “well will run dry” or the money will seem to evaporate due to lose of income.

So, let’s get started and create a sustainable budget now.  You will create the short-term, the long-term and the budgets for the specific things you need. 

The common sense approach to avoiding a time of financial crises during an economic downturn is to guerrilla budget when times are good as well as when times are bad.

Unfortunately, many people don’t think about budgets until finances are in trouble. Start to create your sustainable budget and continue improving it as time goes on.

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I saw a new story about a young girl, who became a high-income singer, with a contract from a major media company, then came a terrible time of financial crises with an illness. Now  her 1.2 million dollar home is being auctioned off. Where did she go wrong? Is she any different than most Americans in her position?

The answer is 1. Apparently she did not understand how to budget the money she earned, 2. She didn’t  understand the limits of the money she earned. 3. She didn’t understand that, no matter what your income emergencies happen. 4. She did not create a sustainable home buying budget based on worse case scenarios.

The answer to the second question above is, NO, she is not any different than most Americans, and did not anticipate a financial crises.

Budgeting is not taught in most high schools and colleges or graduate school. Because of that we even have PHD’s and MD’s (doctor of philosophy and medical doctors), going broke due of mismanagement of money or the lack of budgeting skills.

They don’t understand that a financial crises can happen to anyone, so creating a sustainable budget early will prevent problems. 

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In this article I will give you a few quick tips to creating a sustainable budget using my guerrilla budget method:

1. Live below your means no matter what your financial status to create a sustainable budget.

This sounds like common sense, but many who have common sense and a good income don’t,  because you feel money will make up for it.

It does not. Ask all of the broke entertainers who once made millions. The 8 cars, and the 8000 square foot house is only a distant dream.

They think about how they could have purchased 3 nice cars, and a 3000 square foot house, put money in savings, invested aggressively, and they would have been set when the entertainment contracts dried up.

Many get caught in something as simple as not paying required yearly taxes. Pay your taxes first, then pay yourself in savings and investing, then pay your other affordable bills. 

2. When you make a lot or are awarded a lot of money

When you enter into a high income or windfall pretend like it has to last you 100 years.

The is a good trick for those who don’t have a lot of self-discipline, it works because you trick your mind into believing the money does not exist, so you are forced to guerrilla budget it.

When you are distracted one day you open your savings and investment account and you realize you did something really smart. You created a sum of money you can actually live off as your business or income falls on hard times.

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3. Be conservative with your purchases

There is no law that says when times are good you should waste money. The problems come when you have not grown up with financial discipline; too many income earners do.

Don’t fall in the trap of, “I have to spend big to have quality products”. You don’t. You can get nice clothes, shoes, cars, homes, and education at a very affordable cost and high quality.

Some things that are very expensive, you will later find that you simply spent too much money and could have gotten the item for a fraction of the cost.

Do your homework, do lots of research and get the best item for the best price. This is a major step to creating a sustainable budget.

4. Buy a home and car with a monthly note you can afford

You do not have to max out your monthly income in “monthly bill payments”. That is that your entire paycheck goes to “monthly bill payments”.

Here are examples; Why not buy the certified pre-owned car with a monthly note of one-third of the new car? Put the remaining two-thirds in a couple of different savings and/or investment accounts.

If you lose your job, you can pull from one of those accounts to continue your payments until you get another job.

creating a sustainable budget with free printables

5. Decide what you can afford based on your income and future

Start with a written budget. Your budget should include cost to run your home (maintenance-rent or mortgage), food – clothes – medicine. Also include things such as getting to work and maintaining a car, going on vacation, and to save, save, save for now and the future.

Everyone has different needs. It is imperative to identify all of your needs you have now or may have in the future. This is an analysis that will take time to figure out.

6. If you have an addiction to expensive “things” work on that problem

That is the number two problem that causes poverty with people who make a lot of money. The number one problem,  is “budgeting ignorance”.

If you have an entertainment contract that last three years, spend  like it will last three years.When you are an independent contractor on a job that will last two years, live like it is only two years.

When you are self-employed don’t fail to get proper liability insurance, health insurance and all insurance that is required by your industry. For those who are self-employed with an office space lease make sure you understand your lease by talking to a business attorney, before you sign.

