Tax Breaks for People Over 50

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KATRINA MADEWELL:  If you missed any part of the show we talked about a lot of stuff actually and the whole show is available on a podcast, just search for the IRS Solution Attorney.

DARRIN T. MISH:  IRS Solution Attorney on iTunes or you can visit our special podcast only website at irssolutionattorney.com and of course you can always access them at my regular website at getirshelp.com.

KATRINA MADEWELL:  And if you do have an IRS tax question you can reach Darrin T. Mish at 888-get-mish.

DARRIN T. MISH:  That’s 888-get-mish, 888-get-mish or 888-438-6474 if you are the type of person like me who does not like to spell out things on a telephone keypad.

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KATRINA MADEWELL:  Like dish but Mish he prefers fish.

DARRIN T. MISH:  It’s very simple Mish and people want to put a C in there they want to make it complicated, it’s really not all that complicated.

KATRINA MADEWELL:  But we were talking about some of the things like the bigger standard deduction cause that was changed for this year also talking about higher tax filing thresholds, property tax breaks.

DARRIN T. MISH:  There’s a lot of these numbers that move a little bit every year theoretically because the price of living goes up, the cost of living goes up and so we were talking about the additional IRA deduction you get an extra $1000 if you are 50 or older you can put into your IRA.

KATRINA MADEWELL:  The 401K catch up

DARRIN T. MISH:  Yeah there is a 401K catch up contribution, it’s not the 401K mustard contribution.

KATRINA MADEWELL:   That is what I was thinking they should call them mustard. I swear I think you are reading my mind now.

DARRIN T. MISH: Ok quick sidebar what’s up with the spelling, I mean I get Ketchup with a K right and you go to the store and you see catsup yeah, what is that?  Is that even popular anymore?

KATRINA MADEWELL:   It’s probably European spelling or something.

DARRIN T. MISH:  It’s probably mid-western you know they do things different in the mid-west ever notice that?

KATRINA MADEWELL:  You know if I was the Heinz 57 era I probably have an answer for this question. But I’m not.

DARRIN T. MISH:  Or another condiment issue is Hellman’s Mayonnaise is called best foods west of the Mississippi like or west of the Rockies actually like why?

KATRINA MADEWELL:  I never heard that one but then again I’m not from west of the Rockies you are so.

DARRIN T. MISH:  They couldn’t get like Hellman’s over the pass in the Rockies or what’s the deal I don’t get it.

KATRINA MADEWELL:  Probably donkey’s and mules and horses back then so it’s possible. Anyway.

DARRIN T. MISH:  Anyway yeah if you.

KATRINA MADEWELL:  We have to make this stuff fun you know.

DARRIN T. MISH:  Talking about the 401K catch up contribution, if …

KATRINA MADEWELL:  So if you didn’t save enough money for retirement you got to start catching up hopefully by this point maybe your house is paid off or close to it or your expenses have dropped down, you don’t have kids you can pay some extra money towards your retirement.

DARRIN T. MISH:  How wonderful would it be to have a paid off house by age 50 where these rules start to kick in.

KATRINA MADEWELL: Oh my house will be paid off before 50.

DARRIN T. MISH: You can actually defer paying income tax on $6000 more in your 401K contributions then if you’re under the age of 50.

KATRINA MADEWELL:  Wait say that again?

DARRIN T. MISH:  You can actually put up to $6000 more in your 401K if you are 50 or over.

KATRINA MADEWELL:  If you are over the age 50

DARRIN T. MISH:  So I guess over the age of 50 it’s like 50+

KATRINA MADEWELL:  But sometimes you run through these numbers so quick my eyes glaze over so you got to repeat again.

DARRIN T. MISH:  Yeah so you can actually defer paying income on it up to $6000 additional if you are age 50 or more. So that’s a pretty good deal.

KATRINA MADEWELL:  And so the total amount is it $24,000 is that right?

DARRIN T. MISH:  Yeah it’s $24,000 and that could save you up to $1500 a year if you are in the 25% tax bracket so that’s a pretty good deal.

KATRINA MADEWELL:  And you will have some extra money for retirement which is the whole point.

DARRIN T. MISH:  And I wasn’t actually aware of that before I started doing research for you know the show today so that’s pretty neat and some of these things are going to start kicking in. I really never thought about turning 50 before but I got a year or so and I’m going to start taking advantage of some of these things. Actually need to set up a 401K at the law firm because I don’t you know and some of those things can really be tax advantageous by…

KATRINA MADEWELL:   Well if you are the only employee or if you have limited employees you can offer the same match plan for everybody.

