DARRIN T. MISH: Welcome and good morning this is the IRS solution attorney Darrin T. Mish joined once by my lovely and talented co-host who’s actually trying to plug my microphone in right now or my headset.
KATRINA MADEWELL: Yeah your microphone is working fine, it’s the headphones.
DARRIN T. MISH: My microphone is working and going out live but my headset are a little suspected at this point but how you doing Katrina?
KATRINA MADEWELL: I’m good, you sound really good with no sleep I gotta tell you.
DARRIN T. MISH: It’s artificial enthusiasm here or at least artificial energy I think.
KATRINA MADEWELL: Alright so if you say something that’s like a little bit off I’ll correct you and make sure you’re going crazy here.
DARRIN T. MISH: When do I not say something that’s a little bit off?
PAT: I got to thank you for this delicious bagel.
KATRINA MADEWELL: You’re welcome pat I really should get a picture of this, it is really funny, he has cream cheese smeared all over his face, he looks like a 2 year old eating a bagel really.
PAT: If you don’t wear it, you don’t enjoy it.
KATRINA MADEWELL: Oh gosh it’s gonna be all over your head and everything else.
DARRIN T. MISH: It’s got the little flavor savor thing going on, you know on the upper lips.
KATRINA MADEWELL: Let’s not go there Darrin, so you’re listening to the IRS solution attorney show so we’ll promise to keep it fun to keep it real, we’ll give you some valuable information, also we won’t make it so serious all the time if you have a question like tax related or specifically IRS issue related, you can call us, we are live at the studio 888-404-1010 again 888-404-1010 so the show that we have lined for you today are nine common tax mistakes to steer clear of, which is right on time for tax season.
DARRIN T. MISH: Exactly, that’s why we thought we should do the show today it’s good topic, there’s nine things, actually there’s probably 99 things that you should steer clear of at tax season and tax mistakes, but we’re gonna talk about nine of them today.
KATRINA MADEWELL: And keep in mind that some of these things ultimately lead to the bigger issue which is people that are like oh gosh I didn’t file my tax return. All of a sudden they have this letter from the IRS that wants to seize or levy all the fun stuff they do.
DARRIN T. MISH: Yeah for sure you know if we have a 3 hour show or a 4 hour show, I could tell a story about every single one of these 9 mistakes probably could tell more than one story about all these mistakes but the first one.
KATRINA MADEWELL: I think you should add a story in you could pick one from 9 of the best ones.
DARRIN T. MISH: Alright I’ll pick a story but the first one is pretty common but you wouldn’t think it was it’s just forgetting the sign and date the return, it’s like, duh I’ve actually done it.
KATRINA MADEWELL: They give you a hard time if you don’t date it or sign it?
DARRIN T. MISH: Well if it’s not signed or dated it gets sent back so it’s not considered an executed return it’s not an official return and so you will pay late penalties and ETC if you actually forgot to sign and date the return.
KATRINA MADEWELL: Okay my jaw is open now, that’s ridiculous.
DARRIN T. MISH: You know now a days or so many people probably the majority are filing electronically there still you know a forum that you’re supposed to sign when you’re tax preparing and if your tax preparer sends out your tax return without getting you sign that forum then he’s not supposed to transmit it to the IRS although I get that all the time but yeah failing to sign and date a return is a pretty common problem, it’s just one of those things that they think that emotionally people are like so glad to have the return you know all the numbers crushed.
KATRINA MADEWELL: the hard part is done.
DARRIN T. MISH: You know they think it’s all done and they forget to sign it.
KATRINA MADEWELL: So are they accepting electronic signatures now? Because I know you can e-file it but can you e-sign it?
DARRIN T. MISH: The signature form with the e-filer gets kept at the tax preparer’s office so that’s something that you can think about.
KATRINA MADEWELL: But I mean you can’t like electronically sign like docusign like tax return, can you do that?
DARRIN T. MISH: No you see the government really always pretty far behind private enterprise and even though when you buy or sell a house you can e-sign and do all those kinds of things.
KATRINA MADEWELL: We e-docu signed everything.
DARRIN T. MISH: Yeah and corps allow you to E-Sign even federal courts surprisingly you can e-sign just not the IRS.
KATRINA MADEWELL: Just not the IRS.
DARRIN T. MISH: You know the IRS’s idea of high falutin technology is a fax machine, The irony I think in that is they actually use e-facts so how does a e-fact and you know at their desk goes through the internet of course so I’m not sure how an e-fact is more secure than an email but they don’t use email at least with the public, they use inter, right right yeah exactly, all it is it’s a picture right that got transmitted by a fax machine potentially on one end but I….
KATRINA MADEWELL: At least have digital stuff right I mean we’re getting better.
DARRIN T. MISH: Yeah we’re getting better eventually they still have 2-86 processor computers over there though.
KATRINA MADEWELL: The ones that are scrap for all the gold parts.
