Toph CPA - April 2021

Toph CPA - April 2021

APRIL 2021 VOLUME 5, ISSUE 4

TOPH’S TAX RESOLUTION T IMES

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Don’t Let These Tax Misconceptions Trip You Up

When it comes to the IRS and paying taxes, there is no shortage of misconceptions and misunderstandings. As we all know, April is tax month and Tax Day is April 15. In recognition of this day, I want to talk about a few misconceptions that can cause people a lot of trouble when they file their taxes or try to work with the IRS on their own. Misconception No. 1 — Tax return extensions are payment extensions. Every taxpayer has the right under U.S. Tax Code to file for an extension. People do it for a number of reasons. They might be missing a crucial piece of paperwork. Or they simply might not have time to take care of their taxes before the April 15 deadline. Regardless, you can file for an extension and give yourself six extra months (Oct. 15) to file your returns. Here’s where people make the mistake — they erroneously believe the tax return extension is also a tax payment extension. Unfortunately, it’s not. You are still required to pay your taxes by the April 15 deadline. I’ve worked with clients who had no idea this was the case. As a result, they paid their taxes later and were hit with penalties and interest. Misconception No. 2 — The IRS would never take your home. This is related to a question I get a lot. People ask, “The IRS can’t take my home, can they?” If you owe back taxes, the IRS isn’t necessarily going to go after you home, but they have that power. If you have a significant balance with the IRS, they may decide to take steps to seize your property and assets. They may or may not go after your home. They may go after purchases you’ve made, such as vehicles, collectibles, or other value items. They may put liens on accounts or garnish wages. The IRS has many tools at its disposal to get money they believe they are owed. This is a good reason to work with a tax professional who has experience going up against the IRS. The IRS may have its tools and resources, but so do you! Misconception No. 3 — The IRS knows best. If you receive a letter from the IRS, most people assume the worst, but reality can be very different. When I retain a new client, one of the first things I tell them is to forward all IRS correspondence to me. I do this for several reasons. One, it ensures I have as much information about the client’s situation — as the IRS sees it — as possible. And two, the client doesn’t have to stress about future IRS letters.

But there’s one more crucial reason: IRS letters aren’t always accurate. Many people assume the IRS knows best, but that is far from the truth. The IRS often gets the facts of the situation wrong. For example, I recently had a client receive several letters filled with erroneous information. This information led the client to believe the IRS was going to seize their home, but that wasn’t the case at all. Again, this is why it’s so important to retain expert help. The IRS isn’t always right and an independent mediator can look at the situation impartially to get the facts right before the IRS takes any further action. Working with the IRS is stressful enough. It’s a lot for a person to deal with, especially when they say you owe money or they’re going to penalize you. A big part of my job is standing between you and the IRS so you don’t have to worry about what I’ve talked about in this letter — and to make sure you’re informed about your rights as a taxpayer.

–Toph Sheldon

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The clients’ names and personal details have been changed to protect the identity of those involved. However, the tax results are 100% factual! Tax Resolution Success Story No. 1: Martin owed the IRS $218,000. He received the news after an IRS audit. The IRS learned he had been paying his contractors in cash, but the IRS told Martin — also a contractor —that he could not deduct the cash payments from his taxes — which he had been doing. As a result, the taxes mounted and he was expected to pay. However, Martin was in no position to pay $218,000. So, he called Toph for help to get the situation figured out. Toph worked with the IRS to settle for a more manageable amount. The IRS settled for $30,000 and wiped out the rest. Martin got back to work and made sure he was paying his contractors above board so he would never have to deal with a surprise tax bill again! Tax Resolution Success Story No. 2: Monica owned two houses. One, she owned jointly with her husband. The second, she owned herself. It was a house she bought for her son who was dealing with addiction and other health issues. She bought it as a compromise as her husband didn’t want the son living at home. THE IRS VS. TOPH AND HIS CLIENT WITH 2 HOUSES

CRAFT THE PERFECT FOLLOW- UP EMAIL The (Not So) Secret Recipe When it comes to securing leads, the follow-up email is hard to beat. One study found that a 12% response rate from two emails increases to 15%–16% with a third email. If you play your cards right, the success of your email marketing could, in large part, depend on your follow-up emails. So, how do you create ones that maximize positive responses from leads? Know your goals. You should have a clear idea of what you want to accomplish with your email campaign. Which metrics are most important to you? The number of times recipients open your follow-up email? That they click a link in the text? That they reply? Maybe tracking total conversions resulting from follow-up emails is important to you. Whatever the case, knowing your goals is a good first step. Find the ideal number of follow-ups. Obviously, not following up at all is a recipe for abandoning several potential leads. However, sending too many follow-ups can leave potential leads annoyed and unwilling to look into your business. According to several studies, the ideal number of follow-up emails is no less than three, but no more than seven. Time your follow-ups right. You don’t want to space your emails so far apart that leads forget about you, but you also don’t want to spam their email box so often that they get annoyed. A good rule of thumb is to wait at least 48 hours before sending a follow- up email after the initial email. After that, wait 2–4 days before sending another. Craft appealing content. This point is worth its own article, but briefly put, your follow-up email content is incredibly important. Create a subject line that will grab readers’ attention. Then, be polite, direct, friendly, and personable in each email. As you send out more follow-ups, become more specific about the deal you’re offering and make it more enticing. Above all, you should constantly tweak your follow-up content and overall strategy as you gain new information. As you continue to create follow-up emails, you’ll learn what works best.

Needless to say, Monica was in a tough situation, but it only got tougher. The IRS hit her with a $120,000 tax bill. However, when she initially tried to settle with the IRS, they said no — and it was because she owned two homes. They considered her second home a luxury item as her official residence was paid off.

