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Undercharging: A Problem to Avoid

August 31, 2023 by admin

Thursday, August 31, 2023 – I recently met with a client who is a self-employed contractor, receiving income reported on Form 1099. Like many in his situation, he views himself as more of an employee than a business owner. This mindset leads him, and others like him, to commit a critical error: undercharging for their services.

Many 1099 workers forget to account for taxes when setting their prices, setting themselves up for financial pitfalls down the road. They are not just responsible for regular income tax but also a 15.3% self-employment tax. Plus, they bear business expenses that W-2 employees usually don’t have to worry about.

This issue isn’t exclusive to 1099 workers; traditional business owners are also guilty of the same mistake. The misconception that low pricing will attract more customers is a dangerous gamble. As the saying goes, “We lose money on every sale, but make it up in volume”—a flawed business strategy, to say the least.

Marketing strategist Dan Kennedy wisely pointed out, “There’s no strategic advantage to being the second-lowest priced leader in your market.” Competing on price alone is a surefire way to race your business into the ground, hitting that dreaded $0 mark before you know it.

Raising your prices doesn’t just improve your bottom line; it enables you to offer superior service, leading to higher customer satisfaction. Satisfied customers tend to stick around, become repeat buyers, and provide invaluable referrals. These are the cornerstones of a sustainable and profitable business model.


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

Filed Under: Today's Tax Talk Tagged With: IRS, Tax, tax planning, Undercharging

Who Is On Your Side Against the IRS?

April 21, 2023 by admin

Thursday April 20, 2023 – Description: In this episode of Today’s Tax Talk, we discuss Senator Joni Ernst’s concerns about the IRS enforcement plan under President Joe Biden’s Inflation Reduction Act and its potential impact on small businesses. We also explore the future of free filing options from the IRS and the possible development of a direct e-file program.

Join our host, [Your Name], as they break down:

0:00 – Intro
0:30 – IRS Enforcement Plan Controversy
1:45 – Senator Joni Ernst’s Concerns
3:00 – Potential Impact on Small Businesses
4:15 – Future of Free Filing Options from the IRS
5:30 – Feasibility Study for Direct E-File Program
6:45 – Sen. Elizabeth Warren’s Push for a Direct E-File Program
8:00 – Outro

Stay informed and make the most of your tax season with Today’s Tax Talk! Don’t forget to hit the subscribe button and the notification bell to get the latest updates on tax news and developments. Let us know your thoughts and questions in the comments below.

#IRSTaxNews #TodaysTaxTalk #FreeFilingOptions #TaxSeason #TaxUpdates #SmallBusinessTax #IRSEnforcement #TaxControversy #InflationReductionAct #TaxFiling #TaxAdvice #TaxPreparation #TaxPolicy #TaxReform #DirectEFile #ElizabethWarren #JoniErnst #TaxTips #TaxTime #TaxNews

https://www.cnbc.com/2023/04/20/there-are-lingering-questions-about-irs-free-tax-filing-options.html

https://www.foxnews.com/politics/ernst-accuses-irs-witch-hunt-against-small-businesses-audit-proposal


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

Filed Under: Today's Tax Talk Tagged With: danny werfel, FreeFile, IRS, senator ernst, senator warren, Tax

Throwing Money At The IRS

April 18, 2023 by admin

Tuesday April 18, 2023 – The Internal Revenue Service (IRS) has made headlines for its recent improvements in customer service during the 2023 tax filing season. Thjey tell us this is proof $80 billion funding boost from the Inflation Reduction Act was good government . However, there’s more to the story than meets the eye.

According to the U.S. Treasury, the IRS managed to provide live assistance to 87% of taxpayers’ phone calls and answered 2.4 million more calls during the 2023 tax filing season.

While this is an obvious improvement, the real reason behind it is not the Inflation Reduction Act. In fact, the IRS hired 5,000 new staff members to answer calls in June 2022 BEFORE the Act was passed, as part of the $1.5 trillion Omnibus spending bill from March 2022.

Looking at the numbers, the new IRS employees managed to answer only 480 calls each. Assuming that these calls were spread over the 13-week tax season, each new employee handled just 37 calls per week. This raises questions about the efficiency of the investment and whether there are better ways to improve the IRS’s customer service.

Republicans in the House have already tried to claw back the $80 billion in new IRS spending and may do so again in exchange for raising the $31.4 trillion U.S. debt ceiling.