The general idea here is to get cosst under control, understand that you don’t need expensive things.

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7. If you work on a contract like the singer above probably did

You have to be especially careful with spending because you will have a big tax bill at the end of every year based on your big income (quarterly after the first year).

When you are an independent contractor of any type – self-employed, contracted worker or any other; you will need to pay taxes by quarter and then year-end.

The worse thing to do is to file too many exemptions so you can have extra money in your paycheck. You promise yourself that you will pay it back, and of course that doesn’t happen. Eventually, you get into a nightmare loop of owing taxes, making payments and getting future behind.

8. Remember that it takes a long time to create a  sustainable budget

-Because you have to consider cost that you normally don’t think about.
-You have to consider all timelines for payments.
-Then don’t forget things you may need in the future.
-You can get a simple short-term budget, but a long term budget is ultimately the most important.
-When you do all of the above you creat a guerrilla budget

Go here to understand creating a sustainable budget  of your dreams.

Lois Center-Shabazz | Course Delta Agency

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creating a sustainable budget when times are hard

Tax Scam Victims Avoidance

Tax scam victims have become a targeted work for tax fraud.  Paying taxes is a fact of life, it always has been, and it always will be. For years the IRS has warned taxpayers about tax fraud, tax schemes, and plain old individual dishonesty. In many cases the dishonesty can result in stiff financial penalties and the fraud can result in jail. But still, this warning continues to evade some taxpayers. So be for warned.

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This evening on our nightly news one of the potential tax victim was rescued by a tax cab driver. An elderly lady told the tax cab driver she needed to go to her bank. She was not aware that she owed the IRS 25 thousand dollars. He ask her several questions and found out someone called her on the phone and told her to wire money to pay off her taxes.

He convinced her that he did not think it was the IRS, there are several tax fraud calls and he would take her to the police station. They informed her that it was not the IRS who called her. Creating tax scam victims continues in the year 2020, but thanks to an aware taxi cab driver she was rescued.

The IRS wants you to know many tax scams and schemes still exist and is heavily promoted as legal by con artist, and individual taxpayer dishonesty is not an option.

1. Tax Scam Victims

As per the IRS, they look shady. They lurk in the shadows. They try to entice you with promises of bigger refunds, audit-proof tax breaks or sure ways to beat the IRS. But the only sure thing about them is that they can cause you trouble … a lot of trouble. If you are aware of this you can avoid becoming a tax scam victim.

Defend yourself by reviewing the IRS update of the Dirty Dozen – 12 schemes and tax scams prowling for victims during tax season.

Check out what IRS agents are finding in their criminal investigations of crooked tax preparers – and their tips for avoiding these characters.

 The IRS urges people to avoid these common schemes targeted to making you a tax scam victim:

Go here for fantastic finances that grow and protect you now and in the future.

2. Offshore Transactions

Some people use offshore transactions to avoid paying United States income tax. Use of an offshore credit card, trust or other arrangement to hide or underreport income or to claim false deductions on a federal tax return is illegal.

Through April 15, the IRS is offering people with improper offshore financial arrangements a chance to make things right. Eligible taxpayers who step forward will not face civil fraud and information return penalties. A taxpayer involved in these schemes who does not come forward now, however, will be subject to payment of taxes, interest, penalties and potential criminal prosecution.

People interested in participating in the program, called the Offshore Voluntary Compliance Initiative, can contact the IRS by calling 215-516-3537 (not toll-free).

3. Identity Theft

Identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.

The IRS is aware of at least two recent identity theft scams involving taxes or the IRS. In one, tax preparers allegedly used information, such as Social Security numbers and financial information, from their clients’ tax returns to commit identity theft. In another, fraudsters sent bank customers fictitious bank correspondence and IRS forms in an attempt to trick them into disclosing their personal and banking data.

For taxpayers, it pays to be choosy about disclosing personal and financial information. And the IRS encourages taxpayers to carefully select a reputable tax professional.

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4. Phony Tax Payment Checks

In this scheme, con artists sell fictitious financial instruments that look like checks to pay a tax liability, mortgage and other debts. The con artists may also counsel their clients to use a phony check to overpay their taxes so they can receive a refund from the IRS for the overpayment. The false checks, called sight drafts, are worthless and have no financial value. It is illegal to use these sight drafts to pay a tax liability or other debts.

