Getting Clear On Taxes in a Strange New World
Ernie Neve, CPA
December 10, 2020
One of the least common things for many people who get a regular paycheck is a tax bill. Oh, sure, you might have to pay a few hundred dollars once every few years on April 15th, but for the most part, the United States Tax Code is designed to allow you, as a wage earner, to pay throughout the year and not have any unpleasant surprises on Tax Day.
Now, that changed a few years ago, and it wasn’t fun for a lot of people, but, to the credit of the government, they did tell us exactly what was happening.
Statistically, most people did pay less in taxes over the year, but the withholding standards had changed, so at the end of the year, people who had never had to pay the IRS suddenly did.
With 2020 having been a crazy year as well, a lot of people jumped into the so-called “gig” economy, delivering groceries, driving for Uber, and so on, and those former “employees” suddenly became “contractors.”
… And they might owe the government a lot of money very soon on income that was never taxed.
Sound familiar? All over the country, people are going to have this struggle, and the worst part is most can avoid it if they take action now. Even if they have to pay, those payments can be set up now – not in April – and begin to lower balances and keep them out of financial dire straits.
Can I diagnose your troubles – if you even have them – in an email? Of course not. What I can say is this: if you lost a job or got laid off last year and began working as a contractor to make ends meet, you’re still responsible for the money you made.
If you didn’t pay taxes on it, you will still have to, so it might be a great idea to begin to get a handle on this a little early.
Give us a call to go over the scenario you found yourself in – it’s not going to hurt, but it can absolutely help to get you sorted out and ready for tax season.
At the same time, it’s also important to recognize that when tax season really begins – the middle of January – a lot of preparers and accountants are going to be slammed with business. The companies we help and represent have even more questions, and the number of honest and experienced tax professionals has never been large.
In fact, my biggest fear is the many “fly-by-night” companies that take advantage of people is going to be a huge problem this spring.
I want to make sure you aren’t paying too much in taxes, but I also want to make sure you don’t get take advantage of.
Give us a call and let’s get things figured out.