DARRIN T. MISH:  Or you can just set up another corporation that does something specific where you are the only employee and then you can up for everybody.

KATRINA MADEWELL:  Absolutely

D; Yeah, problem is you have to have some other idea on how to start up another business but anyway….

KATRINA MADEWELL:   Hopefully you got that Darrin.

DARRIN T. MISH:  So early withdrawal penalties.

KATRINA MADEWELL:   So when do they take that away there is no more early withdrawal penalties?

DARRIN T. MISH:  At age 59 1/2 and that kind of reminds me of….

KATRINA MADEWELL:  59 1/2 you have to wait till the day or the minute what is that all about?

DARRIN T. MISH:  Yeah it kind of reminds me of in most states you have to be 15 1/2 to get a learners permit do you remember that was that how it was here?

KATRINA MADEWELL:  No no it’s always been 15.

DARRIN T. MISH:  So I grew up in California and you literally could get a learner’s permit at age 15 1/2 and they there is a day that is in the half a year I think it’s a 183 days so that’s when and a half so same thing here with the early withdrawal penalty if you are 59 1/2 then there is not going to be an early withdrawal penalty of course if the retirement account is taxable you are still going to have to pay taxes you just won’t have to pay that dreaded 10% early withdrawal penalty and if you are over 59 1/2. I’ve seen cases….

KATRINA MADEWELL:  Don’t they get like double tax on that?  I think we’ve talked about this before cause it would get with the 10% penalty but isn’t there extra like taxes or fees or something?

DARRIN T. MISH:  Yeah if you are talking about a traditional IRA as opposed to a Roth IRA, I’m going to talk about the differences in a second. If you are talking about a traditional IRA where you are paying taxes at the time of the withdrawal and it’s an early withdrawal then you are going to pay the 10% early withdrawal penalty plus the income tax rate of whatever that withdrawal, whatever bracket that put you in.

KATRINA MADEWELL:   So they are taxing you as income on that 10,000 or 20,000 or whatever you took out.

DARRIN T. MISH:  Yeah and usually with my clients is like 100,000 or 200,000, in fact I just talked to…

KATRINA MADEWELL:  I mean that is a hefty tax like what does that shape out to be by the end of the day like more than 25% doesn’t it?

DARRIN T. MISH:  Well let me tell you a story about a gentleman I talked to yesterday he actually made you know let’s characterize a hardship withdrawal and there’s a lot of these plans you can take out a hardship withdrawal for the purchase of a primary residence. So a hardship withdrawal sounds like it’s a hardship, therefore you wouldn’t have any penalties or potentially not have to pay any tax on it right I  mean hardship is one of those words where we  are like ok I’m having a hardship so I should get cut a break. So he makes a hardship withdrawal of I believe $108,000 and he moves down to Florida from somewhere up north and he buys a $500,000 house and he was thinking there was no early withdrawal penalty or tax and his tax preparer does his tax return it turns out he owes $23,000 and he is like freaking out cause he is like but it was a hardship withdrawal, well yeah it was a hardship withdrawal, it meant that you could technically take the money out of the account because you have to have decent reason to take the money out of the account at all…

KATRINA MADEWELL:  Without that 10% penalty?

DARRIN T. MISH:  No he ended up, although it was a hardship withdraw which meant that he was entitled to withdraw the money from the retirement account…

KATRINA MADEWELL:  So that means they let you take it, it doesn’t mean that you are escaping the taxes.

DARRIN T. MISH:  That’s exactly right that was the point I was trying to make is that yeah it’s a hardship withdrawal meaning you can actually access your money but you are still going to have the early withdrawal penalty and have to pay the tax as well. So probably what happened to him was he was already making $100,000 or something and then when he took out another $108,000 it kicked him into the highest bracket and that is where it started to really add up. He was pretty upset about it.

KATRINA MADEWELL:  That is a sore subject in my house that happened to us one year.

DARRIN T. MISH:  We ended up making, talking about a plan to like push that off so he wouldn’t actually have to start making the installment agreement payments for about a year so he was pretty happy with that plan I mean he wasn’t happy that he owed the tax but…

KATRINA MADEWELL:  Have you had customers before where you helped them escape that tax or figure that out for less then what they want to penalize them?

