The San Diego Tax Pro

Actions the IRS Can Take if You Don't File Your Taxes

Taxes can be complicated at times. Perhaps you have questions about the deductions you can take, or maybe you are concerned about the amount you owe. Whatever the case, you should always file your taxes. If the IRS discovers that you did not file your taxes, they can take a number of different actions against you – and none of them are good. The potential consequences for not filing your tax return include:

Substitute for Return Once the IRS notices your taxes are not filed, they will complete your tax return for you. At first, this might not seem like a bad idea – unfortunately, there is a catch. When the Substitute for Return is issued, additional exemptions or expenses you are rightfully entitled to may be excluded. Additionally, your real tax liability might be overstated, so you could be losing even more money than had you filed your return in the first place.

Penalties and Interest Failing to file taxes on time can also result in a number of penalties and incurred interest. The failure-to-file penalty, for example, results in a monthly late fee equal to 5% of your total balance due. After five months, this percentage will increase to 25%. You may also be charged interest based on the total of your past-due tax balance. The current interest rate is 3%.

Jail Time Although most people who do not file a tax return do not go to jail, the IRS can suggest criminal prosecution for individuals who fail to file taxes. Notorious gangster Al Capone and actor Wesley Snipes are just a few of the high-profile celebrities who served jail time for not filing a tax return, but it can happen to anyone, so be sure to file your taxes truthfully and on-time to avoid a potential criminal prosecution.

The best way to avoid trouble with the IRS is to have your taxes filed at The San Diego Tax Pro. We help individuals and businesses in the San Diego area prepare and file taxes. Visit our website or call (888) 690-9245 to learn more about our tax preparation services.

Disclaimer:

(1) nothing contained in this website was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended; (2) any written statement contained on this website related to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any federal tax transaction or matter contained in this website. No one, without our express written permission, may use any part of this website in promoting, marketing or recommending an arrangement relating to any federal tax matter to one or more taxpayers.

IT'S NOT ALWAYS "GOOD TO BE THE KING!"

CALIFORNIA FRANCHISE TAX BOARD AIMS AUDITS AT "HEAD OF HOUSEHOLD"

Sacramento –The Franchise Tax Board (FTB) announced mailing more than 120,000 audit letters to taxpayers to verify their “Head of Household” (HOH) filing status on their 2011 state tax return. 

Each year the FTB reviews tax returns of taxpayers who claim the Head of Household filing status because the qualifications are commonly misunderstood. You can generally claim the Head of Household filing status on your tax return if you are unmarried, have cared for a qualified person for more than half the year, and paid more than half the cost of maintaining your home.

Taxpayers who can claim this filing status benefit from a higher standard deduction and lower tax rates as compared to the single filing status. More than 2 million California taxpayers use this filing status each year.

Taxpayers who do not qualify will have their tax reassessed at either the single or married-filing-separate filing status. Nearly 28,000 taxpayers who used this status last year did not meet its requirements and were issued $30 million in tax assessments.

FTB encourages taxpayers who receive a Head of Household letter to respond promptly by completing the enclosed questionnaire. Failure to respond could result in a tax assessment and penalty. You normally only have 30 days to respond or they will assess you, and THEN they will rollover on you and tell the IRS that they denied your filing status.  As always you can get in touch with me directly. Call us at 619-283-8055 to discuss your case, email go to our website at www.sdtaxpro.com. As always, consultations are free.

The San Diego Tax Pro

Terrance Smith

Visit these Resources for More Valuable California Tax Information

Our recent blog posts have discussed common tax deductions for California businesses and the actions the IRS may take if you do not file your taxes. For more information on these important topics, take a look at the following resources from around the Web:  

• When you work with a professional tax consultant, you can tax advantage of all of your available tax deductions. To give you an idea of the deductions you might miss out on if you decide to fill yourself, visit Kiplinger.com.
• If you use your car for business in California, then check out this guide from the California Franchise Tax Board to learn more about business vehicle expenses.
• Read about common tax deduction for business expenses, including meals and entertainment deductions, in this comprehensive article from Inc.com.
• See a quick breakdown on the penalties associated with not filing taxes at IRS.gov.
• Visit SanDiego.gov for a list of helpful small business resources and associates.

For more California tax information, contact The San Diego Tax Pro by calling (888) 690-9245. You can also visit our website to learn more about our tax preparation and filing services.  

Disclaimer:

(1) nothing contained in this website was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended; (2) any written statement contained on this website related to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any federal tax transaction or matter contained in this website. No one, without our express written permission, may use any part of this website in promoting, marketing or recommending an arrangement relating to any federal tax matter to one or more taxpayers.

Common Tax Deductions for California Businesses

Whether you are a new or established California business owner, being aware of the business tax deductions available to you is important. According to the IRS, business expenses are anything relating to the cost of carrying on a trade or business. To ensure that you do not deduct ineligible expenses, make sure the expenses you are planning to deduct are both ordinary and necessary. Some examples include office supplies, software, telephone charges, travel expenditures, and insurance premiums.

To help you think about the money you could be getting back on your next tax return, here’s a list of some common business tax deductions available for California business.

Salaries and Wages The pay you provide your employees is tax deductible. Additionally, sick leave time, paid time off, bonuses, educational expenses, and reimbursements for employee business expenses are also tax deductible. In some cases, you may even be able to deduct the cost of employee gifts. For example, if you give your employees laptop computers for Christmas, the cost you paid for the gifts would be deductible.

Automobile and Transportation If you use your car for business, then you are eligible for a tax deduction. Activities that constitute business use of a car include driving to different workplaces and taking business trips. The easiest way to determine your business car expenses is to simply multiply your total business miles by the current federal mileage rate.

Meals and Entertainment Have you taken a client or employee out for some entertainment lately? Do you treat your office to catered lunch each week? Did you recently throw a big office party or corporate event? If so, then you may be able to deduct up to 50% of these expenses form your business tax returns. Keep in mind that you can only deduct expenses directly related to or associated with your business.

These deductions are only some of the ways you can get money back on your business tax return. If you own or operate a business in San Diego, then visit The San Diego Tax Pro. We have over thirty years’ experience providing tax return services for business owners. Contact us online or call (888) 690-9245 to schedule an appointment with one of our professional tax preparers.

Disclaimer:

(1) nothing contained in this website was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended; (2) any written statement contained on this website related to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any federal tax

IRS Tax Penalties And IRS Representation: 4 Resources for Further Reading

Would you like to know more about IRS tax penalties and how a tax professional can help you in an IRS investigation? To discover more about these topics, consider the following resource links:

• This IRS.gov news article explains the many different IRS civil penalties that may be imposed for failure to file a tax return or pay taxes.
• This Huffington Post article describes what to do if your tax return is audited by the IRS.
• You can read about how last-minute changes in the 2011 tax laws resulted in taxpayers owing additional taxes and penalties in this CNN Money article.
• This report explores how taxpayers can use the IRS “Fresh Start” Program to remove federal tax liens and improve credit scores.

If you’re looking for an experienced tax consultant in the San Diego area, call The San Diego Tax Pro at (888) 690-9245. We can help you reach an acceptable resolution of your tax issues with the IRS.

Disclaimer:

(1) nothing contained in this website was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended; (2) any written statement contained on this website related to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any federal tax transaction or matter contained in this website. No one, without our express written permission, may use any part of this website in promoting, marketing or recommending an arrangement relating to any federal tax matter to one or more taxpayers.