Tony Novak CPA

Category: IRS

  • What’s your risk of being audited by the IRS?

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    Tony Novak
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    High risk category The highest risk of audit is born by the President of the Unites States who is automatically audited by the IRS every year. President Trump says this is very unfair. But what about the rest of us? Any taxpayer who omits an income item filed by a third party (a W2 form…

  • Tax preparers in trouble with IRS

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    Tony Novak
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    How do tax preparers get into trouble with the IRS? In 2018 the Office of Professional Responsibility, under the Internal Revenue Service, investigated over 2,600 cases of tax preparer misconduct. According to the Office’s latest report, the three most common problems were: Claiming false credentials on Form 2848 (Power of Attorney) or using that power…

  • Changing address with IRS

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    Tony Novak
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    I would guess that half of the IRS client tax dispute matters I handle involve some form of failed notification in the storyline. The most common cause is a failure to record an appropriate change of address. Changing address with IRS is simple: Complete a form 8822 (8822-B for businesses) and mail it in. Here…

  • Tax filing trends indicate future direction for professionals

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    Tony Novak
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    We are only half way through the tax filing season but so far the IRS reports that tax filer behaviors are significantly different than a year ago. The number of tax returns filed has dropped by more than 12% and the number of paid preparer returns (often including the more complicated tax returns) dropped even…

  • Great advice from IRS

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    Tony Novak
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    This comes directly from an IRS email: “Offering time-saving alternatives to a telephone call, the Internal Revenue Service reminds taxpayers they can get fast answers to their refund questions by using the “Where’s My Refund?” tool available on IRS.gov and through the IRS2Go app. The IRS issues nine out of 10 refunds in less than…

  • Four taxpayer reactions as the realities of new tax law hit home

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    Tony Novak
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    Of the first 5 individual income tax returns that I prepared this week, 4 had unexpected problems and complications. Other tax preparers report unexpected and disturbing taxpayer reactions. Income tax filing season opened four days ago on January 29. Day by day now the real impact of the new federal tax law is hitting home…

  • Six basic rules for handling a tax audit

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    Tony Novak
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    Everyone hopes to avoid a tax audit but sometimes it happens anyway. An audit always starts with a written notification by mail from the IRS, state, or local tax authority. It might just be triggered by a simple computer-generated “mismatch” error or it might be the beginning of one of the more rare types of…

  • A quick peek at 2018 income tax results

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    Tony Novak
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    Here is an interesting observation of an early filer, a married client with about $170,000 total income: This chart shows marginal and effective overall tax rates for 2016, 2017 and 2018. Note the steady decline in tax rates, first in 2017 due to tax planning and then in 2018 due to the change in tax…

  • What is your chance of being audited by the IRS?

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    Tony Novak
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    Audit rate based on 2017 IRS data: Form 1040 taxpayer types, in descending likelihood of audit Returns audited International taxpayers 1 in 19 Taxpayers with gross income before deductions of over $1 million 1 in 23 Sole proprietors with gross income before deductions between $100,000 and $200,000 1 in 48 Sole proprietors with gross income…

  • When do I get my tax refund?

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    Tony Novak
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    The IRS begins accepting tax returns and processing refunds next Tuesday January 29. I can prepare and submit your tax return for e-file acceptance before then but it essentially sits in an electronic waiting list until the 29th. See tonynovak.com/taxes for information on getting started with an early tax return filing. The first tax returns…