DARRIN T. MISH:  Well in the law biz we don’t call them customers we call them clients so yeah I have had some clients, I’m just teasing just playing with you. What was the question again I was too busy….

KATRINA MADEWELL: Oh my gosh so the question was have you had any IRS tax problems where they got penalties and income taxes and all this stuff on the early withdrawal from the 401K?

DARRIN T. MISH:  Oh yeah all the time. That’s probably one of the most common ways that a wage earner or retired person is going to end up with a tax problem, probably not a retired person cause they are not going to have an early withdrawal but sometimes you see retired people who, sure they are over 59 1/2 so they don’t have the 10% early withdrawal penalty but let’s say they had $400,000 in their retirement account and one year they just go hog wild crazy and they take hundred out and they are not thinking about wait that is a traditional IRA, I got to pay the taxes on that and that kicked me into a different tax bracket, so one of the strategies that you can use in dealing with that is if you have a big expenditure you can go ahead and take out like at the beginning of a new year you can take some of that money out in December and some of that money out in January and can spread  that out over 2….

KATRINA MADEWELL:  Hold that thought we are going to recap that when we come back and just a break you are listening to the IRS Solution Attorney show, stick around we will be back in a minute.

(Commercial Break)

KATRINA MADEWELL:  You are listening to the IRS Attorney show with Mr….

DARRIN T. MISH:  Darrin T. Mish the IRS Solution Attorney.

KATRINA MADEWELL:  And I’m your co-host Katrina Madewell thanks so much for sticking around with us through the break. Let’s recap on that cause I feel like we kind of ran out of time for what we were talking about. The question was I asked if you got clients that came in and actually got hit with that  10% penalty you know and you were talking about them getting bumped from there tax bracket can  you just recap on that?

DARRIN T. MISH:  So sometimes if you have a retired person that’s had a traditional IRA so you are going to have to pay tax on  the withdrawals so they are not going to necessarily pay the 10% early withdrawal penalty because they are over 59 1/2 but they are going to have to pay the tax. Let’s say they need to withdrawal a hundred grand because they know they have some big expense like they’re going to buy a house or something like that. If you’re toward the end of the year one strategy that can be intelligent is to go ahead and take out some of the money in December and take the rest of the money out in January and then I mean that could be literally one week right take some of it out the last week of December and some of it out the first week of January and that would actually spread that withdrawal out over 2 tax years potentially lowering your overall tax bill because you can stay at a lower tax bracket.

KATRINA MADEWELL: Instead of throwing them up in the next tax bracket.

DARRIN T. MISH:   So let’s talk real quickly about the difference between a traditional IRA and a Roth IRA. A traditional IRA is what we think about traditionally when we talk about an IRA it’s where you have a certain contribution limits and you put money in there over time and because it’s you are putting pre-tax money in there when you make the withdrawals there actually taxable at the time of the withdrawal, which makes sense to lots of people.

KATRINA MADEWELL: I think you are glazing over this a little bit too fast so traditional IRA mean and a lot of CPA’s may suggest this so you can get a tax break during your earning years but you are taking that tax break now and you are going to have to pay taxes on it later.

DARRIN T. MISH:  Right and for most people that makes sense right because during there working life they are going to be in a higher tax bracket and so let’s say, I don’t remember what the contributions are for IRA’s right now but let’s say you put…

KATRINA MADEWELL:  It depends on your age and your income I think.

DARRIN T. MISH:  $2500 in there than those that’s going to be $2500 that you are going to deduct and you are not going to have to pay tax on that money now during your working life in with the theory being that you are going to put that in some kind of account, it’s going to grow and what not and then when you make those withdrawals when you are older you are going to have to pay tax but you are going to be in a lower bracket and so it’s going to be a tax advantages sort of situation.

KATRINA MADEWELL:  I personally prefer the Roth which is what I know you are going to chat about next and it’s also what Dave Ramsey recommends because you don’t pay taxes on all that growth.

DARRIN T. MISH:  Yeah Roth IRA’s are really cool, there’s income contribution or there’s income limits to where you can’t even have or open a Roth IRA after a certain income limit. But a Roth IRA is kind of neat because you are going to put after tax money in the IRA which kind of sounds bad right cause you don’t get the write off when you put the money into the Roth IRA but the really neat things about Roth’s are at the time of retirement after you have all that growth and appreciation and accumulation you’re not going to have to pay tax on those withdrawals in your older age so it’s really good for higher income people or people that anticipate being higher income during their retirement age.