5. African-Americans Get a Special Tax Refund

Thousands of African-Americans have become tax scam victims and misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law. Some unscrupulous promoters have encouraged clients to pay them to prepare a claim for this refund. But the claims are a waste of money.

Promoters of reparations tax schemes have been convicted and imprisoned. And taxpayers could face a $500 penalty for filing such claims if they do not withdraw the claim.

In early 2002, the slavery reparations scam ranked as the No. 1 scheme on the Dirty Dozen list. Following a sweeping public outreach campaign and assistance from members of the Congressional Black Caucus and other organizations, the number of reparation scam claims fell sharply. Tens of thousands of claims were received in 2001, but the claims fell to less than 50 per week in 2002.

6. No Taxes Withheld From Wages

Illegal schemes are being promoted that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees. These schemes are based on an incorrect interpretation of tax law and have been refuted in court. A recent flurry of court actions has been taken against promoters of these schemes. Taxpayers who have concerns about their employer and employment taxes can get help by calling the IRS at 1-800-829-1040.

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7. Improper Home-Based Business

This scheme purports to offer tax “relief” but in reality is illegal tax avoidance. The promoters of this scheme claim that individual taxpayers can deduct most, or all, of their personal expenses as business expenses by setting up a bogus home-based business. But the tax code firmly establishes that a clear business purpose and profit motive must exist in order to generate and claim allowable business expenses.

8. Pay the Tax, Then Get the Prize

The caller says you’ve won a prize, and all you have to do to get it is to pay the income tax due. Don’t believe it. Someone who really wins a prize may need to make an estimated tax payment to cover the taxes that will be due at the end of the year. But the payment goes to the IRS – not the caller.

Whether the prize is cash, a car or a trip, a legitimate prize giver generally sends both the winner and the IRS a Form 1099 showing the total prize value that should be reported on the winner’s tax return.

Since tax scam victims appear to not be doing their research and reading news reports they are particularly vulnerable, so please pass these tax scams on to the elderly and underinformed.

9. Frivolous Arguments

Frivolous arguments are false arguments that are unsupported by law. When a scheme promoter says “I don’t pay taxes – why should you” or urges you to “untax yourself for $49.95,” beware. These scams are as old as snake oil, but people continue to be taken in, and many have become tax scam victims. And now they’re on the Internet. The ads may say that paying taxes is “voluntary,” but that’s just plain wrong.

The U.S. courts have continuously rejected this and other frivolous arguments. Unfortunately, hundreds of people across the country have paid for the “secret” of not paying taxes or have bought “untax packages.”

Then they find out that following the advice contained in them can result in civil and/or criminal penalties. Numerous sellers of the bogus schemes have been convicted on criminal tax charges.

10. Social Security Tax Scheme

Taxpayers shouldn’t fall victim to a scam offering refunds of the Social Security taxes they have paid during their lifetimes. The scam works by the victim paying a “paperwork” fee of $100, plus a percentage of any refund received, to file a refund claim with the IRS.

This hoax fleeces the victims for the up-front fee. The law does not allow such a refund of Social Security taxes paid. The IRS processing centers are alert to this hoax and have been stopping the false claims.

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11. “I Can Get You a Big Refund …for a Fee!

Refund scheme operators may approach someone wanting to “borrow” their Social Security number or give him or her a phony W-2 so it appears that the person qualifies for a big refund. They may promise to split the refund with that person, but the IRS catches most of these false refund claims before they go out.

When one does go out, the participant usually ends up paying back the refund along with stiff penalties and interest. Two lessons to remember: 1) Anyone who promises someone a bigger refund without knowing their tax situation could be misleading them, and 2) Never sign a tax return without looking it over to make sure it’s honest and correct.

12. Share/Borrow EITC Dependents

Unscrupulous tax preparers “share” one client’s qualifying children with another client in order to allow both clients to claim the Earned Income Tax Credit. For example, one client may have four children but only needs to list two to get the maximum EITC.

