People started filing their tax forms this week. For some of us, it’s a simple matter —use the EZ form, fill in the boxes and usually await a return.
For others, it’s much more complicated. And tax codes twists have been thrown in this year.
Deductions for married couples will be treated differently; there’s an increase in how much you can contribute to retirement plans, and how do you deal with the adjusting tax brackets?
Raphael Tulino is a spokesman for IRS and Todd Cox is a Las Vegas certified public accountant (CPA) and a former gaming control board agent. They joined State of Nevada host Joe Schoenmann to answer your questions.
Monday marked the first day of filing.
INTERVIEW HIGHLIGHTS
SCHOENMANN: What documents should they have at their side?
TULINO: You want to make sure you have all your tax documents like your W-2 forms, 1099s 1098, those kinds of things, any kind of document that you're going to put on that return that you normally get from an employer, or from some sort of business or transactions you have via business or investments, and that kind of thing.
One of the things we always stress, and it's really, really important, has been during the pandemic, because we saw a lot of errors and mistakes because of the way we had to administer the pandemic legislation. And the way that was brought upon IRS, if you will, in terms of doing that, is to minimize errors as much as possible. So file when ready. For a lot of folks who want to get in, file, by all means do so, but file when you're ready, so you can avoid an error and omission of a tax benefit, which is kind of a bummer. If you miss something that you qualify for that can increase your refund and or reduce the tax you pay.
GEORGE FROM PAHRUMP: I get very, very little social security. So a family member's helping me out by sending me $1,000 gift every month. And it's for nothing. I mean, I don't do anything for it. They just send me $1,000 a month. Do I have to file an income tax return on that?
COX: Your Social Security is not going to be taxable, if that's your only income substantially. And even if you do have some income, in addition to the Social Security, you still probably don't need to file it because it has to exceed some limits. Any gift that your relatives, your family or friends, that you're receiving is not includable as an income to you. And it's not deductible to the giver … if it's your nephew, or your cousin who's given you this gift, they're not going to make an adjustment on their tax return as a deduction or anything, but you don't need to pick it up in your income. If it's $1,000 a month, it's $12,000 a year, that's way under the the annual gift threshold [of $16,000 in 2022].
PAUL FROM SOUTHERN NEVADA: I'm 74 years old. I've had 80 to 90 jobs in my life, I travel around a lot. The last time I filed an income tax return … long time ago. I've never got a refund. I've worked a lot of jobs where they took the money out and you know, I'm gonna get a refund at the end of the year. So I've never got a refund. And right now, I'm on Social Security. I haven't worked a job in five years, I'm disabled. And I live in a truck out in the desert. What's the IRS gonna do to me if they catch up?
TULINO: This is a general rule, not necessarily applying just to you. But if you have a refund owed, in other words, if you file a tax return, and it's a reconciliation, if you will, generally speaking, but if you have a balance due, then you may get a nasty grant from the IRS saying, 'Hey, you know, you owe this money, we need to settle things up. You need to you need to take care of business here.' And we'll work with you on that, we're very flexible, understanding the situation you're in, if you have a refund return, there is no penalty or interest. … What you're doing is you're letting the government hold your money until you file a return to claim that refund and have it sent to you. So if it's the case, you haven't filed in a long time, you've just basically been foregoing refunds and money that the government has withheld from you.
SAM FROM LAS VEGAS: I think I'm a 1099 non-employee contractor. And I'm wondering about the expenses I can deduct. I know I paid for my professional indemnity and licensing and house and auto and uniforms and I'm wondering if I can also deduct a little bit for entertainment. I have timeshares and I'm wondering if these qualify as a second home, and I can deduct my maintenance. And the other thing is, after all that, how much can I put away in a SEP IRA? Can I also put money away in a Roth and possibly a regular IRA?
COX: As an independent contractor, any normal and necessary business deductions that you have are deductible. If you've had to take a client out [or] if you take your employees out for lunch as a team-building exercise or something like that, great, that's all deductible. As far as your SEP IRA goes, it's going to be 25% of whatever your net income is, after whatever your 1099, your total gross income was, minus those expenses, that's going to be your net income, what 25% of that is eligible, typically, to make a SEP IRA contribution if you do a regular IRA contribution. Typically, you can't also do a Roth IRA contribution, although there are some backdoor Roth IRA tricks that you could possibly avail yourself of, but it would require some sophistication and some things like that wouldn't recommend somebody just do it without some guidance.
Todd Cox, certified public accountant (CPA); Raphael Tulino, southwestern U.S. spokesman, IRS