KATRINA MADEWELL:  So number 6 on our list is avoiding tax on required minimum distributions.

DARRIN T. MISH:  Yeah this is kind of interesting because we very rarely think about hey you actually have a minimum you have to take out of your retirement accounts. So when you hit age 70 1/2 there’s that half year again I don’t know what’s up with that but so when you reach 70 years and a 183 days you typically have to take out a minimum amount of money from your traditional retirement accounts and then you have to pay the resulting income tax bill. So there is a formula that there is a certain percentage that you have to take out and what not. But one kind of interesting and cool strategy is you can actually take that money out and contribute it to a charity of your choice and then you are not going to have to pay the income tax on that charitable contribution. So that is really for really wealthy people.

KATRINA MADEWELL:  But I guess the IRS’s thought is to keep money moving through the system, the economy, you think that’s what it is?

DARRIN T. MISH:  I think the rationale is probably keep really large transfers of family wealth from happening. I think that is probably the reasoning but I’m not really sure why they care but at some point they don’t want that money locked up in institutions I guess they want you to make your withdrawals and pay your taxes cause that is really probably the issue is they don’t want rich people just socking money away and not ever taking it out.

KATRINA MADEWELL:  Cause there is a way to transfer money to your kids without that being taxed.

DARRIN T. MISH:  Sure but not necessarily out of withdrawals from your IRA. From your retirement account.

KATRINA MADEWELL:  So many quirky little rules. So number 7 on our list is higher HSA contribution limits. So HSA is health savings account.

DARRIN T. MISH:  I’m really a big proponent of Health Savings Accounts I actually love these things.

KATRINA MADEWELL:  Took me a long time to get this one but we got it.

DARRIN T. MISH:  We have one in my family for a better part of a decade now actually 12 or 13 years I think. What it is that you have a high deductible health care plan kind of like what Obama Care requires?  So in our family I think our deductible is $6850 year, nothing is covered except well care visits like physicals and stuff like that. Nothings covered you know up until you get up to the point of $6850. Now the cool thing is you are allowed to put pre-tax kind of like a Roth IRA, you are allowed to put….

KATRINA MADEWELL: If you gain $5000 yeah you could take out well $5000 a month you could take out a certain amount $5000 or $6000 a year.

DARRIN T. MISH:  Yeah it’s about $6850 a year I believe in 2016 for a family and so you can put that $6850 into your Health Savings Account pre-tax, you are not paying any tax on it and then for qualified health care expenses like doctor co-pays, dental cleanings, prescription drugs, some over the counter drugs.

KATRINA MADEWELL:  Yeah anything health care related like I get migraines.

DARRIN T. MISH:  Vision, you know vision care those types of things,  that’s all, you can pay for all of that stuff out of your Health Savings Account which is pretty cool and it also has another benefit that people don’t typically think about and that is that doctors will actually bargain with you. If you are paying cash which you are going to be paying cash up to you know up to the deductible limit then all you have to do is go into the doctor and say hey doc what’s this going to cost me and typically the doctor has no earthly clue.

KATRINA MADEWELL:  I don’t know ask my assistant.

DARRIN T. MISH:  Yeah so what happens is you talk to the billing person and they will traditionally or routinely cut that bill by sometimes 60% because you are going to pay cash you know today going to use your debit card from your Health Savings Account today and the reason that I think they do that is because they don’t have all that billing expense.

KATRINA MADEWELL:  And they have negotiated amounts anyway already.

DARRIN T. MISH:  Yeah with all the HMO’s and stuff anyway so you are getting the benefit of getting the HMO screaming discount rate and you are making your health care dollars go farther. I really do and I’ve said this before I really do think that Health Savings Accounts are the solution to health care expenses in this country and the reason that they are is because when it’s your money you care how much things costs, when it’s health insurance company’s money you don’t care what is the cost and you probably frankly never see how much it cost.

KATRINA MADEWELL: That’s true.

DARRIN T. MISH: Because it’s just not really you feel like it’s not your problem you are entitled to whatever coverage and you are just not going to care.

KATRINA MADEWELL:  You actually might have some people that would possibly run to the doctor less and that kind of stuff if it was their money.