The preparer will list two children on the first client’s return and the other two on another client’s tax return. The preparer and the client “selling” the dependents split a fee. The IRS prosecutes the preparers of such fraudulent claims, and participating taxpayers could be subject to civil penalties.

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13. IRS “Agent” Comes To Your House To Collect

First, do not let anyone into your home unless they identify themselves to your satisfaction. IRS special agents, field auditors and collection officers carry picture IDs and will normally try to contact you before they visit.

If you think the person on your doorstep is an impostor, lock your door and call the local police. To report IRS impostors, call the Treasury Inspector General’s Hotline at 1-800-366-4484.

Beyond the “Dirty Dozen,” the IRS sees many more tax schemes. Some examples include home-based business scams, disabled access credit for pay phones and a variety of improper abusive trusts.

“The best advice for taxpayers is to remember the concept of ‘buyer beware,’” Wenzel said. “Think carefully before paying for services or signing important documents.

And don’t be fooled by outrageous promises. If something sounds too good to be true, it probably is.” Don’t help a con person make you one of many tax scam victims.

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5 Retirement Tips for your Retirement Planning Young and Old

5 Retirement Tips That Make Retirement Planning a Serious Issue

5 retirement tips for your retirement planning young and old

Retirement tips are for those who never think that retirement day will come, or don’t know the potential difficulties they face when they retire. It always seems so far away, but those who have retired tell me it came faster than they ever imagined.

Here are some actual examples of problems seniors tell me they’ve had because they didn’t take their retirement date seriously in their 20’s, 30’s or 40’s. Here are 5 retirement tips to include in your retirement planning.

Retirement tips #1 – Medicare + 20%

Medicare pays 80% of most of the senior medical cost. Because of this, senior citizens are required to take out a Medicare Supplement policy. The supplement pays the extra 20%. Some seniors planned so poorly that they can’t afford or pay for the Medicare supplement. Because they have no supplement insurance, they are required to pay the 20% each time they go to the doctor, have surgery, chemotherapy or any other medical treatment. If they have a home, the home will be attached to pay for their medical balances, usually if they sell it or pass away. If they don’t have an insurance supplement or pay the 20%, some medical facilities will not treat them. There are two types of medicare: Regular Medicare (government sponsored) and Medicare Advantage (private coverage). Regular medicare typically pre-authorizes and pays promptly. Medicare advantage includes
many “extras” to “induce” seniors to sign up, but does not authorize major
treatment in many cases, and does not follow through with the extras. Doctors I talk to recommend seniors sign up for regular medicare.

Retirement tips #2 – Social Security as a Supplement

Many employees, both young and old, can pay into a 401k plan but opt-out of it, because either they, 1. Don’t understand what it is, 2. Don’t get matched by their employer, or 3. Feel they have plenty of time to worry about it later. The fact is there are numerous articles to explain 401k plans, the match is a nice side benefit—but you still get a tax benefit when you contribute without a match. The amount of a monthly social security retirement check is small compared to your working retirement income. Because of this, social security is meant to be a supplement to your retirement, so think hard about creating your main retirement now. The earlier you start, the easier it is, and the less you need to put into your account, monthly.

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Retirement tips #3 – 401k Protection

A popular retirement supplemental plan is the 401k, but you must protect it. Once you start to fund a 401k protect it with all your might. The protections include; 1. Leaving it alone for retirement – this means no borrowing. This is a provision that should not be allowed in a 401k plan since it is meant for retirement. Everything should be done to avoid borrowing from your 401k, including careful planning early in your career. Here are some protection ideas. Make yourself several “would if” scenarios and fulfill those scenarios early.

The examples are — “what if I lose my job”, “what if I need a large home repair”, “what if I want to go on a nice vacation”, “what if I have difficulty paying my mortgage”. All those issues can be addressed by 1. Creating savings accounts, 2. Cutting your living expenses now, 3. Make all major purchases affordable. You can come up with more solutions. The point is to come up with solutions to problems that don’t exist yet, so you never need to borrow against your 401k plan later.

Another protection is to keep your 401k balance to yourself. Scam artist prey on older people and sometimes younger people who have large 401k balances, because they know you can take that money out of your account anytime. A large lump sum withdrawal will trigger a large tax bill if you take it out at once. But, that is no concern of any sales person (many of whom are fake), when it comes to your 401k. You should be the only one who knows the balance. It’s not a good idea to share your balance with strangers.

