How to Report Gambling Winnings & Losses to the IRS

After a big win on a lotto ticket or after a great night at the casino, the last thing you’re probably thinking about are those pesky tax obligations that come along with it. While that brand new sports car or fancy yacht may look enticing, it’s important to remember that the IRS wants their fair share.

What Counts as Gambling Income in the Eyes of the IRS?

Gambling income includes winnings from lotteries, raffles, horse races, sports betting, casinos, and cold hard cash, which is a standard assumption. But did you know that it also includes the fair market value of prizes like cars, trips, etc.? So, if you made a deal with Wayne Brady, got lucky betting the ponies, or took on losses betting on the Lions, you need to make sure you’ve got your house of cards in order come tax time.

Reporting Lottery Winnings to the IRS

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Covid Relief For Employers: Employee Retention Tax Credit

By now, just about everyone has heard of PPP loans, EIDL Loans, and the various grants available to employers that have been negatively impacted by COVID-19. However, there is another COVID relief program that many people don’t know about called the Employee Retention Tax Credit (ERC). It’s largely unknown because when it was first rolled out it didn’t apply to a lot of people (you couldn’t claim the credit if you got a PPP loan), but the rules have since changed. Under the new ERC rules, many businesses that were impacted by COVID are entitled to tens, or even hundreds of thousands of dollars in COVID relief funds – over and above any PPP or EIDL loans they might have already received.

So how does the Employee Retention Tax Credit work??

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Side-Hustling Independent Contractors And Taxes

Understanding Your Taxes If You’re A Side-Hustling Independent Contractor

In today’s day and age, it’s not uncommon to come across people who have side hustles to make some extra cash, especially since the start of the Covid-19 pandemic. The fact that many people have found themselves unemployed, making less money overall, or just have more free time than they did before gave even more rise to an already rising trend.

Side-hustles have provided people with the much-needed supplemental income, which has benefits and drawbacks. And while side hustles are a relatively new thing, a hustler’s tax obligations are not.

Income Tax Rules For Common Side-Hustles

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How To Avoid IRS Tax Problems With Business Expenses

Do you spend money on your business throughout the year? If you’re a business owner, I’m sure you do. While some of those costs can be deducted from your tax return, not all business expenses qualify. Learn what types of costs you can deduct, as well as what it means to overstate your business expenses – and what penalties you might face from the IRS if you do.

Key Insights We Will Discuss

  • What counts as a business expense
  • Separating your expenses
  • Types of expenses you can deduct on your tax return
  • What is means to overstate your business expenses
  • Penalties for making false deductions on your returns

What Counts as a Business Expense? 

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Can I Go To Jail for Past-Due (Delinquent) Taxes?

Past-due (delinquent) taxes create a stressful situation for taxpayers who fall behind or file late.  Liens, wage garnishment, and fines only increase anxiety for those behind on their taxes.  To make matters worse, there is a question of an even bigger punishment for delinquent taxes: Can you go to jail for falling behind on taxes?

The question is more complicated than a simple yes or no.  Many factors play into decisions the IRS makes regarding criminal charges for tax issues.

Key Insights:

1.)  Why the IRS can file criminal charges against you

2.)  How long does the IRS have to make their case against you?

3.)  What other penalties can the IRS impose for delinquent taxes

Yes, You Can Go To Jail

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How to Reduce Payroll Tax Penalties

Failure to submit payroll taxes to the IRS can result in penalties against you and your business.  If you have a valid reason as to why the taxes were not paid, the federal agency may consider waiving or reducing your penalties.  With the guidance of your tax attorney, you can try to get your penalties abated.  There are a few different ways to go about this: by showing reasonable cause for why the taxes weren’t submitted; by proving you didn’t pay taxes due to erroneous advice from a tax professional; or by paying the owed taxes.

Key Insights We Will Discuss
  • What qualifies as a reasonable cause?
  • What is a correction of service error?
  • Why paying your taxes is necessary to get penalties abated

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When Do You Need To File An FBAR?

According to the IRS, a U.S. citizen, resident, corporation, partnership, limited liability company, trust, and estate, must file an FBAR if they meet certain criteria.  These requirements can include: if you have a financial interest in or authority over at least one foreign financial account and if the combined value of the foreign accounts exceeds $10,000 at any time during the calendar year.