DARRIN T. MISH:  You think if they actually had to pay so within the past few years I was having some kind of you know complaint health care complaint and I went into the doctor and he said you know we really should run this test and I said really so what are these odds that this test that I’m going to have this thing this malady you know based on this test and he said oh it’s extremely slim we are just doing this to cover ourselves. So how much is it going to cost?  It’s expensive. Ok doc we are not doing that because it’s my money I don’t need to know it’s not that it’s not like some rare tropical disease, I haven’t been to the Amazon, let’s not do the test. But if you had health insurance….

KATRINA MADEWELL:  Sometimes I think they push for it and they ask for it, it’s almost like they are upselling the insurance.

DARRIN T. MISH:  I don’t really think doctors are doing that I think it’s more they’re afraid of litigation. Especially when there patient is a lawyer. So I signed something that said yes I don’t want this test. Basically because I don’t want to pay for it but you know……

KATRINA MADEWELL:  People are more guarded with people like you anyway Darrin because people are so sue happy.

DARRIN T. MISH: Yeah I probably get more time with a doctor or dentist and stuff then your average patient and it’s not cause I demand it it’s just because they look at the occupation thing and kind of figure that I’m not a nice guy or whatever. So anyway when we are talking about HSA’s and the context of what we are talking about today with older folks there’s actually a little bit higher of a contribution that you can make if you are 55 or older. So you can actually contribute like a $1000 more per person into your health savings account when you are a little bit older. Another really cool thing….

KATRINA MADEWELL:  That’s a neat little tip and you know for sure that older people are going to have more health care expenses they just do it’s a fact.

DARRIN T. MISH: Yeah another really cool thing about the health savings accounts is if you reach age 65 of course Medicare kicks in then right so you don’t have a need for traditional health care insurance at that time but if you have a pot of money in your health savings account it actually turns into an IRA.

KATRINA MADEWELL:   If you are older?

DARRIN T. MISH:  Yeah if when you hit age 65 if you have money in your health savings account it actually turns into an IRA.

KATRINA MADEWELL:   I did not know that cause when you are younger you lose it, it’s like use it or lose it.

DARRIN T. MISH:  Well I think what you are talking about is a flexible spending account and what I’m talking about is a health savings account. So you don’t actually lose your health savings account ever it just rolls over year over year. In my family we have a family of 4 and 2 kids and what not we don’t ever have any money in the thing at the end of the year. It’s kind of nice is what it does in effect it makes all of my families you know out of pocket health care expenses deductible.

KATRINA MADEWELL: Well you can budget for it to that’s the cool thing about that. You can budget for any mishaps or regular doctor type visits.

DARRIN T. MISH: Yeah you know pretty much everything above a broken arm is going to be covered by you know your policy, I don’t think a broken arm costs $7000.

KATRINA MADEWELL:  Well we finally did flexible spending after spending several, several years back to back in the hospital with kids like yeah. I mean like Mastoiditis and broken noses, and you name it.

DARRIN T. MISH: Now hold on a second what is Mastoiditis is that where you turn into a Mastodon?

KATRINA MADEWELL: No it’s literally it can affect your hearing bone, it’s an infection that’s so bad in your ear it’s very painful. It can affect the hearing bone.

DARRIN T. MISH:  So it’s like…

KATRINA MADEWELL:  Like if we didn’t go to the doctor soon enough Nicholas could have lost his hearing.

DARRIN T. MISH:  Well I’m glad he didn’t.

KATRINA MADEWELL:  Me too. But it was it was crazy it was really bad it was so bad the Ear, Nose and Throat sent us like directly to the hospital and scheduled surgery the next day. It was crazy. And it was around this time of the year so we went in like my husband or my son’s birthday are 3 days apart and they fall all around Easter and I think we went in on my husband’s birthday, was there for Nicks birthday came out it was past Easter though we spent Easter in the hospital, it was kind of crazy.

DARRIN T. MISH:  Does he swim in lakes by any chance?

KATRINA MADEWELL:  He has but he will get it even from just going into the pool, some kids are just more prone to ear infections.

DARRIN T. MISH:  My kids get it if they swim in the lake a lot. Then they end up getting ear infections and ear problems and stuff.

KATRINA MADEWELL: So number 8 on our list is lower the Threshold to Deduct Medical Expenses.

DARRIN T. MISH: So most taxpayers can only deduct there medical expenses on there tax return if those expenses exceed 10% of there adjusted gross income so let me give you an example:  There adjusted gross income is $80,000 seems like a reasonable number right well they can’t even deduct there medical expenses on Schedule A as an itemized deduction, didn’t we talk about that earlier in the show?

KATRINA MADEWELL:  Yes we did.