DARRIN T. MISH: Well they have another problem they have a tendency of to lose laptops and things too so I’m sure there’s you know a revenue officer or agent that loses laptop I’m sure there’s no confidential information on one of those but anyway moving right along the goal of this show is not to bash the IRS it’s just to figure out what the solution to people you know common tax problems so the next one is checking the wrong filing status and I see this all the time.
KATRINA MADEWELL: So what does that mean like what?
DARRIN T. MISH: You know like single married filed jointly marrying file separately had a household qualifying widowers those kinds of things and I see this all the time in this context you’ll have a husband and wife and some kids and maybe the husband is not working and the wife is and so she’ll go ahead and file head of household because most people think or a lot of people think that head of household means who wears the pants in the family.
KATRINA MADEWELL: That’s what I thought, so what does it mean for tax return perspective.
DARRIN T. MISH: Oh Katrina is all that.
KATRINA MADEWELL: I am the head of the household.
DARRIN T. MISH: I check that box every time.
KATRINA MADEWELL: That would be a mess if I filed a return and I have no idea what I check probably just married I guess, I don’t know.
DARRIN T. MISH: Head of household means a single parent raising kids I mean there’s some other technical jargon but that’s basically the scenario and you see it all the time where you have a married and one of them claims the kids now if they’re not married.
KATRINA MADEWELL: What does it do like just say hypothetically speaking they are married one of them’s not working the other one files head of household like what does that do.
DARRIN T. MISH: Well you get a break you get a tax break if you file head of household because it’s designed to release some of the tax burden that a single parent has and raising a dependent child and so if they check the wrong box then they’re subjected on audit and then a re-character filing status and so could cost you several thousands dollars.
KATRINA MADEWELL: Plus they tact on like those late penalties or.
DARRIN T. MISH: Yeah there’s gonna be you know probably iniquitous or inaccuracy penalties so it could be up to 25 percent but it’s not like one of these big hairy scary audits you know like I had scheduled up at 11 AM this morning I had to reschedule not one of those it’s really what we call correspondence audit where the IRS simply sends a letter and tells you eh and you know you messed us up.
KATRINA MADEWELL: They can just fix it like amend it or is it a correction.
DARRIN T. MISH: yeah if you have checked the wrong filing status and you have not gotten that audit letter from the IRS you can certainly amend it and fix that mistake.
KATRINA MADEWELL: Alright so number 3 on our list is messing up social security numbers just kind like I’m typing it and my finger misses the 9 and hits the 6.
DARRIN T. MISH: Yeah I wish this wasn’t as common as it is it happens quite a bit at our office because some people actually write their social security number wrong when they come into the office like they’ll transpose a number I even had some people come in and say I’m not sure what my social security number is which is pretty interesting that the person’s 50, 60 years old and they’re not sure what their number is a one guy that comes to mind was a gentleman that was in he entered the service he was drafted back during the Vietnam Era and he knew what his social security number was but the army transposed a number and then declared that was his serial number his social security number forevermore and so we did eventually get it fixed but it was a gigantic snapper and it took it been on and off on this wrong number for like 30 or 40 years so that was a problem that actually kind of crossed agency boundaries.
KATRINA MADEWELL: That reminds me of my grandfather giving me he told me how like when he was younger he gave them a different date of birth he was a couple years older when he went to the DMV and they never verified anything back then because he was born in like 32, and so he always had the wrong date of birth on his drivers licenses.
DARRIN T. MISH: Yeah so it was great at ages you know 21 and 65 probably.
KATRINA MADEWELL: Well 18 was the drinking age back then, remember so but the social thing I mean I can understand where that can get mixed up cause like even mine and my husbands the 2 digits in the middle are only 1 digit off for us, we’re very close so I’ve done it personally.
DARRIN T. MISH: Yeah if you had a spouse that’s trying to give the tax preparer the other spouses social security number I barely know mine I fact to know mine but my wife has to look it up every time, we’ve been married for like 20 years, it’s a crutch you know, I know where to find it, I just don’t commit it to memory, it helps to keep me from buying stuff in her name, you know committing identity thief.
KATRINA MADEWELL: I’m sure Heather would be very happy that you’re not you know going to the men’s clothing store buying stuff in her name.
DARRIN T. MISH: I sure why the men’s clothing store would need your social but it that’s kind of a side issue the whole social security number was intended not to be a national identifying number it intended to be sully for uses of the social administration do you remember when you get your social security number.
KATRINA MADEWELL: Are we boring you pat? Did you just have bring that music in real high just to make sure?
PAT: No I’m really getting into this, I’m mad because it started.
DARRIN T. MISH: Well when we come I’ll get back to why the social security number wasn’t supposed to be used for everything like it is now.
KATRINA MADEWELL: You’re listening to the IRS solution attorney show we are live in the studio 888-404-1010 we are talking about the 9 common mistakes to steer clear of and we will continue on the path so we’ll take your calls in between 888-404-1010 we’ll be back in a minute.
