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
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??
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
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.
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
The IRS has placed a lien on your property or financial assets. What is your next move? How do you handle this situation? And, most importantly, can you dispute or stop a tax lien?
Finding out there is a tax lien on your property – whether real estate, personal property, or financial assets – is incredibly stressful. An IRS tax lien is a serious matter and should not be taken lightly. They will use every tactic in their book to get back the taxes, and each action will have a serious impact on your earnings and reputation.
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
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:
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.
What Is an Audit Reconsideration?
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.
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
What it Means for You and Your Tax Debt
When you owe the IRS money in back taxes, the federal agency can use a variety of ways to obtain the debt, including assessing a bank levy. This means the IRS can place a freeze on your accounts and seize the money until your tax debt us satisfied. To try to have the bank levy removed and to learn more about your options, you can work with a tax attorney. Learn more about how a tax attorney can help you negotiate with the IRS to try to have a bank levy removed.
If you owe the IRS money in back taxes, the federal agency may take action in several different ways to recoup the debt, including placing a bank levy on your accounts. This means the IRS will place a freeze on your bank account to seize the funds. This levy may stay on your account until your tax debt is paid in full.
Having a a bank levy placed on your accounts can put you in a hard spot, financially. To try to get a levy released, it is important to hire a tax attorney to represent you in your negotiations with the IRS. Some options an attorney can help you explore include:
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: