IRS Archives - Chicago IRS Tax Attorney

Sole Proprietorship, LLC, or Corporation: Making the Right Choice

September 20, 2023 by admin

Wednesday, September 20, 2023 – Listen up, taxpayers—I’m here to tell you that your business structure isn’t just a bunch of paperwork; it’s a game-changing strategy. Get this wrong, and you’ll pay for it, literally—in taxes, and maybe even in lawsuits. But get it right, and you’re one step closer to financial freedom.

You’ve got options. Let’s start simple: Sole Proprietorship. It’s the easiest to set up but don’t get too excited. This structure ties your personal finances to your business, meaning if your business goes belly-up, your personal assets are on the line. And here’s another kicker: all your business profits are taxed as personal income. You think that’s smart money? Think again.

Now, let’s talk about the Limited Liability Company, or LLC. It’s the darling of the small business world for good reason. With an LLC, your personal assets get a layer of protection, and you can decide how you want the IRS to tax you. But remember, flexibility means more decisions; more decisions mean more room for mistakes. Get educated.

Then we have corporations—S-Corps and C-Corps. S-Corps are similar to LLCs but come with their own maze of rules. As for C-Corps, they’re their own beasts entirely. The corporate tax rate may be lower but beware of the double taxation trap. Profits can get taxed twice—first at the company level, then again when they reach your pocket as dividends.

Look, taxpayers, don’t play guessing games with your financial future. It’s critical to talk to a tax attorney and get the best advice for your specific situation. Remember, it’s not just about making money; it’s about keeping it, and making it work for you.

Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649

Beware Crypto-Traders: 1099 Forms May Bury You

September 20, 2023 by admin

Crypto-Tuesday, September 19, 2022 – Hey taxpayers, If you’re messing around with this Bitcoin and other digital money, you better brace yourselves. The government wants their cut too, and they’re real serious about it.

So here’s the thing: end of the year comes, and WHAM! You get hit with a ton of these 1099-B tax papers (soon to be 1099-DAs) What’s a 1099-B? Well, it’s a paper that says how much you made or lost trading stuff. And guess what? Every place you traded crypto is gonna send you one. So if you’re trading a lot, or using different apps to do it, you’re gonna have a mountain of papers to deal with. I have clients who received 100’s of 1099-B forms in one year!

Don’t think you can get just any brainiac with a calculator to figure this out. This crypto tax stuff is like the Wild West, and you need someone who knows the ropes. So get someone who really gets how digital money taxes work.

And here’s the kicker: some of these trading places don’t even send out 1099-Bs. So you gotta be real careful, or you’re looking for trouble with the IRS. My old man used to say, “Time is money.” So use your time wisely and get to know how taxes work with this crypto stuff.

Hey, I know it sounds like a headache, but life ain’t always easy, right? This is part of the game if you wanna get rich and keep your money safe. Just remember, the taxman always wants his share, so you better be ready. It’s not just about making a quick buck; you gotta be smart about keeping it too.

Surprise: $400,000 IRS Audit Pledge Broken

September 15, 2023 by admin

Thursday, September 14, 2023 – It’s clear as day: Biden’s promise to refrain from auditing households and small businesses making less than $400,000 a year was never believable from the get-go. The Treasury Inspector General for Tax Administration (TIGTA) just dropped a bombshell report saying as much. They reveal that the IRS is hopelessly out-of-date, using income thresholds from 1976! That’s right—while your cost-of-living skyrockets, the IRS is stuck in a time warp, holding onto an archaic definition of “high income” set at $200,000. This bureaucratic inflexibility isn’t just a quirky footnote; it’s leading to more audits for the little guy.

What’s even more shocking is that when TIGTA recommended that the IRS update this decades-old standard to align with Biden’s supposed $400,000 pledge, the IRS flat-out refused. They claim they need “agility” to go after anyone they please. This isn’t agility; it’s a power grab. The IRS wants an unchecked ability to audit whomever they wish, flying in the face of the President’s alleged intentions.