DARRIN T. MISH:  Ok so they can’t even deduct those medical expenses to they reach the level of $8000 in my example, so it’s got to be at least 10% of there adjusted gross income or they are not deductible at all. This is actually a pretty commonly audited item and the reason is that’s kind of a rare thing. Right so the bottom line is if you are 65 and older you can actually deduct the medical expenses even if they are more than 7 1/2%

KATRINA MADEWELL:  We will recap on this in just a few minutes we have to take a quick break you are listening to the IRS Solution Attorney show, stick around we will recap in a second. Back in a minute.

 

(Commercial break)

 

KATRINA MADEWELL:  Welcome back you are listening to the IRS Solution Attorney show with Mr. Darrin T. Mish.

DARRIN T. MISH:  The IRS Solution Attorney.

KATRINA MADEWELL:  And I’m your co-host Katrina Madewell thanks so much for sticking around with us through the break today’s show is all about tax breaks for people over the age of 50 and we actually had a question from Joe he wanted to know he was listening to the show on the road like a lot of people with talk radio they are in and out of the car and he wants to know where he can find all the episodes to the podcast?

DARRIN T. MISH:  There are actually 3 places you can find the podcasts on ITunes under the IRS Solution Attorney Show, or you can go to our special website for the podcasts which is irssolutionattorney.com or my regular website is getirshelp.com and they are on there as well. So there is lots of places to find you know back episodes of the show we try to have a topic that we talk about you know every week that is of some value to our audience.

KATRINA MADEWELL:  Let us know you know cause we are really curious to know what you think about the show, if there is something you want us to cover we will be happy to chat about it just hit us up at 888-404-1010 or feel free to reach out to Darrin at 888-get-mish.

DARRIN T. MISH: That’s 888-get-mish, 888-438-6474 so at the end of the last break I kind of glossed over, went to fast, ran out of time because I’m not the radio pro here like you are so typically tax payers under the age of 65 can only deduct there medical expenses if they exceed 10% of there adjusted gross income so in my example if your adjusted gross income was $80,000 then your medical expenses would have to exceed $8000 in order to itemize them, deduct them on schedule A ok. So the break is if you are over 65 then that threshold reduces to just 7 1/2% so it gives you a little bit of an opportunity and you know most…

KATRINA MADEWELL:  It makes sense because they may have more expenses then that amount.

DARRIN T. MISH:  It does but on the other hand aren’t most people over age 65 covered by Medicare anyway so the odds of them actually probably having those medical expenses are kind of on the rare side but it’s kind of a nice thought that conquers you know throw them a little bone to try to help the senior citizens set so I think that’s good.

K  I’m sure there is somebody that it’s going to help for sure. So there is this headline we want to chat about cause it’s right on time right for being March Madness but one of our stories is the road to the financial 4 is paved in tax evasion?

DARRIN T. MISH:  Man you really blew that it’s the Road to the Final Four is paved in Tax Evasion.

KATRINA MADEWELL:  Thanks for cleaning it up somebody has to screw it up usually it’s you.

DARRIN T. MISH:  And the point of the story here is that March Madness office pools which are super common right now this time of the year you know that’s technically illegal gambling in most places so that’s kind of, so that’s 2 issues really we have illegal gambling, I’ve actually heard stories of cops like busting doors down to like arrest old ladies you know playing bridge, I shouldn’t have said old lady that’s really not nice. Older women who are playing bridge they bust down the door and arrest ladies I mean come on this is silly there’s no real crime going on.

KATRINA MADEWELL:  What?  So are they really looking for people that are doing this?

DARRIN T. MISH:  Well no not really but you know the person who wins the pool let’s say in a big building like we are in right now there might be a 100 people in the pool the winnings might be 5 grand right and there might be a little bit of office jealousy and theoretically if you don’t put that on your tax return as gambling winnings it’s lower…..

KATRINA MADEWELL:  Do you think they are scouring the social media sites for that stuff?

DARRIN T. MISH:  I don’t think they are now but I, boy can’t you see that coming?

KATRINA MADEWELL:  I can see that coming, I’m surprised they haven’t started.

DARRIN T. MISH:  You can write a script for that probably to just scrape Facebook and stuff and then match the Facebook account to the tax return.

KATRINA MADEWELL:  They will hire some techie or someone like that.

