エピソード

  • Handling back taxes - options for repayment and relief | Layton & Stacey Smith

    Handling back taxes - options for repayment and relief | Layton & Stacey Smith
    2024/11/07

    You’re dealing with back taxes—what a headache! What can you do to get this monkey off your back? The first thing to do is to stop running from the IRS and listen to this episode of Cigars and Taxes, where we provide practical options for relief. Grab your drink and cigar and join us in the Somers Point Cigar Lounge.

    What Are Back Taxes?

    Back taxes are taxes that were due but weren’t paid on time. For example, if you owe taxes from 2022 and still haven’t paid them, then you owe back taxes. This can include income taxes, payroll taxes, and state taxes. Don’t wait to address back taxes because you’ll incur interest, which will continue to grow until the taxes are paid.

    Consequences of Not Paying Back Taxes

    You can’t bury your head in the sand and ignore back taxes. The IRS will keep coming after you until you start paying. Some of the consequences you could face include: Penalties Interest Wage garnishments or other levies Prolonged payment schedules Additionally, the embarrassment of owing back taxes can be harder to deal with than the other consequences and may even strain your relationship with your partner.

    Addressing Your Back Taxes

    Here are the steps we recommend for handling back taxes: Review all of your IRS letters (Don’t throw them away!) Verify the original amount you owe Consult a tax professional (The most important step) We also discuss repayment options: Installment Agreement: Automatic, streamlined, and regular options are available, and we explain each in detail. Partial Payments: Layton shares an example of a client who owed $400,000 and how a partial payment plan helped. Offer in Compromise: This allows you to settle your debt for less than the full amount owed. To qualify for these repayment options, you’ll need to provide the IRS with your income and expenses. Based on this information, the IRS will determine which repayment option is appropriate.

    “Bankruptcy does not automatically eliminate tax liabilities. However, it can reduce the interest accrued on the owed amount.” — Layton Smith
    続きを読む 一部表示
    43 分
  • Tax Considerations for rental properties | Layton & Stacey Smith

    Tax Considerations for rental properties | Layton & Stacey Smith
    2024/10/31

    Real estate offers a wealth of opportunities, but if you’re not careful, you can easily make costly errors. It’s a landscape filled with potential pitfalls, especially when tax and legal considerations come into play. To help you avoid these mistakes, grab your cigar and drink, and join us in this episode as we explore how proper consultation can transform your approach to property investment.

    Consulting Professionals

    It’s ideal to have a strong relationship with both a tax professional and an attorney to assist with taxes on rental properties. Tax professionals help you understand the tax implications of empowerment zones or areas with special tax credits. We share different scenarios where passive activity loss rules come into play. Attorneys help you understand local laws when renting properties across different states. We share a story of how a lack of legal consultation can lead to significant tax complications.

    Tax Considerations

    Capital Gains and Depreciation Recapture: We go over why it’s important to calculate capital gains, the benefits of 1031 exchanges, and deferring taxes. Tax Documentation: Be sure to do good documentation to substantiate income and expenses. Using tools like spreadsheets or accounting software, and possibly separate accounts for rental income, can simplify record-keeping.

    Rental Property Management

    Some of the expenses and deductions related to renal property management includes: Advertising & Realtor Fees: Tax-deductible expenses for attracting new tenants and realtor fees often equate to the first month's rent. Travel and Auto Expenses: Mileage for property management tasks is deductible for tax purposes. Insurance and Repairs: Differentiating between deductible property insurance and PMI premiums, and accurately recording repairs and capital improvements for tax benefits.

    “If you buy multiple properties, you want to not have an issue with the phase out limit. So you're going to become a real estate professional. Material. Just that. Then you should definitely have a conversation with your tax colleague.” - Layton Smith.
    続きを読む 一部表示
    46 分
  • The Importance of Record Keeping for Tax Purposes | Layton & Stacey Smith

    The Importance of Record Keeping for Tax Purposes | Layton & Stacey Smith
    2024/10/17

    By a show of hands, how many of you actually keep financial records for tax season?

    We’re pretty sure not many hands are up right now.

    If you’re a sole proprietor, you better have your hands raised at this moment. Even if you’re a 9-to-5 worker, you may want to start keeping financial records. They just might come in handy for you.

    You know what to do now. Grab your drink (water or coffee) and cigar, and join us on our sunny, beautiful patio to learn the importance of keeping records for tax purposes.

    Why Should You Keep Financial Records?

    You spend so much money throughout the year, and you surely aren't keeping count of how many times you swipe your debit card. Now that it’s tax season, it’s hard to remember which purchases you can count towards a tax credit. It also makes your tax advisor's job ten times easier. Keeping track of your financial records allows you to make this wonderful season a stress-free one. Another important reason for record keeping is to ensure you are tax compliant with the IRS. We share examples of our clients who made the mistake of not keeping records. Don’t become like them, folks! Oh, let’s not forget one word: audit protection, or more like audit assurance.