DARRIN T. MISH: Welcome back to the IRS solution attorney show, I’m your host the IRS solution attorney Darrin T. Mish.
KATRINA MADEWELL: And I’m your co-host Katrina Madewell thanks for sticking with us we are live in the studio today 888-404-1010 if you’re just joining this the whole show is all about 9 common mistakes to steer clear of to help you with those tax files to help you keep out of trouble with the IRS and to keep you from paying fees and penalties.
DARRIN T. MISH: Yeah so you don’t need IRS solution so you can think of all these mistakes.
KATRINA MADEWELL: I can think of another 100 other ways to spend money other than to pay penalties to the IRS.
Mike: You were talking about before the break about not knowing your wife’s social security number, I don’t even know my wife’s middle name I don’t know her previous address I haven’t met her parents yet she said if you last 40 years I’ll start to give you a little more information.
KATRINA MADEWELL: Where is she from anyway?
Mike: I don’t know.
KATRINA MADEWELL: Runaway bride? Pat did a Mail-Away Bride, That’s what it is.
DARRIN T. MISH: We need a caller to get on here and ask her what her middle name is.
Mike: Here’s another thing about I have a friend and she goes I have a guy that I have been seeing and I am all mad at him and I just should call somebody because he’s never filed his taxes ever.
DARRIN T. MISH: Oh my goodness well this is actually pretty darn common you know it tends to be the guy is sort of he’s out there probably doing a blue colored job but a lot of white colored jobs too and they’re more busy worrying about the cash flow and how to get the bills paid and not really that worried about getting the tax filing that’s sort of a detailed thing to a lot of business owners a detailed that might be beneath them or might even be administrative denature in their mind in fact I was talking to a gentleman yesterday that hasn’t filed a return in a while like.
KATRINA MADEWELL: A long while.
DARRIN T. MISH: Like 8 years and so what we’re gonna do in that case his wife is fully aware I have proof of this because well least somebody was on the other end on the phone that seemed to know what was going on that was per claimed to be his spouse but in that case what we’re gonna do is we’re gonna file her married filing separately and he you know and both of them are marriage filing separately obviously but that’s because he’s gonna have the entire tax debt and she’s not gonna have significant tax debt and if they she does have some tax debt then they’re gonna pay that off and the reason we’re gonna do this is we’re not we don’t want to suck her into his tax vortex of hell because he’s gonna owe a solid 6 figures and they have a really big house on a lake and they have a lot of equity in that house and it’s owned by Tennessee by the entirely so that’s an undivided half inch vs what each spouse has and if we were to file jointly then the tax lanes that are you know obviously forth coming at some point soon but attached to the entire property well if we file separately and she has no tax debt it’s still attaches to the property but it only attaches to his undivided half inch of the interest in the property so in many ways we will have saved at least half of the equity in that property from being exposed and subject to that tax claim if it were seized.
Mike: There’s another mistake that I heard someone talk about they said well we always file separately my wife and I but then they you know when you take the deductions they take the deductions of being married.
DARRIN T. MISH: Yeah you know there’s a lot of rules that apply to married filing separate status most people would benefit from filing jointly because there’s a tax break you know associated with that and so if you file separately you are going to pay a little extra tax and the reason you’re paying that tax is to get the benefit of being separated now this is something I always forget to say and since you know this is obviously a local ship going to Florida primarily but in community property states which are the states out west like California, you know Arizona, New Mexico and Texas the ones that have the Mexican Spanish sort of heritage in community property states then the spouse is subject to all the liabilities of the other spouse and so this filing status doesn’t make as much difference funny thing is I went to law school, grew up in California went to law school in California and had to take I took a whole course on community property but I could be in here in Florida for 23 years you kind of forget just until you talk to somebody from Texas or whatever and I’m telling them what the deal is and they go what about Community Property.
KATRINA MADEWELL: And Texas has weird stuff anyway like I remember because I started on a lone side vs real estate and we use to do ones in Texas and they had all these little weird funky rules about financing the property and both spouses have to be on it, it’s weird.
DARRIN T. MISH: Yeah and in those states with the Spanish heritage they also have common law marriage which basically means if I guess two people nowadays if two people romantically shack up for long enough you know if they get most days I think only 5 years which you know and today’s day age living with somebody for 5 years is not really that long right? So in those states they’re actually technically married so then it brings in all kinds of interesting thoughts about which filing status do we pick if we’re technically common law married and in community property.
KATRINA MADEWELL: That’s a good question because works gets all weird state specific.
DARRIN T. MISH: Yeah it gets all twisted up and all up and in Florida we don’t have common law marriage which I think is a good thing even though Florida has a lot of that Spanish heritage but you know Spain didn’t have control over Florida for all that long as proposed out west where they were under least Mexican rules until 1948 which is really not that long ago if you think about it.