In the middle of negotiating with the IRS, Monica’s father and son passed away. You would think this would earn Monica sympathy

from the IRS; however, in reality, if they got wind that the son had passed away, the IRS would see less of a need for Monica to own a second home — and they would use that against her in order to get the $120,000. So, here’s what happened. Monica moved into her second home and made it her primary residence. The IRS was unlikely to go after the home now. And after further negotiation, the IRS agreed to $65 a month payment plan for the next seven years to be done with it — or about $5,460 in total — and over $114,000 saved!

–Toph Sheldon

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Sunshine and Bedtime Stories Melt the Stress Away Tax season is notoriously stressful — we can all agree on that. For our family, and for Toph in particular, a big source of stress comes from the lack of work/life balance during this time of year. But that comes with the territory. We always know tax season is going to be a very busy time, but that doesn’t make it any easier! Toph has been working out with a trainer. Walking the dogs and working out has been Toph’s thing for a while now, but he’s dialing it up. We can all benefit from a little more physical activity.

At home, another way we come together and wind down is to read bedtime stories to the kids. The kids really love their quality time with Dad in the evenings when he reads them a story. I think it’s good for all of us because it helps us as parents focus on just our kids and to live in that moment. Plus, it helps wind down the kids, too! As we’ve definitely learned, when parents are stressed, the kids pick up on that. Even the pets pick up on it. And then they get stressed. So, the more we can do together to bring things down the better, whether we’re reading bedtime stories or going for a walk around the neighborhood.

Our son, Mac, recently commented to Toph’s sister that Dad hasn’t been around much. That really hit home for Toph. But as busy as it gets with each passing day as we get to April 15, we know we’ll get to the other side and Toph will be able to spend more time with the kids. Regardless of the source of stress, there are many things we do as a family to reduce stress as best we can. Thankfully, it’s finally spring and we’re able to get outdoors. The sunshine and outdoor activities do wonders to melt the stress away.

That, and you can’t beat a nice, delicious donut every now and again.

I’ve also gotten into running and working out. I even joined a running group with a few other moms. We get together in the morning to go for a run before the kids get up. I also take time to just run by myself as well. As nice as it is to run in a group, that alone time can’t be beat!

SHEET PAN CHICKEN DINNER

Take a Break

You’ve probably heard of a one-pot meal, but how about a one-pan meal? This easy sheet pan dinner comes together in just 30 minutes without dirtying many dishes.

Ingredients

•

2 boneless skinless chicken breasts, cut into 1-inch chunks 2 medium sweet potatoes, cut into 1-inch chunks

• • • • •

1 tbsp soy sauce 1 tbsp lemon juice

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1 tbsp honey

1/2 tsp cayenne pepper

• • •

1 tsp salt

1 large head of broccoli, cut into florets

1/4 tsp pepper 2 tbsp canola oil

Directions

1. Preheat oven to 425 F. 2. On a large baking sheet, combine chicken, sweet potatoes, salt, and pepper. Drizzle with oil and toss to coat. 3. Bake for 15 minutes. In the meantime, make the sauce by combining the soy sauce, lemon juice, honey, and cayenne pepper. 4. Remove pan from oven and use a spatula to flip the chicken and potatoes, then add broccoli florets. 5. Drizzle sauce evenly over top and return to the oven to bake for an additional 15 minutes or until chicken has an internal temperature of 165 F and vegetables are fork-tender.

Solution on Page 4

Inspired by TheSpruceEats.com

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Cincinnati Tax Resolution Powered by Toph Sheldon 9200 Montgomery Rd., Ste. 7B Cincinnati, OH 45242

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INSIDE 1

Don’t Make This Tax Extension Mistake!

2

How to Craft the Perfect Follow-Up Email

The IRS vs. Toph and His Client With 2 Houses

3

Sunshine and Bedtime Stories Bring Us Together

Sheet Pan Chicken Dinner

4

Why Is Tax Day in the Middle of April?

TOPH’S TAX NIGHTMARES

Federal Income Tax Becomes a Reality —Why Is April 15 Tax Day?

This month, Toph’s Tax Nightmares is shaking things up. Instead of featuring a big-name tax evader, we thought in “honor” of Tax Day this month, we would take a step back in time to answer the question: “Why is April 15 Tax Day?” It seems almost random — surely, there is a good reason for it? The road to Tax Day began in 1913. On Feb. 3, 1913, Congress ratified the 16th Amendment to the United States Constitution. This amendment let the federal government levy income tax. It reads: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” In creating this new federal income tax, Congress also had to decide on a due date. That date was originally March 1. The first federal income tax returns would be due by March 1, 1914, or a little over a full year after the 16th Amendment went into effect. The date was chosen to give taxpayers plenty of time to prepare to pay their taxes to the brand-new Bureau of Internal Revenue.

However, the March 1 deadline didn’t last long. As part of the Revenue Act of 1918, Congress pushed the due date back by two weeks. Taxpayers now had until March 15 to file. Interestingly enough, this new date stuck around until 1955 until the

Internal Revenue Code received a major update — which included a new due date: April 15. (One more fact: the Bureau of Internal Revenue was renamed the Internal Revenue Service in 1953.) The new April 15 date was chosen because Congress determined that taxpayers needed an additional month to adjust to the new tax laws. By 1955, the tax code had gotten incredibly complex. The new deadline was also put in place to help accountants and tax preparers adjust as well. The date stuck ever since.

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WHEN THE IRS COMES KNOCKIN’ ... LET US ANSWER THE DOOR!