Ask TaxMama Issue 537 – Life is Electric

Happy International Gourmet Coffee Month

Dear Family,

It’s been pouring all morning. Last night, working here in front of the patio window, it suddenly got a bit frightening. Can you be struck by lightening inside your own house? There were flashes so close to me that I had to back away from the computer, the the things on the desk, and anything else that might conduct electricity. Of course, that’s silly. But…

This has been an odd week, with little time to keep up with tax news. Have you also been buried in your work? We have probably never worked so much or so intensely – and that’s even without phones. Our phones are still not working. It seems the phone company has more important calls to take than ours. Yet, I do know that the woman running the repair center really IS trying to get someone here. But then, even if they do come, what can they do with wiring in the rain? The problem is in the wires and the way they get shorted out every time it rains. Well…at least the Internet still works.
(oh YAY! The phone guy is here!!)

Back to tax news. I’ve been getting mail about President Obama’s push to cut off money to government contractors who haven’t paid their taxes. Someone is trying to generate sympathy, saying the President is being too harsh on small businesses. Here are the details:


From what I have seen, most government contractors are getting paid very well. Those contracts tend to charge much more to the government than they could ever charge civilians. There is no excuse for them to take taxpayer monies, then not pay their own taxes. There is over $5 BILLION owed!

Oh, and you think you have tax troubles. Did you want to see a list of celebrities and their tax sins?

You’ll get to know the tax woes of folks like Al Franken, Arnold Schwarzenegger, Nicholas Cage – and others.

You’ll find more news about Brooke Sheilds, Nicholas Cage (again) and others here.

What is interesting about some the problems people have run into is that some of these problems were caused by the very folks whose job it is to take care of these celebrities. People who are generally on the road, or working long hours on odd schedules, farm out their financial management to professional firms. It’s their job to see that the bills are paid, tax returns filed, estimated taxes paid, etc.

I’ve worked on problems like this before. Often, you learn that the celebrity getting the bad press really did make a good faith effort to do it all properly. Suddenly, they find they owe taxes they didn’t know about – and whopping penalties and interest that should never have been generated – if only the people they trusted were actually working, instead of just getting paid. You can see that Nicholas Cage is suing his manager for $20 million.

On the other hand, you find the problems result from IRS (or tax agency) errors. Brooke Shields says IRS posted their payments to the wrong account. You can understand that problem, right? But taxes don’t go to lien without IRS sending several letters of warning. If someone on Sheilds’ team had only called IRS and asked them to put a hold on collections until the problem was solved, there would have been no lien. She can’t blame that on the IRS, can she? Or did IRS jump the gun, just to be able to get some cheap press?

Really though, their problems are no different from yours. What do I always say to do when you get a tax bill you don’t understand or think is correct? Call IRS and have them put a hold on collections until you can investigate further. You don’t need to hire anyone to do this. Just call the phone number on the notice.

What is the number one error taxpayers make when it comes to getting into tax trouble?

They don’t open the letters from IRS!
Truly. People simply do not open the letters.
Opening the envelope is the firs step to solving the problem!

The second mistake?
They do nothing.
The problem doesn’t go away. It just gets bigger.
If you do nothing else – call the phone number and ask for time.
That’s all. It’s a free call.

Enough spanking. Let’s be helpful.

Have you read Tahiera Monique Brown’s story of how she survived during times of poverty? These ideas can work for you, too.

Please add ONE helpful tip to this week.

This week TaxMama’s TaxWatch gives you the overview and news about the online filing sites. Next week, we’ll cover the FreeFile Alliance sites.

In today’s Money Funny we get into the mind of a 6th grader. Are you smarter than…?

This week’s IRS News tells you how you can get a copy of IRS’s information on your account, copies or transcripts of your tax returns and more. You will also learn more about the educational tax credits available to you and your family. Incidentally, did you know that you can find other valuable IRS-related links below>

Incidentally, one more bit of IRS News – You have the option of deducting your 2010 donations to Haiti Earthquake charities on your 2009 tax return, if you like.
Senate Finance Committee

This week, you will find TaxMama in building the new website and getting ready for the media tour.
On January 27th, tune up your radios. TaxMama is doing a nationwide radio tour for Office Depot. From the comfort of my own office, I will visit dozens of radio stations, offering a variety of tax tips. Listen in Raleigh-Durham, Tampa-St. Pete, Boston, Los Angeles, Kansas City, Missouri, Omaha and Atlanta. More stations are being added daily.

In TaxQuips this week we learn what to do when your ex-spouse forges your name on a tax return. Tom Blair, EA explains how fighting this works in real life. Believe him. He’s done this. We learn that a child living in Mexico or Canada may still qualify for the Child Tax Credit – and the Additional Child Tax Credit. Are gifts refundable? Can you demand that your children return monetary gifts you paid them? What about that big down payment on your car lease? Can you write that off all in one shot?

As always, we love your feedback, opinions and ideas.
You are what makes all this fun – and interesting!

Please use the Comments link online.

TaxNerd gear makes a bold statement year-round. And it helps attract the opposite sex!
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Hugs from your favorite TaxNerd,

Eva Rosenberg, EA

Your TaxMama is watching…out for you.


01.15.2010 4th Estimated Payment for 2009 Due
01.15.2010 Employers Make monthly Payroll tax deposit
02.01.2010 File Heavy Highway Vehicles Form 2290
02.01.2010 File Tax Return for Wagers (Accepting Wagers, Pool, Lottery for Profit)
02.01.2010 Furnish W-2s to recipients
02.01.2010 Furnish 1099 MISC to recipients
02.01.2010 Furnish 1099 Interest to recipients
02.01.2010 Furnish 1099 Dividends to recipients
02.01.2010 Furnish 1098s to borrowers – Mortgage interest
02.01.2010 File 4th, Quarter Payroll Reports
02.01.2010 File Employers Annual Payroll Reports
02.01.2010 File Annual Payroll for Agricultural employees
02.01.2010 Employer’s Annual Federal Unemployment (FUTA) Tax Return
02.01.2010 Individuals who missed estimated pmt – File & pay taxes
02.16.2010 Employees to File new W-4 with Employer
02.16.2010 Employers Make Monthly Payroll tax deposit on the 15th of each month


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