KATRINA MADEWELL: No not in any scheme of things, not in Europe.
DARRIN T. MISH: Yeah not in the scheme of law you know I remember going to law school and one of the things you do is you learn sacratic method but you have to read a tremendous number of cases out of a law book.
KATRINA MADEWELL: Which means?
DARRIN T. MISH: Well you have to the way we learn is we re case opinions about how the majority in that case ruled on that case and then it’s supposed to teach us the rule of law which regard to that particular application so for example if there was a contract dispute you read a case about how a contract dispute is ultimately resolved and a lot of those cases were seventeen hundred to early eighteen hundreds a lot of pre-slavery cases and things like that.
KATRINA MADEWELL: Alight so number 4 is failing to report income.
DARRIN T. MISH: Well gee.
KATRINA MADEWELL: Yeah you never see that one.
DARRIN T. MISH: Yeah this is probably the most common one that almost guarantees to get you into trouble Remember folks that when you work at a job you get a w-2 obviously, right? Well but when you’re an independent contractor to pay your of that job is supposed to issue you a 10-99 if you make over 600 bucks, 600 dollars is just not that much money, so what I see a lot is people they forget to put all of their 10-99 income on a tax return so let’s think of it hypothetically here if you had 10-99’s that amounted to a hundred thousand dollars in income in a year and you fill out your schedule c and you only report 50 thousand dollars’ worth of income what do you think happens?
KATRINA MADEWELL: They’re gonna probably be triggering an audit I would imagine.
DARRIN T. MISH: Yeah it’s a guarantee an almost instantaneous audit because all though we were making fun or poking fun at the IRS technology just in the last segment.
KATRINA MADEWELL: You probably wouldn’t miss 50 grand.
DARRIN T. MISH: They do actually have pretty good ability to match the 10-99’s to the gross income report on return.
KATRINA MADEWELL: How do freelancers plan to that because they are so many perpetration’s now and places online that you can hire freelancers and that company’s work with freelancers because I do myself but then I’m paying basically paying company to company I have no idea what they do, do they send that they people 10-99’s? And some of those people aren’t even in the United States so are they subjected to them?
DARRIN T. MISH: So I’m not sure if it’s real website name but let’s call it Freelancer.com so you as a US citizen hires another US citizen through freelancer.com to do some job that is worth more 600 dollars and you pay freelancer.com 601 dollars then they’re gonna go ahead and issue that 10-99 to that US citizen on your behalf cause it’s really on their behalf.
KATRINA MADEWELL: Freelance.com?
DARRIN T. MISH: You were the customer to freelancer.com and Freelancer was the one that paid the freelancer on the other end, Now if that freelances independent contractor is in the Philippines or Mexico or wherever then they’re not subjected to that law and no 10-99’s are issued and they’re supposed too I’m sure this is really common, they’re supposed to pay the taxes in their home you know whatever that means now.
KATRINA MADEWELL: And some of those super crap places I’m sure that happens.
DARRIN T. MISH: Yeah I’m sure in the Philippines in some of those places that are really third world and not really knocking them but they just don’t have the taxing they don’t the efficiency that the IRS has and.
KATRINA MADEWELL: the tax and authority is not there I would imagine.
DARRIN T. MISH: It’s just I think it comes down to resources on the governments end in those countries and they just don’t have the resources to track down every bit of income like we do here a lot of those countries have really deep underground economies too so.
KATRINA MADEWELL: The internet like from a global perspective has probably changed a lot of things as far as money and how some stuff changes hands.
DARRIN T. MISH: I know that in the Philippines that it is very common for young people to work they get out of their university which is more analogies to our high school system and they learn how to do some online things in data processing maybe some programming some internet marketing stuff and they go ahead and they hang their single at freelancer at freelancer.com or google or these other places and they just get paid and they get paid higher than the average market wages.
KATRINA MADEWELL: Right just because their countries dollar stretches a little further.
DARRIN T. MISH: Yeah I know the Philippine peso is very weak in the US dollar really goes a long way the average person in the Philippines makes right around 200 dollars a month.
KATRINA MADEWELL: Wow I can’t even imagine how much that is per hour but anyway you’re listening to the IRS solution attorney show, we’re talking about 9 common mistakes to steer clear off to keep you out of trouble with the IRS and to keep you from having to go to Mr. Darrin Mish’s office but if you found yourself from the hot seat and you have an issue with the IRS or you got a question we will help you, you can call us at 888-404-1010 888-404-1010 or even you know somebody you know have them give us a call we will be happy to answer it and you can Sally and Joe smith, that’s cool, alright we’ll be back in a minute.
KATRINA MADEWELL: What do you think about the music Darrin?
DARRIN T. MISH: I think it’s cool I’m a country music enthusiast I say thumbs up.
KATRINA MADEWELL: Alright we’ll like that, midlife crisis?