When you have foreign bank accounts, there are certain situations in which seeking help from a tax attorney can be beneficial.  In addition to getting information on how to file an FBAR, a tax attorney can help you with the following:

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How To Appeal A Past Tax Audit

Finding out the IRS is auditing your tax return can be stressful enough, but what happens if you disagree with the federal agency’s findings on a previous tax return? No fear – you have options when trying to appeal an IRS tax audit.

With the help of a tax attorney, you can file for a reconsideration audit. Find out what an audit reconsideration is and how to qualify.

Key Insights We Will Discuss
What is an audit reconsideration?
How to qualify for an audit reconsideration.
Benefits of hiring a tax attorney.
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What Is an Audit Reconsideration?
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Penalties For Not Turning Trust Fund Taxes Over To The IRS

When you pay your employees, you are not paying them all of the money they earned. Instead, you are responsible for withholding part of their income for taxes. These can include income taxes and FICA (Social Security and Medicare).

Your employees trust that this money – referred to as trust fund taxes – goes to the treasury to pay their portion of taxes, and not to the company’s accounts.

But what happens if your business doesn’t submit this money to the treasury? Keeping this money can result in penalties from the IRS.

Learn what these penalties are and how you and your attorney can work the federal agency’s Special Agents to try to get the assessments reduced.

Key Insights We Will Discuss:
Possible penalties for not turning trust fund taxes over to the IRS.
Who are IRS Special Agents?
How a tax attorney can help you negotiate with Special Agents.
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How An Offer In Compromise Works

Do you owe back taxes to the IRS? Until your debt is paid in full, the federal agency can assess penalties, interest, and more. Fortunately, you have options on how to settle your debt with the IRS. One solution is an Offer in Compromise. Read on to find out what an Offer in Compromise is, how it works, and how a tax attorney can help you qualify.

What is an Offer in Compromise?
An Offer in Compromise is a program to help you settle your tax debt with the IRS. If you owe the federal agency money in back taxes, you can work with an attorney to apply for this program to help reduce the amount of money you owe them. In some cases, the amount you agree to pay can be significantly less than what you originally owed. According to the IRS, the agency takes the following factors into consideration when determining if you qualify for the Offer in Compromise program:

-Ability to pay
-Income
-Expenses
-Asset equity

What it Means for You and Your Tax Debt
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When Seeking IRS Penalty Abatement, What Qualifies As Reasonable Cause?

If you are facing penalties from the IRS for paying or filing your taxes late, you have some options to get those assessments removed. Reasonable cause is one method to getting penalty abatement. Learn more about reasonable cause and how to qualify for it.

Key Insights We Will Discuss

-What is reasonable cause?
-How to qualify for reasonable cause
-What Is Reasonable Cause?

Reasonable cause can be used when you have a legitimate excuse for not paying or filing your taxes on time. When claiming reasonable cause, you must be able to prove that it was out of your control to file or pay on time and that you tried to file but it wasn’t possible.

According to the IRS, some examples of reasonable cause can include:
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TaxConnections, Guide For Tax Audits, Venar Ayar

This Guide For Tax Audits was prepared by Tax Lawyer Venar Ayar. The Guide covers the many notices that the Internal Revenue Service sends to individual taxpayers regarding tax audits. This is an excellent guide for tax professionals and taxpayers alike and we thank Ayar Venar for compiling this information and reference guide for our readers.

Please be advised that all tax audits should be handled by an experienced tax professional. Please refer to the guide below:

IRS NOTICE NUMBER DESCRIPTION – VENAR AYAR’s ADVICE

CP11Audits   This notice states that your return has been changed because the IRS believes there was a miscalculation. This means you owe money on your taxes because of this. Double-check the numbers on your tax return to confirm that you actually did make a mistake.  If there was no mistake on the original return, you need to respond to the notice with an explanation.

CP14- Balance Due   The IRS has sent this notice because you owe money on unpaid taxes. This is the first letter sent in the collection process. It is the initial tax bill sent.  The letter gives you an opportunity to pay the tax in full to prevent any collection actions.  If you ignore the letter, the IRS will continue sending notices that get more and more threatening, and will eventually start taking collection actions.

CP16-Audits This notice was sent because we have found a miscalculation in your return that affects your refund. The IRS records show that you owe other tax debts, and we used all of part of your refund to pay them. Double-check the numbers on your tax return to confirm that you actually did make a mistake.  If there was no mistake on the original return, you need to respond to the notice with an explanation, otherwise the IRS will keep all or part of the refund you claimed.

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