So I get home and the wife says she痴 got bad news: A letter from the IRS saying we owe $4,000 on our 2018 taxes.
Apparently, she sent all the right paperwork to our tax preparer, but when the preparer returned the completed forms she forgot to include one. My wife failed to check that and signed the return (and got me to sign off, trusting her) and sent it off.
So here we are. My wife is afraid I知 going to divorce her. (I知 not.)
Anyone have an experience like this? Do we have any recourse? That 4 Grand could buy a lot of Super Bowl swag. [Reply]
What was the form that was forgotten? Was it a 1099? Or do you have any 1099s in general, included or not?
If so, did you maximize all of the possible business deductions you could? There are many that you may not realize.
You could probably chew up that $4k pretty quickly in deductions from cell phone, home office, travel, auto expenses, meals, etc.
For example, as long as you have a separate personal line (which could be Skype, Google voice, etc.) for home, the IRS will allow you to call your cell phone a business expense without worrying about splitting up personal vs. business use. 100% deduction. Just document that you have that personal line and you're set. If you pay $1200/year for cell phone and you're in the 25% bracket, that's $300 in savings, so that would bring your liability down to $3700.
Do you have a room in the house that is used for only business? The simplified home office deduction gives you a deduction of $5/sq. ft. This maxes out at 300 sq. ft. (or a $1500 deduction). If you have a space like this that's another $375 in savings, bringing your liability down to $3325.
Did you document (or can you now) mileage that was used for business with your car? Maybe you drove 2k miles for business, which at a rate of 54.5 cents per mile gives you a deduction of 1,090, which would result in another $272.50 of savings, bringing your liability down to $3,052.50.
Do you have kids that helped you in the business? If they're under 18, you could put them on payroll, and get a deduction for that expense. Since they're under 18 you don't have to mess with payroll taxes or anything, and they would $0 in taxes on up to $12k of income. Say you pay your 12 year old to clean your office, sort your mail, shred documents, lick envelopes, or any other task you can have them doing. Document their hours at a reasonable wage, and you can deduct it. Say you paid them $1500 in wages for the year, that would be another $375 in savings bringing your liability down to $2,677.50.
I could go on and on. There are all sorts of perfectly legitimate ways to reduce your tax liability that many don't consider, but it all depends on having a small business of some sort. Opens doors to all sorts of tax savings.
Amend your return, do as much of this as you possibly can with your CPA helping you strategically, and you can probably chew up the entire liability. [Reply]
Originally Posted by siberian khatru:
So I get home and the wife says she痴 got bad news: A letter from the IRS saying we owe $4,000 on our 2018 taxes.
Apparently, she sent all the right paperwork to our tax preparer, but when the preparer returned the completed forms she forgot to include one. My wife failed to check that and signed the return (and got me to sign off, trusting her) and sent it off.
So here we are. My wife is afraid I知 going to divorce her. (I知 not.)
Anyone have an experience like this? Do we have any recourse? That 4 Grand could buy a lot of Super Bowl swag.
As a tax planner and advisor (yes, I also prepare), your preparer could/should potentially compensate you for any penalty associated with the balance due, assuming the preparer made a mistake in this case.
However, before you pay the penalty portion on your balance due, see if your preparer is willing to write a letter to the IRS, or assist you in writing a letter to the IRS. The IRS typically allows a one-time courtesy write off of any penalty for taxpayers who are not habitual late filers, etc. Since you mentioned that you've never had this happen to you before, I would bet you are eligible to have the penalty removed. They won't remove the interest, so don't even go down that road, haha. [Reply]
CPA here- a simple letter explaining it and that you relied on a tax preparer is usually sufficient to remove penalties. RockChalk above is right, you’re stuck with the interest 99% of the time since you had use of the money. Might be able to get that refunded by tax preparer, but YMMV. [Reply]
Easy solution is to do an amended return. Better yet have your tax person that fucked you do an amended return. What form was it tbat she forgot that made you owe 4k? [Reply]