DARRIN T. MISH: Absolutely not, that’s just a man making art.
KATRINA MADEWELL: That’s what happens when your co-host is a male.
DARRIN T. MISH: Or I think it’s actually a bunch of men making art isn’t it, it’s that one guy, you can’t make all that beautiful.
KATRINA MADEWELL: This one chick in the mix.
DARRIN T. MISH: You can’t make all that beautiful noise without other people it’s not a one man band.
KATRINA MADEWELL: So you’re listening to the IRS solution attorney show 9 common mistakes to steer clear and where did we leave off I think using the wrong IRS forum.
DARRIN T. MISH: No we were actually talking about failing to fill out report income but we were pretty much done with that you know put away your 10-99’s and your w.2’s put all your income on there is one other point I wanted to make come to think of it about that and that is that if you don’t get 10-99’s say you’re in a cash business.
KATRINA MADEWELL: Like a restaurant or something like that?
DARRIN T. MISH: Or my favorite short story is the liquor store that only reported the income on the 1099k’s from the credit card machines so what that tax return was all the money that we took into this establishment over the course of a year was in credit and debit card sales period? No cash so.
KATRINA MADEWELL: So we dodo birds should at least report a little bit of cash he might have got away with something.
DARRIN T. MISH: And so the other funny thing that happened in the case was during the course of the audit the IRS went ahead and summons the liquor sales receipts and those were all paid in cash so yeah it was a little hard to explain.
KATRINA MADEWELL: You probably can’t say he drank that much alcohol right?
DARRIN T. MISH: I don’t think this particular gentleman drank alcohol at all so he was of a particular religious persuasion that doesn’t allow that so it was an interesting case.
KATRINA MADEWELL: So you represent people that have audits as well, right?
DARRIN T. MISH: Well yeah for sure not my favorite thing to do, and I do do it, the reason they’re not super fun is to be quite honest is what happens in most audits is there’s a red flag like I just described and so there is going to be a change there is going to be some money.
KATRINA MADEWELL: Something is gonna happen.
DARRIN T. MISH: Yeah there’s gonna be some penalties in interest it’s not going to be a no change audit in most instances so as long as you have a client that sort of admits that they’re some and they get the fact that there’s gonna be some changes and my job is to minimize those and just make things as good as I can.
KATRINA MADEWELL: Easy, Fast, Painless.
DARRIN T. MISH: Then those audits are fine it’s the audits that are really hard that the people just don’t want to take any responsibility and just don’t want acknowledge that there can possibly be some change in the audit and there are innocent.
KATRINA MADEWELL: Like the tax protesters.
DARRIN T. MISH: Yeah there are innocent people who do get audited and there are no problems and I don’t mind those cases either as long as we can substantiate or document.
KATRINA MADEWELL: Have you seen the clear flat out mistakes or like fraud cases where someone is using someone else’s social but they didn’t collect the money.
DARRIN T. MISH: Well there’s rapid identity thief going on right now where people are doing that you know they’re making up social security numbers or they’re using someone else’s social security number but I don’t get those guys I don’t get the bad guys come in you know I only get to fix the problems and the damage that they caused.
KATRINA MADEWELL: We’ve seen that a lot actually we’ve had customers in sometimes it will pop up late because now in the state of Florida we are considered a high risk state so I’m just saying we used to be only be like might be today but now it’s the whole state of Florida so if you’re to apply for a load like getting a mortgage they’re going to verify that your tax returns is the same as you followed the IRS that you gave the liner and they’re really weird stupid about some things, I have seen these things about a dollar or something just ridiculous or maybe they caught something later, added something back in so maybe they had the original copy but the one they filed had a couple minor changes and they get super weird about that.
DARRIN T. MISH: Yeah that’s a real problem in the entire system in the entire private enterprise and the IRS’s trying to grapple with this identity thief crisis that we’ve had it’s happened to me not in the context of the IRS but it’s happened to me where somebody gained access to my identity information and bought stuff and had it sent to someplace in the broncs.
KATRINA MADEWELL: I had a couple customers that literally someone else filed their return and got the refund before they had a chance to file hopefully they’re working on that, are they?
DARRIN T. MISH: I’d say like 20-30 percent are all my clients are in the i.d thief you know kind of hold status with the IRS and this kind of brings me back to that social security number discussion that we were having that we didn’t really finish up and that was that when that program came out that number was supposed to only be for social security use so only the retirement or disability you know benefits use and then slowly a retirement IRS says okay well this is cool because we can use this number as a number that everybody has that you need for that person and then just in the course of my life time which is less than 50 years that number the social security card that I got when I was 14 or whenever said right on it this number not to be used for any other purpose but then I got a replacement card I don’t know sometime later probably in my 20’s and it no longer said that and the social security number is used in so many different places even in private industries that that is really probably the singular reason why we have the id thief crisis that we have because those of us that are older than 20-30 years old we used to be really free in liberal with the use of our social security number I can remember giving to practically people at the gas station when you pumped gas maybe that not a great example but I mean it was very.
