By Attorney Steven A. Leahy

The IRS Tax Season officially begins Monday January 27, 2020.  That’s the day the IRS will begin accepting individual 2019 tax returns.  Now, I’ve been helping business professionals fight the IRS a LONG time and I’ve learned that this is the season that those with tax problems start having sleep problems again.  During the rest of the year, they have learned to put their tax problems aside, stop thinking about it. NOW, tax talk is EVERY WHERE and they can’t help but be reminded of that lingering tax problem.

Typically, here’s how a tax problem starts.  The business professional prepares their tax return (or has a tax professional prepare it) and calculates they owe a whole lot of money – money they just can’t pay right away.  It’s troubling, but quickly forgotten in the day to day.  The next tax season arrives – and they still owe from last year – so they don’t file the next tax return, then vow to tackle the problem over the summer.  Often, they even file an extension of time to file in successive years. Time goes by fast – life happens.  So, the spiral begins.

Their tax problem affects their sleeping habits.  It is hard to get a good night sleep when you are frustrated, afraid, and worried about your family’s future.  Not to mention the guilt often associated with failure to file or comply with tax laws.  The lack of sleep makes it difficult to maintain good health or build your body.

The lack of sleep begins to take its toll on motivation to move a business forward.  There is an old saying “If you aren’t growing, you’re dying.” It’s hard to grow a business when you’re playing catch up. The slow in business creates additional debt issues, which further accelerates the downward spiral.  Financial problems are the leading cause of divorce.  Interference in a marriage directly impacts family life.  And forget about romance.  The larger the IRS problem gets, the more likely the IRS will take public action – action that will alert your clients or customers about your IRS trouble.  Now, your reputation is at stake.

What to do?  First, get your head out of your ass!  As an entrepreneur, you have already shown you have more courage and guts than 99 percent of all the other guys. You need to retake control of your life and rebuild your succus.  You can only do that if you begin to fight back TODAY!  Don’t let the IRS steal your confidence.  You are not a fraud!  What you don’t know is there are answers to your IRS problems.  All is not lost.

You must act! Only in that way, can you begin solving your IRS problem so you can stop worrying about it. That will help you rest at night.  Less worry and better sleep will lead to better health and a stronger body.  Better health and a strong body will lead to more confidence.  You will be in a much better frame of mind to grow your business, increase your income, improve your marriage, strengthen your family and protect your reputation.  And, who knows, you may even enhance your love life.  

If you are facing IRS problems, I can show you the way out. I wrote the book “Deal With Your IRS Problem Today!” You can begin your journey by getting a FREE copy.  Simply go to FreeIRSBook.com right now!  Get a FREE copy of my book.  Or call me at   Opem Tax Advocates & The Law Office of Steven A. Leahy, PC (312) 664-6649.  If you call NOW, I’ll give you a FREE Consultation.

By Attorney Steven A Leahy

1. ​There are FREE options
2. You sign your tax return under penalty of perjury.​
   
3. An extension of time to file is NOT an extension of time to pay. ​

First, there are FREE options. For 2020, taxpayers whose prior-year adjusted gross income was $69,000 or less, and that’s most people, can use IRS Free File. Generally, taxpayers must complete their federal tax return before they can begin their state taxes.

Over $69,000 – can still file free (fee for state tax preparation)

• Must know how to do your taxes yourself
• Does math; offers only basic guidance
• You must have your 2018 tax return

Free file companies include:

TurboTax

H&R Block

TaxSlayer

Several others

Each have different rules –

Use the Lookup Tool to help you choose a Free File offer to file your taxes for free online. Just answer a few simple questions about income, age, and state residence to find out which offer(s) is available for you.

tinyurl.com/freefile2020

There Are FREE options

Second, you should be aware that you are liable for all the information on your tax return under penalty of perjury  – even though you didn’t prepare the return yourself.

So I have had many clients who got into trouble because of unscrupulous tax preparers.  The scheme goes like this:  A friend or co-worker tells you that their tax preparer got them a HJGE refund and recommends you use that tax preparer.  They generally charge a little more – but that is more than offset by the huge refund you get.  So, you tell your friends, family and coworkers about this GREAT tax preparer.  And then they sign up with that preparer.

They get you that refund by falsely claiming that you run a business.  And then make lots of business deductions.  Deductions you really aren’t entitled to.

Most people don’t really review their tax return, they simply sign it and count the money!

Sometime later – sometimes years later – the IRS notices that all this tax preparers returns include big refunds.  This is a red flag.  So, the IRS audits all the tax returns the tax preparer has prepared over at least the last 3 years.

When you get audited, along with all your friends, family and co-workers – the IRS will demand the refunds back and may come after you for fraud and filing a false return.   

Just because a tax preparer files your tax return, doesn’t mean you aren’t responsible for the information that is in it. 

