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So You Filed Your Taxes. Now What?

Posted By Kenyatta Turner, LegalShield Independent Associate, Friday, May 6, 2016


After filing your taxes there are a few things you can do to prepare yourself for next year’s filing, protect yourself from scammers and even ease worry about a potential audit. This may include storing documents where you can easily find them, protecting your personal financial information from thieves and being ready should you be selected for an audit. 

•    Hold on to your tax documents. Save copies of your return as well as all of the receipts and other documents you use to prepare your taxes. Keep the documents in a safe and accessible location. You may be asked to produce documents to back up your return. Having all of the information organized and accessible will make it easier for you to validate your return should the IRS come calling. It is a good rule of thumb to retain your tax records for six (6) years. While you may not need all of your tax documents for that long, it is better to have them available should you need them.

•    Keep your documents safe. Whether you file online or use a professional you must keep your personal information safe. Tax returns are a goldmine for identity thieves. Never store sensitive information on public computers or transmit financial information through unsecured WiFi. 

•    Watch for signs of identity theft. Your tax information may be at risk of falling into the wrong hand at no fault of your own. Scammers have been targeting human resources and payroll professionals. Scammers have requested W-2s by email using spoofing to pose as company executives. Click here to learn more about this scam. If you believe you may be the victim of identity theft and you have an IDShield membership call (800) 806-3991. If you do not have an IDShield membership visit to learn more.

•    Beware of phony audit or IRS correspondence. If you receive a phone call at home or work from someone claiming to be an IRS official collecting a debt do not make a payment or provide them with your personal information. Scammers pose as IRS officials and use severe threats to convince victims to make immediate payment or to provider personal financial information. The IRS will not contact you by phone, email or in person for an audit or to collect back taxes. Legitimate communication from the IRS will come via postal mail. Do not respond to, open or click on any links in emails claiming to be from the IRS. If you believe you may owe back taxes you should contact the IRS directly at 800-829-1040 or the Canada Revenue Agency at 800-959-8281.

•    Be ready if you are audited. Only a small percentage of tax payers will ever face an audit, but the threat alone is enough to make many worry. Often, you will simply be asked to clarify a particular portion of your return rather than face a full audit. If you are audited, your LegalShield family plan offers audit legal services starting with your tax return due on April 15th of your first membership year. This includes an attorney at your initial audit meeting and if necessary an attorney to represent you further at the preferred member rate. If you receive notice of an audit, call your LegalShield provider law firm right away.

•    Improve the process for next year. If getting your documents together to file and figuring out deductions was difficult this year, learn from those challenges. Is there a better way to track expenses or file receipts? Figure out how to improve the process so you don’t face the same headaches next year.



Tags:  bookkeeping  identity protection  identity theft  IRS  legal competency  tax planning  tax strategy  taxes 

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Tax Resources for Small Businesses

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Saturday, April 30, 2016


Tax Resources for Small Businesses

National small business week is May 1 – 7.  Your friends at the Internal Revenue Service (IRS) are there to help.  Do you believe, "Hello, I’m from the IRS and I’m here to help you!”  Actually, in my experience they are getting to be a bit more friendly, if not helpful in assisting business to succeed.  IRS e-News for Small Business 2016-1, for small business published on April 29 will assist small business. 

The IRS letter follows.  It provides links to seminars, tips, forms, recommendations, events, and instructions.  The first link under tax resources, "Small Business and Self-employed One Stop Resource, is particularly helpful, especially if one is contemplating a new business.

e-News for Small Businesses

April 29, 2016

Tax Resources for Small Businesses

Small Business and Self-Employed One-Stop Resource

Small Business Forms & Pubs

Small Business Events

Small Business Webinars

e-File for Businesses and Self-Employed

Businesses with Employees

Small Business Products

Self-Employed Individuals

S Corporations

Other Resources

Find it Fast!

All Forms and Pubs

Filing Your Taxes

Make a Payment

IRS Tax Gap

Taxpayer Advocate Service

Retirement Plans

Tax Information for Charities
and Other Non-Profits

State Links

SSA/IRS Reporter

IRS Social Media

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Issue Number:  2016-1

Inside This Issue


1.     National Small Business Week, May 1 – 7

2.     Help IRS promote the free webinars using Thunderclap

3.     Work Opportunity Tax Credit

4.     Reminder for employers and providers: file health coverage information returns 

  1.  National Small Business Week, May 1 – 7

During National Small Business Week, IRS is offering a series of educational webinars for small businesses and self-employed taxpayers.

Register now for:

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  2.  Help IRS promote the free webinars using Thunderclap

Thunderclap is a "crowd-speaking" platform that lets individuals and companies rally people together to spread a message.

Supporters on Thunderclap signup and agree to share a message on social media accounts, e.g., Facebook, Twitter, Tumblr.

Follow this link for the IRS Small Business Week Thunderclap:

  • Select support with Facebook / Twitter / Tumblr
  • Click on the "Support With” tabs to authorize Thunderclap to post this one-time message to your social media platform
  • Input social media username and password

It's  completely safe and will automatically post only one message on your own social media account.