KATRINA MADEWELL: It was a lot more loose than it is now.
DARRIN T. MISH: Yeah I mean I was almost proud to just stand there and be like oh I can remember it and here’s my number you know and now that’s a really bad idea because if someone has access to your social security number your address your date of birth.
KATRINA MADEWELL: Well I mean think about it really all they need is your social security number everything else is already everywhere else so if you’re on Facebook or anywhere else, you know chances are your date of birth is gonna be on there or somewhere, anywhere I mean there are so many places it addresses like you can find that anywhere, that’s the easiest piece to get name is right there so the only missing piece is the social and boom there’s your identity thief.
DARRIN T. MISH: Yeah this is not the story you know the topic of the show but I have one of those id thief monitoring services now and I won’t say their name but I have had it for many years and I have to have it now because I need instant lurch when any kind of activity is going on in my account because I mean probably one of these Eastern European Russian kind of mobs got a hold of my id information and they opened an account with dell computers bought about 8000 dollar’s worth of computers and sent them to some tenement in the broncs and I can remember trying to unravel that see I never had a relationship with dell computers ever, I didn’t even own a dell computer and I start getting this statement saying I owed 8 grand and when I was trying to unravel about that I mean dell was pretty cool about it was almost in spontaneous that they were like okay fine this isn’t you we will go ahead and ride it off but.
KATRINA MADEWELL: but you had to file a police report, right?
DARRIN T. MISH: yeah but how do you file a police report in that case, who do you file.
KATRINA MADEWELL: Well that’s the problem’s they’re all saying not my jurisdiction it’s the other one and they’re both pointing fingers at each other.
DARRIN T. MISH: Yeah I called Tampa PD because my office was and I lived in the city of Tampa in that time called T.P.D they were like not really our problem.
KATRINA MADEWELL: Whoops sorry happened in New York call them.
DARRIN T. MISH: You call N.Y.P and they’re even less interested like what do you want us to do about it so but then I got kind of frustrated so I called the secret service negative they’re not interested the reason and pat just made a funny face like why would you call the secret service? Well a lot people don’t know this but they handle counterfeiting and credit card fraud so they have 2 jobs we think of them as protecting the president but they are actually the biggest agency that deals with counterfeiting and you know that no to the best of my knowledge that no major counterfeiting ring has ever gotten away with it in the U.S because the secret service is like, awesome.
KATRINA MADEWELL: You know what we do see is people getting away with in my industry is rental fraud so like they will pictures off of these online sites that most people familiar with starting with a Z or an R and they will basically take those and they’ll post those on craigslist that’s a big one and then they’ll basically collect rent on behalf of the owner and they’ll say oh yeah I’m working at a town a few western union we the money.
DARRIN T. MISH: Just the deposit.
KATRINA MADEWELL: I’ll have somebody I need to deposit to hold the property they’ll put in some really little rates so the renters are super attractive and motivated to secure that property and they’re not even the owner and people don’t even think to look it up and to see if it matches public records and that can mess up but it happens all the time and the same thing they’re somewhere else in another state properties here and both of the law enforcement’s are pointing to each other so what happens is we end up having to send them to the FBI to file a report there and you can imagine where that falls on their priority list.
DARRIN T. MISH: After the secret service I actually called the FBI Tampa and the guy was really cool, talked to me for a really long time did not take a report I mean at the end of the day there was really no way for me to get any law enforcement agency to get interested in this particular case even though.
KATRINA MADEWELL: you’re just like eh I got bigger fish to fry.
DARRIN T. MISH: You know if you stole an 8 thousand dollar car and reported to the police they will do something about it but 8 thousand dollar worth of computers just went poof the bank paid it off.
KATRINA MADEWELL: I think it’s the difference in the jurisdiction.
PAT: You know another crazy thing that’s happening out there a lot of young they don’t want to carry wallets anymore and I see this before they said I took a picture of my driver’s licenses I took a picture of my birth certificate I got a picture of my credit card I got a picture of my social security card, all on their phone.
DARRIN T. MISH: You better hope that finger print technology is pretty darn good or somebody.
PAT: You know the thing is every time you download an app they have okay we have the right to go look at your pictures.
KATRINA MADEWELL: That’s a fabulous idea.
DARRIN T. MISH: Yeah it was that big scandal a year or two ago about all the cloud somebody broke into the apple I-cloud and got the compromise photos of all the celebrities who were storing these pictures in the cloud, and it’s not even something they intentionally did because I know that for on an I-phone if you take a photo and if you have I-cloud set up it ends up backing up the I-cloud it does it automatically and it’s not something you have to be consciously aware of.
PAT: it’s just very very very sad that you’re forced to get these things like life lock and things that you have to pay now just to make yourself safe.