The popular show, American Greed profiled the case of two ladies, not very old, but managed to retire with large 401k type accounts. One had $600,000 and one had $1 million. Both told friends, who told a fake investment person, who contacted them, talked them into investing with him, and he stole all their money. Their primary problem was that they should never have met with or believed in a stranger who claimed to be investing in the music production business with high returns.

The only thing they got was a huge bill from the IRS since they took the money out within a short period. The man went to prison, but they did not get their money back. Friends, family, and strangers have no right to the information in your 401k or 403b plan. Some elderly people have had their 401k stolen from them by their own relatives, including greedy children.

Retirement tips #4 – 403b Protections

The 403b is like the 401k, usually for non-profits. Fund the accounts, make sure you understand where to keep the money when you retire, you will have a few options. But, mostly understand that your balance is your personal business, and you must pay taxes on the amount you take out. The purpose of your 401k or 403b is to supplement a pension or other retirement plan.

Retirement tip #5 – Tax Shelter Annuity Movement

Many school districts offer tax shelter annuities as supplemental retirement accounts. After retirement, they are offered the right to roll over into an annuity outside their job. Be careful, make sure the costs aren’t prohibitive.  Also, you can only take out a little at a time, otherwise taxes would be too high. Again, your tax shelter annuity balance is your business, no one else’s. Look at online investment banks such as fidelity.com, troweprice.com, schwab.com or others – call and discuss low cost annuities to roll over your annuity. You can also discuss other low risk options. Take your time and don’t allow anyone to pressure you.

This is only the beginning, but if you take these retirement tips serious, and include them in your retirement planning, you will be on the road to retirement bliss. Understand the limits of social security when you plan your retirement.

Lois Center-Shabazz 

Personal Finance:  Author | Blogger | Course Creator | Money Strategist





How You Can Create Fantastic Finances In Your Life Forever!

Watch Your Finances Soar Forever

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Best regards, Lois

P.S. Remember…you don’t need to panic. I don’t expect to sell out immediately. However, if you want one of those spots at my Course For Fantastic Finances Live Workshop, then please don’t delay. They’re going to go fast.

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3 Sure Ways to Create Fantastic Finances That Bank

Thank you for your comments and questions about Fantastic Finances that bank, these are important for us to finish our Fantastic Finances Course Modules. Now, I also have 2 short courses that bank money, I am offering at a deep discount just for you.

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3 Ways to create fantastic finances that bank money

In my comprehensive 8 week Fantastic Finances Course you will be taken down the road to develop prosperity and maintain great finances. In 11 modules you will learn the meaning and the might behind the best finances achievable.

As a small business owner, long term investor in both mutual funds and real estate and previous holder of a financial license, I felt it was my duty to share my success with others.

I have seen a lot of financial ruin from people with low to very high incomes due to lack of high end financial knowledge and it broke my heart.

You will have, 11 Modules, 8 eBooks, 7 PDFs. 7 Presentations, 11 Exercises, 10 Quizzes, 7 FREE Bonuses, 4 Sets of Spreadsheet Templates, a Workbook, a Most Valuable Canvas– a Bonus Module. and 8 bonuses including an exercise to change the way you handle your money, and private facebook live coaching, private online coaching. You will change the way you choose financial products to protect yourself, you will achieve Fantastic Finances, when you follow this simple program.

So, my passion has been to show others what I have learned over the past 30 years.

I know what you are thinking. I don’t have time. The problem is if you don’t take this time for yourself, others will take it from you, when you don’t make the right financial decisions. The time spent turning a wrong decision into a right one, is huge.

Also, should you spend finances to get finances right? This is an 8 week education that can send your finances skyrocketing. The money will come back to you many times over. And you have access to the course for life.

I also know that you are thinking it may be too difficult to understand. Don’t fear, I am here. I will take you through step by step guidance that makes it easy to understand, and I will answer your questions weekly in our group sessions and in our private Facebook group.

I have another video coming soon to walk you through some top things you need to know about money and finance to be successful growing money and building assets. Please leave a comment or question below.

