I’m a believer in plausible deniability, but of course not trying to convert others to this way of thinking. Believe whatever you want, with my blessing.
I did not overtly cheat on this year’s taxes. But there are forum participants who would assert I did. There are any number of us here who are involved with one or another variety of MS (manufactured spending). The IRS, so far at least, has left us MSers alone, an approach by the IRS which is most lucrative for me and surely appreciated. But in future the IRS might reach a different conclusion where we MSers are concerned. That surely would be their prerogative and they would have a strong argument. Should that day ever arrive I do not want their records to indicate I have the tech savvy to file electronically, or very much other savvy for that matter. Just want to appear a fossilized old-timer, hopelessly rooted in the twentieth century, who really cannot keep up and who does not understand at all what is going on.
So it’s not the cost of Turbo Tax that is on my mind. It is, instead, the cost to me if the IRS ever were to go back three years and force me to pay tax on all of my side hustle profits.
My best understanding of an extension is that it confers the privilege of filing your tax return later, if you wish. But insofar as I’m aware, there is no obligation to file later.
Or you will appear to be someone who’s intentionally trying to come off as a fossilized old-timer rooted in the twentieth century.
But really, income is taxable or not regardless of how you file your return. All you should be concerned about is defending the position you’ve taken, because that’s all that will matter if the question is ever raised.
In fact, I’d argue that the “fossilized old-timer” persona fosters the perception of a defiant, unsubstantiated “taxes are too damn much as it is!” attitude, rather than a good faith attempt to comply with the tax code. You dont want to be the guy who "cannot keep up and does not understand at all what’s going on (that person goes to a professional tax preparer), you want to be the guy who’s done the research and truly believes the position you’ve taken is correct. But that’s another subject for another day.
Thanks for the update. Regarding itemized deductions, If employer paying expenses (hotel, car and meals), using this expense for employee taxes is a violation right? Looks like home owners did not get much benefit from new tax rules compared to renting.
Over many years of doing my own taxes, and in particular within the realm of O & G taxation among others, I have founds a great many “gray areas” in the tax laws. My approach always has been:
If the law is clear regarding any tax obligation I might have, I always pay up and I never cheat. But in the “gray areas” I slant my reporting to my benefit and, in effect, challenge the IRS to “come get me”.
My outcomes with this approach are so far so good. Some of the tax laws are so complex I don’t think many IRS employees, aside from very few specialists, really understand the law or are in position to challenge “gray area” matters.
Well, yeah. But if asked why you did/didn’t do something a certain way, you need an answer other than “Because I filed my return on paper, I clearly dont know what’s going on”. That’s just saying you made no effort to get it right, you did what was best for you and hoped to get away with it.
How many times have you even been audited, to know that your outcomes from this approach have been good so far?
We see this differently. To me an audit would be a sign of potential trouble. To me no audits, at least none of which I’m aware, is a good thing. And for me, so far so good.
Like I remarked earlier, I do not cheat on my taxes. When rules are clear I pay up. Period.
Unless you’re a tax practitioner, there is very unlikely to be a situation where you know more about the tax law than the person auditing your return. For almost all situations that a common taxpayer has, the auditor knows the law and/or the IRS’ position. For those times when they don’t, they bring in an expert if they feel it’s worthwhile. So, they are always in a position to challenge gray areas.
You mention that your outcomes with that approach are so far so good, then say you haven’t withstood an audit on that approach. Therefore, no one (including yourself) can draw conclusions on the success from your approach. Not saying you haven’t been successful, which you truly have been if you haven’t been audited, all I’m saying is that has nothing to do with how you’ve handled gray areas.
I disagree with this . . . very, very respectfully, of course. And I completely see where you’re coming from and understand why you would hold that opinion. I will try to explain but not certain I can:
There are some aspects of tax law which are quite arcane. People who do not do their own taxes, and the research sometimes required, would be unlikely even to know of the existence of these things. The IRS home office has specialists in a wide variety of these otherwise arcane tax rules. The specialists certainly DO know and understand their regions of speciality. But one specialist might not have understanding of another specialists area of tax law expertise, and vice versa. And the average tax examiner, who might have broad general knowledge of IRS rules, most likely lacks specialist level knowledge of anything. That’s why they have the specialists, after all.
I personally lack even broad general knowledge of tax law. I know only what I need to know in order to take care of the peculiarities of my tax filing situation. I would be unable without more study, for example, to help most other people file their returns.
As for specialist knowledge, I know even less. Only a few times, over the years, have I spent the time required to do the deep dive, into tax law, which allowed me to discover and make a decision regarding gray areas of the law I wanted to exploit for gain. In those few instances only did I likely know more about that very narrow region of the tax law than an average IRS person auditing my return.
I do recall, and it was many years ago, speaking on the telephone with an IRS specialist. I’m unable to recall any longer the specifics. It was too long ago. I just remember thinking the person on the other end of the line really knew his stuff.
I have a simple tax return & am trying to file my return using TT Free but it’s asking me to upgrade saying that “To accurately complete your taxes, you need to upgrade to TurboTax Deluxe Why do I need to upgrade?
You have Schedule 3, Nonrefundable Credits, and that’s just one of the reasons the IRS requires you to file Form 1040.
TurboTax Free Edition does not cover this situation”
So what you are really saying is that your method and strategy is completely speculative and unproven? It’s only “so far, so good” in that its never been tested - which is true for everyone’s opinions and strategies, including stuff like not filing a return at all, when they too havent yet been subjected to any sort of review.
Most people consider a successful tax strategy to be one that holds up, or one that they think would hold up, under scrutiny. Not being scrutinized is merely “luck”. While the IRS may take a different position, being able to support why you reported what you reported can be the difference between a bigger tax bill and potential criminal consequences.
Your discomfort with my “method and strategy” is fine by me. What has worked for me over a great many years might not be right for you, or for others. And I surely do not require your approbation regarding my choices in this regard, or any other for that matter. I do hope, because I wish you well, that whatever alternative choices you might have selected are working as well for you as mine do for me. If so, you are doing great!
I would strongly recommend you try FreeTaxUSA. I used it this year after many years and price hikes from TaxAct. Very happy! It is about $15 too. Good, easy to use web interface.
He seems to think that someone at the IRS inspects his return every year, and if he isn’t being audited, he’s done everything correctly. Which is, of course, absurd.
One could lie on the self-reported items their whole life and never get caught. Especially if the rest of the return can not be associated with certain known red-flag activities with high levels of fraud, launder, evasion, etc (like working at a business with lots of cash transactions). Doesn’t mean it’s right or a working strategy, it just means you’re not Al Capone… yet.
It’s pretty silly to think that IRS cares about one’s ability to file electronically vs paper. In fact, I think it takes way more effort to file on paper. When it comes to dealing with IRS, you’re guilty until proven innocent, and ignorance of the law is never an excuse.
It doesn’t appear that we are going to convince Shinobi on this, despite what appears to be overwhelming consensus here.
One thing that nearly guarantees special attention to your return is to file on paper. And since it is much more likely to have errors (even a simple addition mistake), it might get special attention again. But if you make it through all that, your return is digitized anyway, and it is doubtful that anyone reviewing or auditing it from that point would likely know, much less care, that the numbers were once on paper.
Yes, although when it comes to and audit and some issues of intent and certain penalties, having a plausible justification or excuse for your positions definitely helps.
