Well, I could have mentioned earlier the tax reduction was in spite of much larger income than in the prior year. But that would have been an expression of bragging instead of what I was intending: gratitude.
Agreed. Perhaps this post could be looked upon as yet another expression of gratitude.
And yet, you’re still filing the old-fashion style. I think I know why. “You are saving money by doing it yourself instead of the charge for using Turbo Tax” Right!!
shinobi… You know I’m just joking.
just now saw this post, what a pain!
I skimmed over Pub 550 and saw the statements you mention. If I was a tax advisor, I’d recommend you do everything per Pub 550. But, you may want to consider just claiming it as 2019 income. On the slim chance you get audited, you can just go and pay them whatever penalty they would assess due to this regulation that pretty much nobody knows about.
No worries, pattyb53. It’s all good!
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.
Tax consultant filed extension for me today. Can I still go ahead file my taxes using software on my own.
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.
Looks like there is no exemptions based on number of dependents. Line 42 from previous tax form exemption is no longer available.
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”
Appreciate any help on this.
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 cannot say for certain. But I suspect it is because, if you fail to upgrade, TT will be unable to collect money from you.