So, ALWAYS review your return.  If you don’t understand something.  ASK about it.

You sign your tax return under penalty of perjury.

Finally, An extension of time to file is NOT an extension of time to pay.

Often, when taxpayers don’t have the money to pay their taxes on the April 15^th deadline, they simply file an extension (IRS Form 4868 “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.”)  What they don’t understand is, the extension does NOT extend the time to pay the taxes due. 

Often, I hear the objection, “I don’t know what I owe until I complete my return!”  The answer is – estimate the tax due.  If you overpay, you will get a refund.  If you underpay, you will have to pay PLUS failure to pay penalties and interest.  The penalties are based on how much you owe.  So if you make an estimated payment, you will reduce the penalty

If you can’t pay, you should still file your tax return on time, or with a timely filed extension.

An extension of time to file is NOT an extension of time to pay. 

January 11, 2020

IRS Problems, Tax Planning and Asset Protection

David Hochberg’s Home Sweet Home Chicago Radio Show aired its second show on Chicago’s Very Own WGN Radio 720! I answered questions about IRS problems, tax planning and asset protection.

This week, Steve Leahy tells listeners how to deal with your IRS problems. Jeremy Hogel answers all of your repair and remodeling questions. Gary Novel informs us about what the holiday season has done to everyone’s credit scores. Cory Ambrose then tells us all we need to know about mold. To close out the show, Michael Boudart talks chimney cleaning, the importance of yearly chimney inspections and free wood for all Lindemann clients.

https://wgnradio.com/2020/01/11/home-sweet-home-chicago-01-11-20-david-hochberg-with-megapros-jeremy-irs-tax-attorney-steven-a-leahy-credit-expert-gary-novel-cory-ambrose-of-jc-restoration-and-michael-boudart-of-lin/

The key to financial security is planning.  The best time to plan, is before there are any clouds on the horizon.  When it’s time for you to begin receiving social security there are several things you should know.  First, social security payments are completely exempt from (most) creditor actions.  It’s true that the IRS and other government entities may attach your social security.  But, regular creditors (e.g. credit cards, utilities, judgment creditors) cannot. 

I practice law in Illinois.  These exemptions can be found in 735 ILCS 5/12-1001(g)(1) & in 735 ILCS 5/12-704

735 ILCS 5/12-1001 Personal property exempt.

The following personal property, owned by the debtor, is exempt from judgment, attachment, or distress for rent:

(g) The debtor’s right to receive:

(1) a social security benefit, unemployment compensation, or public assistance benefit;

(2) a veteran’s benefit;

(3) a disability, illness, or unemployment benefit; and

(4) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.

735 ILCS 5/12-1001 (LexisNexis, Lexis Advance through P.A. 101-591 of the 2019 Regular Session of the 101st General Assembly)

 

735 ILCS 5/12-704 Exemptions from garnishment

Benefits and refunds payable by pension or retirement funds or systems and any assets of employees held by such funds or systems, and any monies an employee is required to pay to such funds or systems are exempt and are not subject to garnishment under Part 7 of Article XII of this Act [735 ILCS 5/12-701 et seq.].

735 ILCS 5/12-704 (LexisNexis, Lexis Advance through P.A. 101-591 of the 2019 Regular Session of the 101st General Assembly)

Furthermore, not only are creditors prohibited from garnishing social security payments, they are also prohibited from attaching funds in bank accounts that were received from social security. 

§ 407. Assignment of benefits

(a) In general.  The right of any person to any future payment under this title [42 USCS §§ 401 et seq.] shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title [42 USCS §§ 401 et seq.] shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

42 U.S.C.S. § 407 (LexisNexis, Lexis Advance through Public Law 116-77, approved November 27, 2019)

Knowing this is the first step to building a plan.

Immediately upon registering for social security, start a new bank account.  Have your social security payments directly deposited in that account, and deposit ONLY those social security funds into that account.  Never intermingle funds!  Once the funds are intermingled, they may no longer be protected.

If you have multiple streams of income, sequester the social security funds in a separate account and use all other monies first, BEFORE accessing the social security funds.  If you have any savings, those savings should be directly attributable to your social security payments AND kept separate from all other funds.

So, if you are receiving, or about to receive, social security benefits make these changes right away.  That way, if creditors start coming after you because you can’t pay your bills, you will be able to protect yourself and your family. If you are looking for other financial or tax advice, you should give me a call – Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649.  Call NOW to set up your FREE Consultation.

Attorney Steven A. Leahy was a guest of Mauck & Baker, LLC and their radio show Lawyers For Jesus, heard on AM 1160 Hope For Your Life every weekday at 2:00 pm and 6:30 pm, Saturdays at 3:00 pm & Sunday at 12:30. On Lawyers for Jesus, the attorneys from Mauck & Baker cover a variety of topics relating to the Gospel in law, society, culture, politics, and in the marketplace.