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Tax Evasion an Option For the Tax Adverse, 5 Reasons

Tax Evasion is Not an Option
Tax evasion is not a 5th amendment right

Tax evasion is a practice employed by some tax revolt groups and individuals who feel, for different reasons, that paying taxes are not fair to them, either legally or morally. They take their excuse for tax evasion even further, by claiming it is their “fifth amendment right”. The government and interpreters of the law are in disagreement with tax evaders on this topic.

A “Tax” is a compulsory payment imposed or levied upon a taxpayer by their state, federal, or local governments, against their income, product sales, or services. This compulsory payment angers some taxpayers to the degree, that they resort to tax evasion.

The word tax evasion is often misunderstood as tax fraud or penalty, but tax evasion is a totally different term, having a different role in the scheme of “all things taxed”.

The word tax evasion is often misunderstood as tax fraud or penalty, but tax evasion is a totally different term, having a different role in the scheme of “all things taxed”.

Every American employee, business owner, or person with a qualified financial windfall, having an income or a qualified financial gain, normally owes a tax liability to the state, federal or local government, and being a mandatory payment, some resent paying taxes as an over-reach by government. This is the main reason, every year,  thousands of Americans decide to skip paying taxes.

What is tax evasion? How is it different from tax avoidance and tax fraud?

Tax evasion is actually a subset of tax fraud which usually entails a deliberate act of misrepresentation of taxable income to the IRS or Internal Revenue Service. It refers to any attempt by  a taxpayer to avoid paying taxes, usually by some type of illegal methods.

Tax evasion should never be confused with tax avoidance because the latter can be a legal way of avoiding taxes by means of legal deductions, sometimes simple and some very complicated, but always allowed by law.

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Tax fraud can involve cases that are civil and criminal in nature, while tax evasion usually includes cases which are criminal in nature.

Types of tax evasion

There are a number of ways an individual can evade his/her tax, some of the most common ones are enlisted below:

  • Reporting less than actual income or failing to report any cash income.
  • Claiming false deductions or showing inflated donations to charitable institutions in order to avoid tax payments.
  • Filing an intentionally deceptive and incorrect tax return or deceiving the IRS with misleading details.
  • Omitting a property or not understating the value of property owned, etc.

Why tax evasion is not a short term or long term option for those who don’t like taxes

Taxes are a legal payment that every American with income or gains is obligated to pay the government– both federal and state. Taxes are usually levied on the income of an individual which can be in the form of a salary, capital gains or income from miscellaneous sources, but the idea of giving up a considerable portion of their income to the government disturbs many taxpayers.

People feel that the government is actually exploiting their fundamental rights by taking away a part of their hard-earned money, and as a result, they resort to tax evasion.

However, tax evasion is never a short or long term option for people who don’t like paying taxes, because taxes are a legal income you owe the government. Our government spends tax money making sure public services are available to you and your family, such as government hospitals, schools, roads, dams, and bridges, as well as streets,  government buildings and salaries of government officials.

Thus, your taxes are the government’s rightful claim and are therefore the law, you must pay your share.

Indulging in tax evasion would mean that you are subject to punishments in the form of several penalties and possibly prosecution. There is a paper trail for everything you do, and the government will eventually find you if you evade taxes. So, I have one bit of advice for you, “pay your taxes, be honest about income”, otherwise tax evasion will eventually open you to severe penalties and punishment.

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What happens when you evade taxes?

A person suspected of tax evasion is first; interrogated by the Internal Revenue Service, and if proven guilty the suspect is immediately imposed with penalties. However, in certain cases, the IRS may deploy The Central Investigation Division to collect further evidence.