KATRINA MADEWELL: It’s the world we live in.
DARRIN T. MISH: It is but I’d rather pay the 29 bucks a month or whatever than go back through the hours and hours and hours and hours of time trying to unravel that particular mess that I described it and I’m a lawyer I kind of had a clue about how to go about fixing it but I can imagine the average person is frustrated lost and not sure what to do.
KATRINA MADEWELL: It’s just the whole world has changed I mean the social security numbers the tax like all this kind of relates but even with the kids like the photos I mean you know not to go too far down that rabbit hole but they’ll take pictures of each other and now they’re trying to charge them with child porn I mean it’s just crazy this is the world we live in like all these things are different than they were when we grew up.
DARRIN T. MISH: Yeah I’m glad that there weren’t I’m glad that not everybody had a video camera on them at all times because.
KATRINA MADEWELL: When you think about it, that’s what it is and a phone and a camera.
PAT: I got a lot of catching up to do, I have been doing a lot of pictures lately.
DARRIN T. MISH: You need to take a picture of your wives birth certificate so you can figure out what her middle name is.
PAT: I have an investigator to find out where she came from.
DARRIN T. MISH: Just give me her name I will figure it all out for you I will get it printed out.
KATRINA MADEWELL: It’s a mail away bride I’m telling you that’s what it is, well you’re listening to the IRS solution attorney show we’re having a little fun this morning talking about some other stuff other than just the IRS stuff so we try to mix it up try to keep you entertained on your drive to work or wherever you’re going, we will zip through the rest of the other 5 through 9 when we come back after the break, I’m your co-host Katrina Madewell with the Darrin Mish for the IRS solution attorney show, we’ll be back in a minute. You’re listening to the IRS solution attorney show that will be tomorrow at 9.
DARRIN T. MISH: Yeah you have to get that shameless plug in there.
KATRINA MADEWELL: No I honestly did not mean to do that I just it almost accidentally came out.
DARRIN T. MISH: Okay so did the topic of the show was 9 common tax mistakes and we’re only on number 4, so here is number 5, using the wrong IRS forum, so I will give you an example, you cannot use the forum 10-40-E-Z unless all you have is wages in income with the W.2 if you have any other kind of income interest anything like that then you cannot use a forum 10-40-E-Z if you use that forum it’s gonna kicked back and you’re gonna have to do that again and there may be penalties involved depending upon if you owe tax or not.
KATRINA MADEWELL: Mm makes sense, is that the one you see frequently?
DARRIN T. MISH: We see it’s not super frequent but you do see people using the wrong forum where they’re trying to get a forum to do what they wanted to do and that’s not what I was assigned to do.
KATRINA MADEWELL: Well we talked about those online tools that people play with and kind of change stuff around.
DARRIN T. MISH: Oh yeah when they use the tax software have a tendency to see that running total and they wanna get the biggest refund possible and that’s not always the right thing to do obviously.
KATRINA MADEWELL: Number 6 is claiming ineligible dependence.
DARRIN T. MISH: Yeah this is the my babies mama exemption.
KATRINA MADEWELL: We talked about that.
DARRIN T. MISH: And what it is when you have dependence it’s actually a race to see who gets their tax return filed first so you know in a lot of divorce cases especially right so there’s a divorce or there’s a court order that says the mother gets to claim the kids or.
KATRINA MADEWELL: Even or odd or whatever.
DARRIN T. MISH: Those kind of things but the IRS is not purvey to those court orders and frankly they don’t care about the court orders, all they care about is who filed the return first.
KATRINA MADEWELL: So what does someone do if they have the scenario where they’re supposed to be rotating or not claiming but they are like what does the person what kind of recourse do they have.
DARRIN T. MISH: My understanding is the recourse you go back to family court and you try to have the bad actor held in contempt by that judge because it’s a violation of that judges order now is that real practical? Probably not it’s expensive to go to court, family law attorneys charge a lot of money and they charge hourly and so.
KATRINA MADEWELL: But essentially the IRS is not care it’s a race to the finish line.
DARRIN T. MISH: They do not care I have never been successful in cleaning that up.
KATRINA MADEWELL: We heard that a lot so number 7, Failing to pay and report pay roll taxes.
DARRIN T. MISH: Yeah this is really common where you have a sole proprietor it’s not a real sophisticated business guy hires his first employee or employees doesn’t realize that there is a need to pay payroll tax there is a need to file 9-41’s or that kind of thing payroll taxes problems get they spiral out of control fast so that’s probably the worst kind of problem.
KATRINA MADEWELL: Those are a lot of your clients aren’t they.
DARRIN T. MISH: Yeah and there’s no way to discharge these sub-taxes and bankruptcies either it’s very very serious.
KATRINA MADEWELL: Do they still settle them?
DARRIN T. MISH: They do.
KATRINA MADEWELL: Alright so number 8 I don’t even know what this means but it’s forgetting about the alternative minimum tax what is that.