TIGTA didn’t mince words either. They slammed the IRS for having “no common understanding” of what high-income even means. And let’s not forget the report’s title: “The IRS Needs to Leverage the Most Effective Training for Revenue Agents Examining High-Income Taxpayers.” Translation? The IRS is not just outdated but woefully unprepared to enact even their own directives.

So here it is, plain and simple: the IRS isn’t about to rein itself in, and the Biden administration’s pledges are looking emptier by the day. It’s another glaring example of why expansive government power should be viewed with the utmost skepticism.

https://www.tigta.gov/reports/audit/irs-needs-leverage-most-effective-training-revenue-agents-examining-high-income

The IRS’s AI Overreach: What Does It Mean To You?

September 13, 2023 by admin

Monday, September 13, 2023 – The IRS was granted $80 billion in the Inflation Reduction Act, a development that has many concerned about an uptick in audits. I’ve long warned that the real issue to watch out for is the increased scrutiny enabled by information technology and artificial intelligence (AI). Now, my concerns are coming to fruition.

Armed with this windfall, the IRS has declared its intent to use AI to audit wealthy individuals and large financial partnerships, specifically those with an average of $10 billion in assets. While the agency’s initial focus appears to be on high earners and the ultra-rich, the fundamental issue is the Pandora’s Box that opens when the IRS begins to integrate AI into its audit procedures. Once the technology for “pattern recognition” and trend identification is unleashed, what safeguards are in place to prevent its application on middle-income Americans?

Today, the IRS says it will go after those who earn more than $1 million and have more than $250,000 in recognized tax debt. Seems fair, right? But don’t be fooled. The IRS has also signaled its intention to cast its AI net over digital assets—a rapidly expanding field that many average earners are entering – and all 1099 information return earners.

So, why does this matter? Because today’s focus on high-income earners is just a precursor to extending this technology to average Americans. While some may celebrate these developments as efforts to make the wealthy pay their ‘fair share,’ we must question what this means for the freedoms and privacy rights of all taxpayers. With the IRS’s enhanced capabilities courtesy of the Inflation Reduction Act, it’s more critical than ever to remain vigilant against potential overreach and abuse.

Ready For New IRS Form 1099-DA?

September 12, 2023 by admin

Crypto-Tuesday, September 12, 2023 – The U.S. Department of the Treasury and the IRS are making new rules for people who deal with digital money, like Bitcoin and other cryptocurrencies. Starting January 1, 2025, if you’re a broker—which means you help people buy and sell this digital money—you’ll have to fill out a new tax form. It’s called Form 1099-DA. The idea is to make sure everyone’s paying the taxes they should. They’re also going to ask for more details on profits or losses for sales starting in 2026.

And get this, even folks in the real estate game must follow these rules. If you’re a title company or a real estate agent and you accept digital money in a property deal, you’ll have to report that too, starting the same year.

The new IRS Commissioner, Danny Werfel (yes that’s his name), says these new rules are to clear up any confusion. They especially want to keep an eye on rich folks to make sure they’re not hiding any money they should be paying taxes on. According to the IRS, when there’s a third-party like a broker reporting things, people are more likely to pay their taxes correctly.

So, if you have something to say about these rules, write it down, and submit your thoughts by October 30, 2023. They’re even holding a public meeting on November 7, and maybe on the 8th if they get a lot of people wanting to speak. At least the IRS will make it look like they are listening.

https://www.irs.gov/newsroom/treasury-and-irs-issue-proposed-regulations-on-reporting-by-brokers-for-sales-or-exchanges-of-digital-assets-new-steps-designed-to-end-confusion-help-taxpayers-aid-high-income-compliance-work

Sole Proprietorship, LLC, or Corporation: Making the Right Choice

Beware Crypto-Traders: 1099 Forms May Bury You

Surprise: $400,000 IRS Audit Pledge Broken

The IRS’s AI Overreach: What Does It Mean To You?

Ready For New IRS Form 1099-DA?

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