If an individual is found guilty, he may be imposed with the following penalties (these penalties are subject to change from year to year):

  • If a person is held guilty for cheating on taxes owed to the government, then his penalty may include a prison sentence of up to 5 years or a fine of up to $250,000 or both. In the case of corporations, the fine may be up to $500,000.
  • Filing a wrong return; having misleading information where the motive of the suspect was to evade tax, in this case, the penalty would be imprisonment up to 3 years or fine of up to $250,000 or both. In the case of corporations, this fine may go up to $500,000.
  • A penalty of 100% of the amount not paid by employers is to be paid by employers when they do not pay the required taxes to government agencies. In the case of businesses with employees, there are certain social security benefits that every employer needs to pay on his employees’ salary, and in the case of failure to pay the required tax, the employer will have to pay 100% of the amount withheld.
  • Non-filing of the tax return also attracts certain penalties and thus a person held guilty may get 1-year imprisonment or $100,000 fine or both. The amount of a fine is $200,000 in the case of corporations.
  • The penalty for failure to file a timely tax return- If a taxpayer who is required to file a tax return fails to do so within a stipulated time period then, he may be charged with a penalty. There will be a 5% penalty on the amount of tax unpaid per month until the return is made, but up to a maximum of 25%.
  • The penalty for failure to pay a timely tax- If a tax- payer is unable to pay his taxes due by the return date then, he/she will have to pay a penalty of 0.5% of the amount of unpaid tax per month up to a maximum of 25%.
  • The penalty for non-payment of stipulated dues- If a taxpayer is unable to pay his taxes even after being notified about the same within a given time period then, he will have to pay interest on the amount withheld along with a penalty of 0.5% per month applied to the unpaid amount.

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Prevent tax evasion under all circumstances

By now you know that tax evasion is a crime and the best way to avoid penalties and fines imposed by the IRS, states, and local governments, would be to follow all tax rules and laws. Make use of legal deductions and avoid anything not permitted by tax law. In case you will be late filing your return, ask for an extension from the IRS, clear your tax debts as soon as possible and always stay away from tax evasion.

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5 reasons tax evasion is not a 5th amendment right at msfinancialsavvy

These are five great reasons tax evasion is not your 5th amendment right

How to Protect Your Tax Returns and Pay Taxes Online

Tax returns can be protected and avoid unnecessary stress.

How to protect tax returns and pay taxes online

Tax preparation and tax preparer selection are not all that difficult, but there are those who make it difficult by not adhering to a few simple rules.

Avoid tax fraud by choosing your tax preparer carefully, and carefully communicating with your tax preparer once he or she is chosen. You can pay taxes online  with the new IRS systems.

The IRS defines someone who is an Abusive Tax Preparer as someone who prepares fraudulent or abusive tax returns for compensation. Here are some of the ways they prepare false tax returns that are easily detected by the IRS.

  • They may inflate expenses related to business or personal use.
  • State false deductions, give tax credits that are not allowed, state excessive exemptions
  • Give false tax credits, such as business equipment credits or personal Earned Income Tax Credit (EITC)
  • Claiming false income and loss statements
  • Claiming non-existent charitable contributions
  • Claiming false dependents
  • Preparing fraudulent schedule C (for business expenses)
  • Claiming false medical and dental expenses; usually over inflating medical cost so they can deduct them.

These and other deductions are usually caught with the IRS “red flag” system as tax fraud. The return is rejected for review because it does not make sense according to computer analyses of the return. You can check own tax forms, filing your own tax forms, and pay taxes online.

The IRS has a special division whose sole purpose is to investigate tax preparer abuse and fraud. It is the IRS Criminal Investigation Return Preparer Program (RPP) that flags the fraudulent returns. Through the RPP, all fraudulent tax preparers are subject to criminal charges.

The abusive tax preparer usually prepares taxes for large numbers of people. The people, who use the services and receive bad tax preparation, will later be charged with interest, penalties, and sometimes civil and even criminal charges.

In 2010 the IRS launched the tax preparer oversight program. This allows the IRS to monitor and catches tax preparers easier. It is important for every taxpayer to make absolutely sure they have closely researched their tax preparer, so they can choose a preparer carefully. The taxpayer is responsible for every single item their tax preparer places on their return.

With electronic filing of income tax returns, and refund anticipation loans (RAL), came new abuses in filing for tax preparers. There were fake tax preparers, filing fake electronic returns and taking fake RAL’s. Since 1977 the Criminal Investigation Unit in the 10 IRS campuses, monitor returns for fraud at their Fraud Detection Centers (FDC). The FDC’s role is to detect tax fraud and tax fraud schemes, and send them to the Criminal Investigation Unit of the IRS.