    What Type of Records Should You Keep?

    These are the types of records you should keep for tax purposes: Income records Expense records Investment records Property records We provide examples of each type of record so you know what documents to prepare while filing your taxes.

    Special Attention to Self-Employed Individuals and Small Businesses*

    It’s even more important for you to keep records of your financial statements. This includes the following: Income and expense records Mileage logs Payroll records Poor record-keeping within this group can put you in deep water with the IRS. Develop a system to help you keep track of the above information so you’ll be ready during tax season.

    Digital vs. Manual Record Bookkeeping: Which Is Better?

    Since COVID, most people are switching over to digital record bookkeeping due to its advanced features. Stacey shares why this is a better option for everyone in this day and age. If you choose to have a personal accountant keep track of your records instead, make sure they’re qualified.

    “If you are selected for an audit, try to gather at least 90% of your financial records. This may give you some grace from the IRS.” — Stacey Hoffman Smith.
    続きを読む 一部表示
    43 分
  • How Do Student Loans Affect My Taxes? | Layton & Stacey Smith

    How Do Student Loans Affect My Taxes? | Layton & Stacey Smith
    2024/10/10

    You took out some student loans, and now you’re wondering how they’ll affect your taxes. Will you receive a credit for them? Can student loans change your refund amount?

    The only way to find out is by listening to this episode, where we’ll tell you everything you need to know about student loans and taxes. Also, don’t forget to grab your favorite cigar and drink!

    Student Loan: What You Need to Know

    You do not include the full payment amounts on your taxes—only the interest amount is deductible. You can also deduct up to $2,500 of student loan interest. However, this deduction depends on your income. Individuals with a gross income over $85,000 and couples with a combined income over $125,000 are not eligible for the deduction.

    Public Loan Forgiveness Program

    If you’re working in public service, you may be able to apply for loan forgiveness. The forgiven amount is not taxable by the federal government, but it may be taxable by specific states.

    Defaulting on Student Loans

    Can defaulted student loans affect your taxes? Unfortunately, while there are no direct tax implications for defaulting, the IRS becomes a collection agency. This means any refunds you receive can be taken to pay off your defaulted loans. To fix this situation, you’ll need to enter a repayment plan to get your student loans out of default.

    “Knowledge is power and it’s helpful to have these little tax nuggets of wisdom.” - Stacey Hoffman Smith
    続きを読む 一部表示
    31 分
  • Understanding IRS Audits: What to Expect and How to Prepare | Layton & Stacey Smith

    Understanding IRS Audits: What to Expect and How to Prepare | Layton & Stacey Smith
    2024/10/03

    Your heart is pounding because you just received the worst letter at exactly the wrong time in your life. The IRS is deciding to audit a past tax return, and you’re unsure why.

    You did everything correctly. How are you supposed to handle this situation?

    Listen to this episode, and we tell you exactly what you’re supposed to do. Grab your drink and cigar, and join us in the Somerpoint Cigar Lounge.

    Why Are You Receiving an IRS Audit Letter?

    What is an IRS audit? It’s when the IRS has reviewed an organization's or individual’s tax return for a specific year and is looking for more verification. Most of the time an audit is not as stressful as many people believe it is to be. Layton shares an example of a client missing documents for her schedule A, which was an odd situation. The story shows how often it happens and why you shouldn’t over-worry when you receive an IRS audit letter.

    Different Types of Audits

    We go over the different types of audits: Mail: The audit is conducted through the mail. Field: An audit is conducted at a tax professional business or your business location. Office: This involves you going to the IRS office for the audit. In all cases, an auditor goes through the documentation to verify income information for a specific year.

    Common Triggers: Why Are You Being Audited?

    Here are some of the reasons you may be chosen for an audit: Excessive business expense deductions Rental losses Earned income credit Cryptocurrencies Layton goes over each common audit trigger and provides examples of how to handle each situation. He also explains why random audits happen, especially for small businesses.

    “We had a landscaping company with four trucks that didn’t keep mileage records. We had to rebuild it for the past year. If you’re self-employed, keep records. It makes everything easier.” - Layton Smith.
    続きを読む 一部表示
    1 時間 2 分
  • How To File Taxes For Prior Years | Layton & Stacey Smith

    How To File Taxes For Prior Years | Layton & Stacey Smith
    2024/09/26

    Falling behind your taxes brings so much anxiety. You don’t want to get into trouble with the IRS, so how can you catch up?

    Listen to this episode to learn how to file taxes for prior years. Sit back, relax, and take notes with us at the Somerpoint Cigar Lounge.

    Why Is It Important to Stay Updated on Taxes?

    There are several reasons why it’s essential for you to stay up-to-date on your taxes. You’re legally required to file your taxes every year. Ensure the IRS receives the appropriate amount of taxes each year. Avoid paying penalties. To receive tax credits and refunds.

