Taxes Getting Back to Normal (Or Not?)

By John Wurts

It seems strange for tax season to end in summer instead of spring, but this year July 15 is the new April 15. The folks who usually wait until April are now waiting until July. The IRS has waived all penalty for late filing as long as you file and pay by July 15 this year. Now that the economy is starting to roar again and people are emerging from their retreat, once again facing the reality that they still have to file tax returns.

Many need to file earlier and don’t realize it because the PPP (Payroll Protection Plan) of the SBA (Small Business Administration) requires the uploading of tax forms in order to qualify for the emergency forgivable loans that they offer. Many don’t realize that self employed people also qualify for these loans which are in reality grants after forgiveness. I have helped many secure these loans/grants for their sole proprietorships/Corporations/LLCs and partnerships. There is no time to lose though, because when the congress approved funds run out for this program, it will abruptly cut off and there will be no more funding.

In the Bible and old westerns it was the “quick and the dead.” Now it will be the quick and the unfunded. So if you have a business or enterprise of any size or description, and have not completed your PPP, act quickly before it is too late.

Another thing to keep in mind is the “rush hour” of tax filing should be avoided for two other good reasons. First, if you have a refund, the government is not paying interest on the money and you don’t have the use of it until you file. Second, the earlier you identify your tax liability, the better you may plan on how to raise the money to pay and avoid penalties. Late filing is the worst of all because there huge penalties if there is tax due as well as penalties for paying late (this year after July 15.)

Every year I come across some who have not filed in years and is like a deer in the headlights, afraid to face the consequences of the delay. When I get them caught up, it’s never as bad as they had imagined. If a very large sum is owed, there may even be relief by doing an offer in compromise (OIC) in which the IRS will accept pennies on the dollar for those that qualify. In the tax world, there is always a way. There are many loopholes which is what happens when politicians, pressured by lobbyists, constantly change tax law. And even after that it gets modified by the Tax Court and may then not be what the IRS said it was to begin with.  CHOICES ?

All this shows that doing taxes is not a science, it is an art. The tax artist pulls an amount from one category, relabels it, and puts it back in another place that will either reduce the tax liability or reduce the chance of audit. Should you depreciate a business use vehicle, or use mileage? You pick the one that saves the most tax without raising flags. Could a fire, theft, wind, rain, earthquake or other casualty be construed as a business loss? IF so, it may save you far more than a personal loss in taxes. Did the money you sank into your relative’s failing business have to count as a capital loss, slowly deducted over many years, or was it a business loss all deductible now because you had a probable constructive interest in the business? There are many shades the same truth that can greatly benefit you if you know where and how to look at them. That’s why I love doing taxes. I save people a lot of money with my creativity and knowledge and they greatly appreciate it.

John Wurts – John Wurts Financial Services is one of the leading firms in and throughout Woodland Hills, CA.

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