Tax-E Income Tax Services & Accounting

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ATTENTION CITIZENS OF LOS ANGELES!!!
As a tax preparer I had always helped people avoid taxes NOT evade them but this has gone to far, listen why....

A couple of days ago a client of mine called me and said "I need to see you asap I received something in the mail that's saying I owe taxes" ok I said but my mine just imagined that I might be a penalty and interest for late filing or something but I never imagined the scheme that the City of Los Angeles is trying to do to collect more money.
My client came and showed me two scenarios, first his mom, a retired woman living on social security who received a notice from the city that she hasn't paid taxes on 3 years in a row for 30k she made each year and since she supposedly she needed to have a city license , so now 3 years later they are trying to collect over $1000 in fees and penalties. Ok first thought in my mind after checking her last tax returns, was she self employed? No, Did she ever get a 1099 Misc? No, so the easy answer, someone stole her identity and has filed with her SSN and commented fraud so, nothing to do her but to go to the LA City office with her returns "but wait....what returns?The last time she filed was for 2012, the were saying it was 13,14,15, she hasn't filed since because of her age and because she lives on SS.
Ok I said to my client, go to the office with the very last tax return and claim fraud, so where is the cities fault in that? So now we turn over a notice that he received and similarly saying that for the last 3 years he failed to report an exact amount of 30k in his return as independent contractor and that he needed to pay penalties and fees for those 3 years. I've been doing this guys returns for over 5 years now and never has he had a 1099Misc all have been W2 now on top of that they send him a form to fill out to file for a city license because now it's "THE LAW" that if you get paid as an independent contractor for whatever reason you need a city license and because it back dates to 3 years ago so now you are delinquent in city taxes.
Now I started to see the pattern, now I started to connect the dots and this is why....
You are living in Los Angeles and get a paycheck, you get a W2 at the end of the year and think you are fine but you get this letter from the city saying you owe taxes, no biggie, you look at you tax returns, you call the IRS and the State and both say you are fine, so, you ignore the letter, but they claim and add penalties etc until you call, they say you need to show up with your returns and pay, frustrated you ignore once more until a lien on you bank account freezes you money, NOW they have your attention, you go talk to the city clerk, easier said than done. You clear you name and they stop collecting and good for you, it just cost you a day of work and a payday loan just to get by the nightmare but, now imagine you multiply this same scene a couple of millions of times, now you get the picture.

Mayor Eric Garcetti! This is not a honest way to collect funds for the city, you are asking the poor and middle class to pay more when they have already paid up to the Fed and ST. You want to collect more taxes do it the honest way! Lower the threshold from 100k to 30k to on you city tax return, even if the people point at you for increasing their taxes, at least it not fraud or shady.

For of all of you out there in LA, what out for notices from the city regarding needing to get a permit if you get paid direct and get a 1099misc. Don't ignore them, they are real and very soon can get very nasty too.

If you need someone to consult in this regard, drop me a line or give me a call, I'd be happy to assist 😉😉

Happy holidays to you all.
Sincerely
Tax-E

New tax season is around the corner, now is the time to get your accounts settled and make sure you buy health insurance so you avoid paying the penalty, which will be imposed on your 2015 tax return. See you soon!

Getting ready for a new tax season, looking at what's new and the only thing that comes to my mind is the health care law and some credits that's are coming back, other than that and taking in terms of software, it's my second year with OLT Pro and so far so good, I also heard that the RALs are coming back but I still will persuade my clients to stay away from such loans, they are high interest loans and can do more harm than good. It's still to early to say when tax season starts but I'll keep you guys posted😎👍

It's that time of the year, yes it's the holidays but for the tax professionals this means get all your gear ready and hope for the best, and it's not what you guys think, although success never hurts and new clients are always welcomed but it's the behind the scenes that we are weary about, the constant last minute changes to the laws and in my case the looks and feel of new and promising tax software that you only hope does not let you down like the last one did that keep us on edge. Next year we've been told by the IRS that the tax season will most likely start the first week of February so for those counting on a tax refund to pay for your current holiday shopping please plan accordingly because you might not see it coming until the end of February, with all that said, we wish you the best holidays every and shop wisely, until we see again Merry Christmas everybody!

It's been a baffling tax season, the IRS and the states never been this late, it like the software developers are writting the code as we speak on top of that TRX software has problems of there own, it sure make the job harder, not to mention all the fees imposed at us tax preparers from the Fed and the States.
March 15 is around the corner, this is the deadline for all of those filling 1065, 1120-C and 1120S in other words if you have formed a partmership or a Corporation then, this deadline is for you.

TAXPAYERS BEWARE OF CALIFORNIA!!!!!! READ BELOW

Self-Employment Tax Deduction

The federal 2010 Tax Relief Act increased the amount of self-employment tax that may be deducted in computing federal adjusted gross income. California has not conformed to this change. For state income tax purposes, taxpayers may only deduct 50 percent (50%) of the self-employment tax paid in computing state adjusted gross income.

The majority of self-employed taxpayers have not yet filed their 2011 tax return. We have updated forms and instructions and contacted all software companies to make this update. Make sure your tax preparation software allows for the Schedule CA line 27 adjustment if necessary. The following example shows how to compute this deduction:

Self-Employment Taxes Paid, Form 1040 line 56(or 1040NR line 54) $2,000
Federal Deduction Allowed, Form 1040/1040NR, line 27 $1,150
Less: California Deduction Allowed, 50% of self-employment taxes paid $1,000
Schedule CA, line 27 (column b) adjustment $ 150

Important: Self-employed taxpayers who have already filed a return using the higher federal rate do not need to file an amended return. In order to reduce taxpayer burden, FTB is sending a letter to a limited number of taxpayers based on available information and considering the time and effort involved to revise this deduction. The letter will include an explanation of the issue, proposed corrected amounts, and allow taxpayer response before issuing a tax bill. Taxpayers who have already filed and are not contacted by FTB do not need to file an amended return.

For more information on this issue, please see Legal Division Guidance 2012-02-01 located on FTB’s website: ftb.ca.gov.

So now any return filed between Feb 16th - Feb 22nd will expect to get their refund on Feb 29th. In other news...Eye opener... the State of California decided to convert your direct deposit to a paper check if you state more than two accounts to deposit your money in the Federal Return, I call that bull it's just another way to delay your money, some of Tax-E customers are already affected.