DARRIN T. MISH:  I don’t think that at this point in time that they have the capabilities to do that but I can see that maybe by 2020-2025 or something like that. You just have to be careful you know you hear stories or see stories all the time about people doing illegal knuckle head kind of things that we used to do when we were teenagers frankly but we didn’t have camera’s in our pockets.

KATRINA MADEWELL:  So much stuff is on social media that is why I asked that because you know I’m not up to speed.

DARRIN T. MISH:  Man I am so glad that the internet did not actually exist when I was a kid cause there would be a record of all the silly things that I did.

KATRINA MADEWELL:  We talked about that. So it’s about that time.

DARRIN T. MISH:  It is in fact about that time for the IRS train wreck of the week. I really am happy about this one it’s, this gentleman is…

KATRINA MADEWELL: We talked about this last week I couldn’t wait for it.

DARRIN T. MISH: It’s a little bit unusual, it’s not unusual he’s a truck driver, I mean it seems like every 5th show my client that had a good resolve is actually a truck driver.

KATRINA MADEWELL:  Either truck drivers or realtors every week.

DARRIN T. MISH:   And I think it’s because truck drivers own or operator truck drivers by the way are the backbone of the American economy I mean everything in this big studio that we are in every single thing came here on a truck from somewhere, probably originated on a ship from China and it ended up at a rail yard, might of gone on a train but bottom line everything ended up on a truck before it got to the user. So this gentleman was an owner/operator and he had not filed tax returns for a lot of years in fact I have it written down because it was so darn impressive, 1993,97,98,99,03,05,2010 and 2012.

KATRINA MADEWELL:  Wait so that was one, two skip a few like he literally filed some returns in between is that what I just heard?

DARRIN T. MISH:  Yeah and that’s not uncommon that’s why I wrote it down cause it’s a long stream of years but it’s not you know continuous stream there was some years got paid some years didn’t, some years he just didn’t have to file because of the 6 year rule that we talk about all the time, but he amassed a very large tax debt it was $234,516 exactly to the dollar.

KATRINA MADEWELL:  Was that all of them combined or a few years?

DARRIN T. MISH:  All of them combined. They were actually levying him when we filed the offer.

KATRINA MADEWELL:  Talk about levy what does that mean?

DARRIN T. MISH:   A levy is where the IRS was garnishing his wages, actually I think it was his social security in this instance cause he was an older gentleman and they didn’t actually stop the levy and I wasn’t aware that they hadn’t stopped the levy ok and he’s a really nice guy he just never said anything about it so we got the offer done for $1200 so $1200 on $234,516 really, really good deal.

KATRINA MADEWELL:  I’m going to start calculating percentages on these things.

DARRIN T. MISH:  Yeah last week we were at about .11 I think and I don’t know this one looks like about 3 or 4% I mean it was really low and that just demonstrates there’s no absolute threshold. It doesn’t really matter what the percentage is it matters what we are able to demonstrate you know the math calculation is and we don’t have time to go over what exactly the math calculation is, but the interesting fact in this case was when the offer was accepted and paid they were supposed to automatically stop the social security levy and they didn’t and I didn’t know so my client calls me back maybe 3,4,5 or 6 months later and he goes hey Darrin you did a great job it was awesome thank you so much, are they going to finally stop levying me I’m like what? He says well yeah they have been levying me since I first talked to you and it’s never stopped.

KATRINA MADEWELL:  You probably should have told me that.

DARRIN T. MISH:  So we ended up going through an independent agency at the IRS called the taxpayer advocate, we got the levy stopped and the cool think in this case is we actually got a refund for all the levied money from the time the offer was accepted to the time it was stopped. So he actually got a refund check after he got the slamming deal 3 or 4% on the dollar.

KATRINA MADEWELL:  Was that a wash or did he get money back?

DARRIN T. MISH:  No he definitely got money back he got a couple thousand dollars back and he was really, really happy because it was kind of like a for savings plan at that point so in this case this gentleman was living in Maine at the time that he retained me and you know Maine is really sparsely populated so he kind of understood that he was going to have to find someone from somewhere else and ended up living in Mississippi.

KATRINA MADEWELL:  The moral of the story is if you know someone even if another state Mr. Darrin T. Mish can probably help them 888-get-mish.

DARRIN T. MISH:  Or getirshelp.com

KATRINA MADEWELL:  888-get-mish thanks so much for joining us this week for the IRS Solution Attorney show we really enjoyed having you please join us every week we will do our best to bring you a ton of value. This time this week we are out.

DARRIN T. MISH:  We are out.

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