Today's Tax Talk with Attorney Steven Leahy

Thursday January 13, 2022 - In its annual report to Congress the Taxpayer Advocate's office concludes "The IRS is in crisis.  The Internal Revenue Code requires the National Taxpayer Advocate to submit an annual report to the House Committee on Ways and Means and the Senate Committee on Finance that includes a summary of the ten most serious problems encountered by taxpayers and makes administrative and legislative recommendations to mitigate those problems.

The Crisis determination is largely related to the delays taxpayer's are facing.  Delays in return processing.  Delays in refunds.  Delays in answer phone calls.  Delays in...well, you name it.

Attorney Steven A. Leahy reviews the 10 recommendations included in the report.

Wednesday January 12, 2022 - I did a report titled "$600 Cash App Reporting" in October 2021, and a second Report in November 2021.  In those reports  I explained the new cash app rules and the impact it will have on regular Americans.  

Recently, I responded to several YouTube comments on the October report, and I realized - Most People Still Don't understand the rules.  And, the Government and Media are not helping answer the most common question - What will happen If I use a cash App for private purposes - will I get a 1099K?  

Attorney Steven A. Leahy goes to the source - The IRS - to finally ANSWER THAT QUESTION.

Tuesday January 11, 2022 - 2021 saw a boom in cryptocurrency and other Blockchain assets (NFTs, DAOs) activity by taxpayers who never even heard of these assets before this year.  If these taxpayers are not prepared, they could be facing a big tax liability AND audits by the IRS - both things to avoid.

When it comes to Cryptocurrency, the first thing to know is -Crypto is taxed as property - and, therefore, likely creates a taxable event each time it is traded, sold, or used as an exchange of value (think buying something).  Because Crypto is considered property, it is imperative that the taxpayer keep good records.  Untangling Cryptocurrency transactions can be a daunting exercise.

Non-Fungible Tokens create a whole list of different tax issues.  NFTs  are likely considered collectibles.  And collectibles are treated differently depending on your income level.

Attorney Steven A. Leahy talks about the impact these new issues may have on your tax bill.

Today, Monday January 10, 2022, the IRS has set the date of January 24, 2022 to officially open tax filing season, 19 days earlier than last year. That's the first day the agency will start accepting and processing 2021 federal tax returns.

The IRS encouraged taxpayers to file electronically with direct deposit to receive their tax refunds as soon as possible. The IRS claims taxpayers should receive their refunds within 21 days of filing their return electronically if they use direct deposit and as long as there are no issues with the return.

Remember, the IRS offers a Free File program.  That program will open Jan. 18 for taxpayers who made $73,000 or less in 2021. We will provide additional information on that program soon.

This year, your return is due by April 18, 2022 because Washington D.C. celebrates Emancipation Day on April 16th, can April 16th is a Saturday.  Federal employees in Washington D.C. have the day off the closest week day when that happens - Friday April 15, 2022.  That pushes the deadline to Monday April 18, 2022.

Attorney Steven A. Leahy will explain all of these dates on Today's Tax Talk.

The IRS Budget is $14 Billion Plus, for 2022.  They propose spending $4.4 Billion Dollars on Information Services and Modernization, shared services and infrastructure.  That's a whole lot of money!

The IRS has been Modernizing their IT infrastructure for more than 50 years, and, last year, they answer less than 10% of taxpayer telephone calls during tax season.

Attorney Steven A. Leahy reviews the 2022 IRS Tech Budget.

Blockchain technology is at the heart of Cryptocurrency.  Innovators are using that same technology to crowdfund projects, law suits and even commercials.

Last week we told you about the Decentralized Autonomous  Organization (DAO) that raised millions of dollars to purchase a copy of the Constitution.  While that effort failed, the idea seems to be catching on.

This week we review stories about funding law suits and even crowdfunding to raise money for a Super Bowl ad.  It won't stop there!  

Attorney Steven A. Leahy let's you in on the newest trend.

Hey it's 2022 - Let's start the new year thinking ahead.  Too often my clients ask about tax planning after the year is over.  The right time for tax planning is at the beginning of the tax year.  

This year will be a challenge because Congress may pass tax laws retroactively.  They have done it before.  But this year is ripe for these changes, given the Biden Build Back Better Bill is still on the horizon.  

So, Attorney Steven A. Leahy shares some tax tips for 2022.

IRS recently issued Publication 17 (2021), Your Federal Income Tax designed to help individual taxpayers prepare their 2021 tax return.  Think of it as the Instruction sheet for Form 1040 or 1040 -SR.  

The publication covers everything, from the date your tax return is due (April 18, 2022 because of the Emancipation Day holiday in the District of Columbia) to deducting Personal protective equipment (PPE).

Part Two of the publication, Income and Adjustments to Income explains which income is and isn’t taxed and discusses some of the adjustments to income that you can make in figuring your adjusted gross income.  

Remember, the Sixteenth Amendment to the Constitution, granted Congress the "power to lay an collect taxes on incomes, from whatever source derived"  .Well the IRS spells out some of the of those taxable incomes here.

Attorney Steven A. Leahy demonstrates the awesome power granted to the IRS in this epoxide of "Today's Tax Talk."

Have you heard of a Decentralized Autonomous Organization  (DAO), Non-Fungible Tokens (NFT), or WEB3?  If you haven't, listen up.

First Decentralized autonomous organizations (DAOs) are typified by the use of blockchain technology to provide a secure digital ledger to track digital interactions across the internet, hardened against forgery by trusted timestamping and dissemination of a distributed database.

Non-Fungible Tokens (NFT) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions.

Finally, WEB3, also known as Web 3.0, is an idea for a new iteration of the World Wide Web that incorporates decentralization based on blockchains. It is often contrasted with Web 2.0, wherein data and content are centralized in a small group of companies and Web 1.0.  Web 1.0 refers roughly to the period from 1991 to 2004, where most websites were static webpages, and the vast majority of users were consumers, not producers, of content.

In this episode of Today's Tax Talk, Attorney Steven A. Leahy reviews the latest news in Crypto and blockchain..

We don't have to pass the Biden's Build Back Better Bill to find out what is in it.  Now that the Congress has recessed, Americans can look into the bill to find out what's in it - the way it is supposed to be. 

One of the proposals floating in Build Back Better is to allow the IRS to prepare all American's tax returns, FOR FREE. An Elizabeth Warren idea.  

There are at least three reasons to oppose this idea.  First, it is an obvious conflict of interest.  The IRS mission is to collect taxes from Americans - would the IRS seek to minimize your tax obligation.

Second, do we really want to give the IRS more of our personal information?  Third, related to the second reason, can the IRS protect that additional information?

Attorney Steven A. Leahy talks about this recent proposal.  Do you have unfiled tax returns.

IRS Circular 230 Notice:  To ensure compliance with requirements imposed by the IRS, we inform you that this written advice is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.