5 Recordkeeping Tips for Freelancers and Side Hustlers

We’re all living in the gig economy, which has its advantages and disadvantages. It’s easier than ever to start a reliable stream of income to complement your bi-monthly paycheck. Maybe you already dove headfirst into your sole proprietorship.  Regardless, the IRS wants to know certain details about your freelance income. It mainly wants to know who paid you—and how much. Unlike a W-2 job, there is no one else to Read More

IRS Using Unique Tool to Catch Alleged Crypto Cheats

All signs are pointing to a more aggressive posture by the IRS when it comes to investigating and prosecuting those who aren’t reporting their cryptocurrency transactions in accordance with federal rules. Kraken, the world’s fourth-largest crypto exchange, has been forced to turn over information on U.S. citizens involved in transactions totaling at least $20,000 from 2016-2020. The legal tool used by the IRS to Read More

CP2000: Notice of Unreported Income

Anything you get in the mail from the IRS besides a tax refund probably isn’t a letter you want to receive. One such letter is the Notice of Unreported Income, known to many as “CP2000.” The purpose of this notice is to inform you of the IRS’ assessment that you did not accurately report all of your income for the previous tax year. It is NOT a bill nor is it an ironclad assessment of tax obligations—including Read More

Did You Know the IRS Gives Out Badges?

It’s true. However, these badges aren’t something the federal agency gives out for a job well done. Rather, tax professionals refer to these designations as badges of fraud. As the name suggests, these badges are indicators to the IRS that a taxpayer committed an error with possible fraudulent intent. This puts the taxpayer in danger of having to pay civil or criminal fines. In the most severe cases, prison time is Read More

Not All IRS Audits Are Created Equal

You don’t have to be a tax professional to know that a tax audit is not on anyone’s wish list. Most taxpayers think of an audit as a tremendous invasion of privacy wherein they have to produce documentation of every dollar they’ve ever earned. Some audits do require taxpayers to show numerous financial documents.  Chances are, though, that if you are audited, you will never speak face-to-face with an IRS agent, Read More

IRS Liens Can Still Affect Your Credit

In April 2018, the three major credit reporting bureaus announced a shift in procedures: they would cease including federal tax liens on credit reports. This was welcome news to individuals and businesses struggling to pay tax debts. There are still several other ways, though, that tax liens (federal and state) can indirectly affect one’s credit and overall financial wellbeing.  What is a Tax Lien? When an Read More

IRS Penalty Relief: First-Time Penalty Abatement

For all the doom and gloom surrounding “the IRS” — a mere mention of the federal agency is enough to make some taxpayers shudder — plenty of people might be surprised about how willing representatives are to help taxpayers settle tax liabilities and penalties. The IRS is typically more lenient toward taxpayers without a long rap sheet. In other words, you’re more likely to receive penalty relief for your first tax Read More

6 Common Deductions Taxpayers Overlook

Because the IRS extended the tax deadline by three months in 2020, it might seem like you were filing your taxes just the other day. However, it’s time to start thinking about paying taxes again, as there is no indication the yearly April 15 deadline will be moved again. Before you file, it’s worthwhile to ponder the deductions available to you. Many taxpayers are not aware of the numerous deductions and credits Read More

Own Cryptocurrency? Be Prepared for a Potential IRS Audit

At the risk of spreading a fear-mongering headline — theoretically, just about any U.S. taxpayer could be audited at any point by the Internal Revenue Service — it is true that cryptocurrency owners may now be at an increased risk of an audit. Recent actions by the IRS have given us clues that it is adding capacity to examine taxpayers who may not have complied with tax reporting requirements of cryptocurrency Read More

Payroll Tax Issues When You Misclassify Workers as Independent Contractors

No one wants to be in trouble with the IRS.  Most of the time, you may not even be aware that a specific action could lead to a dispute.  One of the most common mistakes is confusing whether a worker is an employee or an independent contractor.  Sometimes the lines are blurred and it’s less clear than it should be.  Here’s how the IRS defines the two: Employee - An employee is someone who works for you and you Read More