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Here are questions you can ask your tax preparer before you get started.

1.   What are your qualifications?

A CPA or Enrolled agent are the best qualified to do taxes. Both of these designations regularly take classes and take an exam for their designations. A CPA or certified public accountant is the highest qualified in the tax field.

2.   Would you be willing to lie on my return?

If your preparer says yes, run as fast as you can. This can get both of you in trouble so why would he/or she be willing to lie. Perhaps your preparer is not licensed. Licensed preparers can lose their designation if they are caught lying on a return.

3.   How is your information protected in their office?

The computer and backup files should be secure during and after hours. All paper files should be secured in locked cabinets. Identity theft is on the rise.

Easy Budget Planner for an outrageously great budget4.   What are your costs?

Agree on a tax preparation fee before you hand over your information, so there are no surprises.

5. Can I pay you extra to re-check my return against documents I have given you?

Ask your preparer to re-check your return. If you have the ability to check your return against your documents that is fine. But, you absolutely should check for the small things: correct spelling of your name, correct social security number, correct occupation, correct income, and any other minor items, which could turn major if entered incorrectly.

6.   How Long Will It Take?

It is your responsibility to organize your tax information and submit it to your tax preparer early. It is your tax preparer’s responsibility to get the information back to you in a timely manner, so you can file your taxes well before the tax deadline.

The Internal Revenue Service has several ways to find dishonest tax preparation. They have a series of checks and balances in their system that can signal fraud.

Why would you risk getting caught by the Internal Revenue Service when the penalties are far, far greater than the savings you will get for dishonesty, by you or your tax preparer? There are many ways your preparer can be dishonest about preparing your tax return.

He or she can make it seem as though you have more business or personal expenses than is true. I have listed many of the ways dishonest tax preparers try to fool the IRS. Some of the more common are; going through the trouble of presenting false receipts for equipment or furniture not purchased.

They can get you a credit where you do not deserve one. They can make false claims about deductions you are not entitled to. False receipts can be detected by the IRS, as well as other forms of fraud.

Understand how tax preparers charge. This is another area where you can get scammed. Tax preparers charge according to the difficulty of your tax return. This should be a flat fee. If a tax preparer charges you according to the percentage of the money you receive from your return or if they claim they can get you a higher return than anyone else, run, as fast as you can. This should raise a red flag in your mind.

You have heard this in other articles I have written, but I will say it over and over. You are responsible for every item that goes into your tax return. You will be heavily fined and penalized for dishonesty in your tax return. So, check your tax return carefully. If there is something you don’t understand, ask your tax preparer to explain it. As you can see from all of the above, you will sleep better for years to come if you file an honest return.

But, better yet, you will save money, lots of money in the long run if you are honest with your return, and you choose an honest tax preparer. You can pay taxes online when you find you own money after tax preparation.

Be sure your preparer signs your return and gives you a signed copy of the return, so you can verify everything on your return is correct before you mail it, and avoid tax fraud at all cost.

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How to protect tax returns and pay taxes online

Healthy Natural Oat Bran Muffin Recipe

Easy and Healthy Oat Bran Muffin Recipe


This is the tastiest oat bran muffin recipe you can buy at msfinancialsavvy.com

Dinner recipes include a natural oat bran muffin recipe that can be used for breakfast, lunch or dinner. Oat bran muffins are a healthy source of fiber and calcium.
The ingredients are measured, but not exact, you can adjust to your personal taste. Because fiber is healthy, this is a particularly healthy recipe.


1 bag of box of natural oat bran

1 tablespoon baking powder

2 tablespoons vanilla flavoring

1 cup applesauce

1 tablespoon cinnamon

1/3 cup of sugar or sugar substitute such as Splenda or stevia

1 egg

1/2 cup milk (whole or low-fat)

1 cup of blueberries or raisins


Mix bran, applesauce, vanilla flavoring and cinnamon and sugar first.  Continue with 1 egg and milk and all other ingredients,
and either blueberries or raisins placed and folded in last.

Place in a cupcake pan lined with cupcake liners or oil and a dusk of flour.

Pre-heat the over to 350 degrees

Bake for 20 minutes in a pre-heated oven at 350 degrees.

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