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  3.  Work Opportunity Tax Credit

Recent legislation extended the Work Opportunity Tax Credit  retroactively for 2015 for employers that hire members of targeted groups.

It also expanded the targeted groups of individuals to include qualified long-term unemployment recipients.

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  4.  Reminder for employers and providers: file health coverage information returns

The deadlines to file information returns with the IRS are approaching for self-insured employers, applicable large employers and health coverage providers.

IRS Health Care Tax Tip 2016-47 has more information.

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Tags:  entrepreneur  IRS  small business  tax planning  tax strategy 

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Five Ways To Avoid Tax Foolishness

Posted By Jason Trujillo, Woodbury Financial, Monday, April 6, 2015

Five Ways To Avoid Tax Foolishness by Steve Parrish

Article appeared on April 6th, 2015 on

Click here to read original article.

Between April Fools’ Day and Tax D-Day (April 1 through April 15), taxes are on many people’s minds. With all the April fooling behind us, what better time to start taking tax savings seriously?

The challenge is to avoid foolish tax moves caused by the panic of an impending deadline and bad news from your tax advisor. I talked with a business owner friend who visited his tax advisor last weekend. He commented, “Once I heard that my taxes had gone up, even though my income hadn’t, I stopped listening.”

Ignoring tax planning opportunities? Foolish.

Another acquaintance told me he planned on saving taxes by “setting up some sort of trust.” Until he understands his plan and is certain that this “sort of trust” is founded on good law, his tax strategy has the potential to be foolish as well.

Taxes may be inevitable, but you have some say over how much you pay in taxes and when. Let’s consider five tax strategies, and ponder whether they are an unwitting, belated April Fools’ joke or are a tax relief tactic to consider for next year’s April 15 filing deadline.


Some taxpayers are tempted to delay filing their tax return and, even worse, delay paying their taxes. As long as an extension is filed, a delayed return is not necessarily a problem. Delaying payment is definitely a problem. Both interest and penalties will apply.

In many ways, putting off paying the IRS by April 15 is tantamount to a very expensive payday loan. There are better ways to borrow money for taxes than borrowing from the IRS.


A few years ago, it was considered passé, even foolish to defer income. The thinking was that taxes would go up, so it made sense to pay tax currently while tax rates were low.

The situation has changed. Taxes have already gone up. Accordingly, a legitimate strategy is to defer taxes, particularly as part of a retirement strategy. An advantage to deferring is not only the time value of money saved on the deferred taxes but also the potential to pay future taxes at a lower rate.

Your money may currently be subject to a high marginal tax bracket because of the Alternative Minimum Tax, the Net Investment Income surtax and other high-income-tax regimes. But income you receive during retirement may not be subject to these additional taxes.

You will likely be in a lower income bracket and not subject to those high-tax-bracket regimes. Consider deferring taxes by contributing to your 401(k) or your nonqualified deferred compensation plan. Or, use your after-tax excess income to fund a tax-favored product such as municipal bonds, annuities or cash value life insurance.


It’s hard to argue with taking a legitimate tax deduction.

Incurring the expense simply to generate the deduction? Foolish.

The highest tax rate is still not much more than 50 percent. Why pay $2 for something you don’t need just to save $1? There are instances, though, where you get something for your expense. For example, money put into your qualified retirement plan is money saved for retirement – and you get a tax break besides.

There are other tax-advantaged benefit plans such as health, disability and life insurance programs.


It sounds foolish to say “pay taxes now,” but in many cases this is an opportunistic tax approach. Look for situations where either:

  1. The asset is expected to substantially increase in value in the future.
  2. Or where the product being used has future tax advantages. That way you pay tax on the seed but not on the harvest.

Here’s an example of a future gain idea. In certain situations, the holder of a stock option can elect current taxation in lieu of paying tax when the stock option is actually exercised. It’s commonly called an “83(b) election.” If the anticipated appreciation on the option is high enough, it makes sense to pay tax now, before the appreciation occurs.

For a tax-favored product example, consider a Roth IRA. You use after-tax dollars now but avoid tax on both the gain and the payout in the future.


Tax planning should not be a fourth quarter activity. Now that you know what last year’s tax bill is –and while it’s still the first half of the year – do something about it. Decide to save future taxes by doing something now.

Not deciding is a decision. The decision to go through the same foolishness next year. So stop fooling around, and start saving taxes.


Tags:  after-tax dollars  Alternative Minimum Tax  annuities  April 15th  April Fools  business owner  IRS  life insurance  payday loan  Principal Financial Group  retirement income  Roth IRA  Steve Parrish  tax brackets  tax deduction  tax extension  tax planning  tax rate  tax return  tax strategy  taxes 

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Why You Should Pay Taxes Now

Posted By Jason Trujillo, Woodbury Financial, Friday, January 23, 2015

Why You Should Pay Taxes Now

Article originally appeared on on January 20, 2015.

Click here to read original post.