The IRS’s approach to solving its customer service issues by throwing huge amounts of taxpayer money at the problem is not the answer.

Attorney Steven A. Leahy critiques IRS claims on Today’s Tax Talk.

https://www.reuters.com/world/us/us-irs-answered-24-million-more-taxpayer-calls-due-new-funding-2023-04-17/

https://federalnewsnetwork.com/budget/2022/03/congress-seeks-updates-on-state-of-the-federal-workforce-in-1-5t-omnibus-spending-deal/

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

Filed Under: Today's Tax Talk Tagged With: IRS, Tax

Don’t Panic! How to Get an IRS Extension FAST

April 13, 2023 by admin

Wednesday April 12, 2023 – Tax Day is April 18th this year. Don’t let the change in the date get you. Yes, April 15th is usually Tax Day – but the rule is – and this rule goes for preforming most any act for tax purposes – if the deadline falls on a Saturday, Sunday or legal holiday it is considered timely if filed no later than the next day that is not a Saturday, Sunday or legal holiday. The term “legal holiday” means any legal holiday in the District of Columbia (and gets more complicated if the new due date falls on an official state holiday). April 15th falls on Saturday this year. And the next Monday April 17th is a legal holiday in DC (Emancipation Day). So, Tuesday April 18th is Tax Day.

Some taxpayers living overseas and disaster victims may have later filing deadlines. Alabama, California and Georgia storm victims now have until May 15 to file various federal individual and business tax returns and make tax payments.

If you won’t be able to file your tax return by April 18th. Consider asking for an extension. An extension will set a new deadline of October 16 (October 15 is a Sunday). To get an extension you simply complete IRS Form 4868. Form 4868 is a single page form with basic information: your name, address and social security number. The form also asks you to estimate how much tax you will owe?

BECAUSE your taxes are still due on April 18th! You don’t get an extension to pay your taxes, just to file the return. VERY IMPORTANT. If you fail to pay by April 18th, you will receive a failure to pay penalty. The Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes.

Here is something most don’t know. Taxpayers can use the Free File program to file an extension electronically – no matter what your income is. EVERY taxpayer can use free file to file an extension.

By filing an extension, you will avoid the failure to file penalty. That penalty is 5% of unpaid taxes for each month that a filing is late, with the penalty capped at 25% of unpaid taxes.

Oh, and most states don’t require you to file separate state extension forms if you don’t owe any additional taxes. When you file your state return, you only need to attach a copy of your federal extension form. If you owe state tax, you typically must file state tax extension to avoid penalties.

Attorney Steven A. Leahy explains filing extensions on Today’s Tax Talk.

https://www.cbsnews.com/news/taxes-2023-tax-extension-deadline-how-to/

https://www.irs.gov/newsroom/irs-kicks-off-2023-tax-filing-season-with-returns-due-april-18

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free


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

Filed Under: Today's Tax Talk Tagged With: IRS, Tax, Tax Return, Tax Return Extension

Bitcoin Breaks $30,000

April 11, 2023 by admin

Crypto-Tuesday April 11, 2023 – Bitcoin, the world’s largest cryptocurrency by market capitalization, has broken through the $30,000 threshold for the first time since May 2021, marking a significant milestone in its volatile price history.
The digital currency has been on a rollercoaster ride in recent years, experiencing extreme fluctuations in value, but this latest surge is a positive sign for investors who have held onto their bitcoin through the ups and downs.

The price surge can be attributed to several factors, including increased institutional adoption of bitcoin, growing interest from retail investors, and a renewed focus on the potential use cases of cryptocurrencies. Some experts also point to the current economic climate, which has seen governments around the world pumping trillions of dollars into their economies to counter the effects of the COVID-19 pandemic, as a key driver of the bitcoin price surge.

Speculation is rampent. Will Bitcoin continue the surge. Some speculate to $1 Million. Or, will it crash and burn to zero. Only time will tell.

Attorney Steven A. Leahy looks at the latest Bitcoin news on Today’s Tax Talk.

https://coinflip.tech/markets

https://www.reuters.com/technology/bitcoin-pushes-past-30000-investors-eye-end-rate-rises-2023-04-11/

https://www.coindesk.com/business/2023/04/11/bitcoin-breaks-above-30k-for-first-time-since-june-2022/


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

Filed Under: Today's Tax Talk Tagged With: Bitcoin, Crypto, cryptocurrency, IRS, Tax

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