DARRIN T. MISH: So the alternative minimum tax or AMT is the special tax setup for people who are hiring income earners and it’s designed to prevent them from being able to for example buy a gigantic house where they are paying all kinds of interests so they idolize all that interest and they deduct it the AMT kicks in at a certain point and like nullifies those deductions to a certain extent and you get to pay this alternative minimum tax the congress put that in place because in some point in the pass 20-30 years ago there was this hueing cry about the rich getting away with too much and so they went ahead and put that in the problem is the limits haven’t been adjusted for inflation over time in an appropriate fashion and so lower and lower income people are starting to get hit by the AMT it’s really a bad thing.
KATRINA MADEWELL: And when does that apply exactly?
DARRIN T. MISH: I can’t say exactly because I don’t have it right here it’s.
KATRINA MADEWELL: Well we’ll have to post that on at Darrin-Mish on twitter or you Facebook page.
DARRIN T. MISH: Yeah or you could visit the website at Get-IRS-help.com we can talk about the AMT
KATRINA MADEWELL: Number 9 is just straight up failing to file the return.
DARRIN T. MISH: Yep that’s probably my single most common problem that I have had in my practices that people come in.
KATRINA MADEWELL: Or 20 years.
DARRIN T. MISH: And you know it’s that they haven’t filed a tax return in a while my favorite is that gentleman who came in and had not filed a tax return since 1960 well that was before I was born and I thought that was pretty darn cool, we got him caught up and we did an offer compromise for him which is we made a deal with the IRS to settle for less he that was accepted we put him on his way and.
KATRINA MADEWELL: I just want to get you back into the system.
DARRIN T. MISH: The last little thing I said was like the mini train wreck of the week but this in fact is the IRS train wreck of the week segment and in this segment I talk about somebody who came into the office and they were kind of a train wreck and they left and it was all happy ending.
KATRINA MADEWELL: All better, fixed that.
DARRIN T. MISH: Well this is one of the very first offers in compromise that I did it it was back in the 90’s that I remember as a remember very very clearly, this gentleman called from the Houston Texas area and he told me that he owed the IRS about 99 thousand dollars but he also told me That Darrin this is really old and I understand that there is a stats of limitations and that’s 10 years from when the taxes access and I think that statute of limitations are getting pretty close so I went ahead and I looked into it and turns out there was only a month left in the statute of limitations but this guy was really really freaked out that he was gonna go Levi in that last month and despite.
KATRINA MADEWELL: Were they sending him letters?
DARRIN T. MISH: They weren’t really bugging him at all he hadn’t had any contact at in a long time but sometimes people just get into these circles these loops where they get convince themselves that something bad is gonna happen, this is real common when the statues about to run out so he assisted we file an Offer in Compromise well one of the bad things about our Offer in Compromise that it stops that time from running while the offers are pending and most offers are pending free about 6-12 months, 18 months sometimes the IRS has it up to 2 years to rule upon that offer or to accept it, so if they just if it gets lost and two years and a day go back, it’s deemed to accept it so he assisted he didn’t want to get levied so he told me Hey we gotta file an offer we filed the offer and there was 1 month left on the statues of limitations.
KATRINA MADEWELL: You didn’t try to talk him out of it Darrin?
DARRIN T. MISH: I did I tried to talk him out of it but he insisted we went ahead and offered a thousand dollars and the IRS called me really pretty quickly I wanna say it was like 3-4 months and we had a kind of open discussion about the statue it was super short and that the case was probably gonna go ahead and expire and they were kind of talking me into just dropping the offer and letting it go, the problem is the offer adds 6 months, time and the offer plus 6 months or is it 6 it doesn’t really matter, it adds some time on the and it wouldn’t of effect the length of the statue long story short the IRS took a thousand dollars in that case so a thousand on 99 thousand was my very first really big win and client was amazingly happy.
KATRINA MADEWELL: The other thing you chatted about during the break just real quick we were talking about the percentage of people that actually get audited and it’s less than 1 percent.
DARRIN T. MISH: Yeah I think last debt that came out was .84 percent of individual tax payers are actually audited or were audited in the 2015 physical year, it goes up if you make more money, there was another interesting data and that was if you make over a million dollars a year the odds of being audited are 12 and a half percent so this big dust up on trump not releasing his tax returns it turns out he’s under audit which is not unusual the guy is a billionaire he’s probably been through a million of them, but if I was representing I’d say I don’t know if we want to release these tax returns right now while you’re being audited.
KATRINA MADEWELL: And the political jury you know are slinging mud, anyway you’re listening to the IRS solution attorney show with Mr. Darrin Mish, you can reach him off air at 888-Get-Mish which is probably most of your clients, 888-Get-Mish.
DARRIN T. MISH: Or IRS-help.com.
KATRINA MADEWELL: Thanks for joining us for this week, we are out.