Shortly before the Great Recession, I was with an advisory team that counseled a business owner to pay $1.2 million in income taxes – taxes he could have deferred. Time has proven that we were right.

He had an $8 million gain from the sale of a commercial building, and was contemplating rolling over the gain in a tax-deferred, like-kind exchange. Instead, he paid the then top capital gain rate of 15 percent versus the 23.8 percent tax he would be facing today.

On $8 million, that’s a difference of more than $700,000.

Paying taxes now that could be deferred until later sounds like crazy talk. But sometimes the numbers show a demonstrable financial saving by paying taxes currently. The scenarios in which this logic prevails are many but can be summarized into the following six situations.

Pay tax on the seed, not on the harvest

A Roth IRA is a classic example. You pay tax on income currently and put the net into a Roth IRA account. If requirements are met, the Roth builds tax free and pays out tax free.

Cash value life insurance is another example. Using after-tax dollars, you can put premiums into a life insurance contract that builds cash values tax-deferred. The proceeds pay out tax-free either as a death benefit (personally, I don’t recommend this approach) or by the owner taking tax-free withdrawals of the cash value up to the tax basis and then switching to loans.

With both a Roth and life insurance, the tax strategy is to pay taxes on a small amount currently so as to avoid taxes in the future on a potentially high amount.

Get the clock running

Sometimes reporting a taxable transaction does not mean you actually pay a tax currently. Gift taxes are an example. An individual has a lifetime $5.43 million gift-tax exemption.

This means a lot can be given before an actual gift tax is incurred. Particularly where the gift involves an uncertain valuation, it may make sense to make and report the gift currently. For example, a business owner who is contemplating transferring a business interest to a family member might do well by making that gift now.

First, it takes the asset out of the business owner’s taxable estate without necessarily causing a current gift tax. Second, future income taxes on the asset won’t be attributable to the business owner. And finally, it starts the clock on the statute of limitations for tax purposes. If the IRS wants to challenge the valuation of the asset, they have a limited period in which to do so.

Better the enemy ye know

With many business transactions, the amount of gain that will be generated in the future is unknown. It may make sense to pay the tax now, when the gain is known. For example, there is a tax provision referred to as an 83(b) election.

Say the founder of a business grants stock to a key person but makes it subject to a vesting requirement. Normally, the key employee defers paying tax on that grant until it vests; however, an 83(b) election allows the employee to be taxed currently. If the key employee anticipates the stock will grow wildly, it may make sense to elect to pay the tax now, when the value is known.

A second example involves IRC 280G. This provision disallows a tax deduction for certain compensation payments made to “disqualified individuals” – such as officers, shareholders and highly compensated individuals – when the compensation is paid pursuant to a change in control. It also assesses an additional 20 percent excise tax on the amount of the payment that is an “excess parachute payment.”

This tax is designed to penalize certain compensation payments associated with taking a business public. One of the ways tax planners avoid this punitive tax is to anticipate the sale and make some compensation payments in earlier years.

This is a complex topic, but the point is that, in this situation, paying tax in advance may avoid confiscatory taxes in the future.

Change the character of the tax

Personally, I think this strategy is oversold, but it’s at least worth considering. Some advisors suggest that rather than putting large amounts of wages in tax-deferred qualified and nonqualified plans, it may be better to pay tax on the income currently and then invest the proceeds in capital gains properties.

The idea is that capital gains taxed at a top 23.8 percent rate is better than deferred ordinary income taxed at a top 39.6 percent rate. The good news is that this isn’t an all or nothing decision. The employee may just defer some wages.

Flow-through beats double taxation

This typically involves the decision as to whether the business should be taxed as a C Corp, an S Corp or an LLC.

There’s a reason the majority of businesses in the U.S. are taxed as flow-through entities. It avoids double taxation. A C Corp pays tax at the corporate level and then is taxed again when excess earnings are distributed as a dividend.

Flow-through entities (S Corps and LLCs) result in the owners paying tax on income as it is earned. With privately held companies, it is typically preferable to be taxed as a flow-through entity.

The overall tax paid may be lower, and it avoids money being trapped in the corporation when it’s time to liquidate or sell the business.

Tax rates may go up

Now that the 114th session of Congress is open for business, we’re all wondering what will happen with taxes. While it can be argued with both houses in Republican control, the session will tilt more toward tax relief, the current federal debt and infrastructure needs are a demand for additional government revenue.

If you feel tax rates will go up in the future, consider paying some taxes now. If you feel tax rates will go down or stay the same in the future, tax deferral techniques may be more attractive.

For most business owners I talk with, taxes are neither a political nor a moral issue. They are a cost of doing business. In some situations, the simple fact is that paying taxes currently will save taxes in the future.

Tags:  after-tax dollars  business owner  C Corp  cash value life insurance  Congress  double taxation  federal debt  flow-through entity  Forbes  gift tax  income taxes  IRS  key person  LLC  Principal Financial Group  Republican control  Roth IRA  S Corp  Steve Parrish  tax deferral  tax strategy 

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