    Documents You May Need

    Some of the documents you may need when filing prior year tax returns includes: W-2s 1099s 1098s K-1s Self employment: bank statements, credit card statements, and other bookkeeping information. Those who are self-employed will have to show a profit and loss statement. If you’re unsure on how to find these documents, we share advice on how to gather them.

    Prior Years Filing Process

    You can only e-file federal tax returns for up to three previous tax years. For example, in 2025, you can e-file your 2023 tax return. However, if you missed filing your 2022 return, you'll need to submit it by mail. In some states, the e-file deadline may be like the federal income taxes. It’s best to check with a tax professional to know specific states' electronic filing deadlines. If you’re mailing your tax return, it’s recommended that you certified it to keep track of its progress.

    “From their records, it looks like you might owe them some money. This is their way to push you to file your taxes.” - Stacey Hoffman Smith.

    “Got divorced. You had to move out of the house. You got a one bedroom apartment to restart. You got an 80 inch screen and a bean bag. But the IR's says you owe $30,000 for the last three years. Each year you owe like 90. You need to follow those returns.” - Layton Smith
    続きを読む 一部表示
    46 分
  • Common Tax Filing Mistakes and How to Avoid Them | Layton & Stacey Smith

    Common Tax Filing Mistakes and How to Avoid Them | Layton & Stacey Smith
    2024/09/19

    One simple mistake on your tax return can make you lose money or pay more than you have to. That little error can also make you want to rip out every single last strand of hair.

    To avoid the headaches this tax season, listen to this episode. We share the most common tax filing mistakes and how to avoid them.

    Also, don’t forget to grab your favorite cigar and drink!

    Common Filing Errors

    Within the episode we shared ten of the most common tax filing mistakes. Here’s five of them below.

    Incorrect Personal Information: Some of the errors related to personal details include names, Social Security numbers, and addresses. We share an example involving a client with a hyphenated last name that caused confusion during their filing. Income Reporting: Not reporting all income and necessary documents (W-2s, 1099s) can lead to IRS inquiries and penalties. Deductions and Credits: Make sure you double check your deductions and credits, especially for education and child-related expenses. Incorrectly Business Listing: Such mistakes can lead to misinformation and delays because the IRS processes returns based on the EIN and classification. Math Errors: When doing your taxes manually, it’s a possibility that you’ll leave out an extra form. This could cause miscalculations in your tax return.

    Importance of Tax Filing Accuracy

    We stress the importance of submitting accurate tax returns to avoid IRS inquiries and potential penalties. The repercussions of neglecting to sign a bid to return, especially for mailed returns that take around six weeks to three and a half months for processing.

    Keeping Copies of Tax Returns

    These documents are vital for referencing previous years' items and making future financial decisions, such as purchasing property or refinancing. We recommend storing copies for at least seven years.

    “If you are a person that normally receives a refund by paper and you decide you want to get a check in the mail, you better have your address correct.” - Stacey Hoffman Smith
    続きを読む 一部表示
    43 分
  • Taxation on Different Types of Investment Income | Layton & Stacey Smith

    Taxation on Different Types of Investment Income | Layton & Stacey Smith
    2024/09/12

    Stock portfolios, investment properties, and accounts, all put you in a different tax bracket. It also makes tax season a bit more interesting, which may leave you with a million and one questions.

    In this episode, we’ll guide you through everything you need to know. Grab your favorite cigar and drink, and join us in the cigar lounge to hear more about taxes on investment income.

    Taxation of Investment Income

    Stacey provides an overview of different types of investment income. Interest Income: Taxed as ordinary income. Dividend Income: Can be qualified (taxed at capital gains rates) or ordinary (taxed at regular income tax rates). Short-term Capital Gains: Taxed at ordinary income rates. Long-term Capital Gains: Taxed between 0-20%, depending on income level and investment duration.

    Strategic Tax Planning

    Stacey shares advice on timing stock sales to benefit from long-term capital gains rates, reducing overall tax obligations. She also touches on rental income, explaining that it is taxed as ordinary income but comes with the advantage of deductions for property expenses.

    Tax-Advantaged Accounts

    IRAs and 401(k)s: These accounts offer pre-tax contributions, with taxes deferred until retirement distributions. Stacey warns of a 10% early withdrawal penalty and advises consulting a tax professional for effective tax planning.

    Wash Sale Rule

    The wash sale rule disallows deductions for selling a security at a loss if the same security is purchased within 30 days before or after the sale. Understanding this rule will help you avoid unexpected tax liabilities.

    “When it comes to rental income more than likely it's going to be taxed at an ordinary income rate, which is whatever your normal tax rate is based on your entire income for the year." - Stacey Hoffler Smith.

    続きを読む 一部表示
    30 分