Toph Sheldon CPA for the Self-Employed ® - December 2019

DECEMBER 2019/JANUARY 2020 VOLUME 3, ISSUE 10

T O P H ’ S TAX RESOLUT ION T I M E S

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The Best Investment You Can Make Is in Yourself

Whether it’s in your health, your finances, your marriage, your family, or even your business, you should always try to invest in yourself.

on its own, so I didn’t see a doctor about it. Well, it didn’t get better. I finally made the decision to buckle down and see a specialist. It turned out I had sleep apnea. Because I wasn’t willing to invest in improving my health, I was miserable until I saw

I see a lot of people who are in financial trouble dig themselves into a deeper hole because they aren’t willing to invest in themselves. They think that investing in themselves will be the cause of more problems, when that is rarely the case. When a person in a tough financial situation hires me, this is a great example of that person investing in themselves. It’s all about recognizing that you need to make a change for the better. When I’m working with clients who are ready to make this change, I sometimes uncover issues related to health care. For instance, clients who are going through serious financial trouble may have put off signing up for health insurance. They may have not been insured for a year or longer, which often means they aren’t going to the doctor or seeing any medical professionals when they might need to. It’s difficult to spend money on health care or health insurance when you’re trying to cut back your expenses as much as possible. But if you neglect your health, it can lead to further complications and bigger expenses later on — not to mention the risk you take on by not addressing health concerns as they happen. For me, when I started my own business, I was definitely afraid to make that investment in myself, even as I took the plunge. A lot of people are afraid to make that kind of investment because they worry about not having enough money or that the investment isn’t worth it. But when I became self-employed, it wasn’t entirely my choice, it was more related to my circumstances at the time. Honestly, I had hit rock bottom. But I realized if I was going to get out of rock bottom, I needed to invest in myself. In this case, I invested in education and worked to sharpen my skills. I also knew I didn’t want to invest in myself unless I knew that I was going to be the one who reaped the benefits, so I started my own business.

the specialist! Thankfully, after making that investment in myself, I was able to address the problem and was no longer miserable. My sleep improved and so did my overall mindset. When you invest in yourself and make a decision to improve an aspect of your life, you free your mind to focus on other things. When clients come to me and we work through their financial troubles, I help ease a lot of their stress, but it wasn’t easy for them to make the decision to hire me. Talking about hardships isn’t easy. We all know someone who is dealing with financial or tax problems but they aren’t talking about them. They don’t want to burden anyone else with their financial issues or feel embarrassed by them, which is something I completely understand. But part of investing in yourself is also motivating the people you care about to get those problems addressed and to not let those problems drag on or ruin their lives. Life is short. There are options out there. Everyone hits rock bottom in one way or another. I had my own problems that I needed to solve, and I did! I became a resource for others who are going through what I went through. As this year comes to an end and the new year begins, we all have a chance for a new beginning. You just have to make that first step.

–Toph Sheldon

I also invested in my health. There was a period of time when I was having trouble sleeping. I thought it was stress-related and that it would eventually go away

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A Client Success Story

A Major Tax Problem Turns Into a Major Refund

So, You Want to Launch a Podcast?

In a previous edition of Toph’s Tax Resolution Times, we published the following story (our update to this case is at the bottom of this article):

The client’s name and some of the details in this story have been changed to protect the identity of those involved. However, the tax results noted are 100% factual.

How to Get Quality for Less Than $200 Podcasting, once a niche medium, is now a towering feature of the audio media landscape. In 2019, a survey by Edison Research and Triton Digital estimated that over 30% of Americans tune in to podcasts each month, and that number is expected to grow. It’s no wonder business owners, hobbyists, storytellers, comedians, politicians, and even Dungeons & Dragons players have found their audience through podcasting. No matter your interest, if you want to break into this industry, you’ll need the right gear. Microphones Nothing will sink a podcast faster than poor audio quality. It doesn’t matter how great your content is — if your audience can’t hear it clearly, they’ll tune out. That’s why even low-budget podcasters should consider dropping a little extra cash for a good mic. A great starting option is the Rode PodMic. With an internal pop filter and built-in shock mount, this mic does a lot to clean up your audio on the front end. At $99, the PodMic is perfect for those who want to earnestly dip their feet in the recording world without breaking the bank. Headphones You need to hear how you and your guests are being recorded in real time, and you need to gauge sound quality while editing your episodes. Thus, having a decent pair of headphones is important, especially if you plan on interviewing guests over video chat. Generally, over-the-ear

Jane Bradberry of Cincinnati, Ohio, is a former real estate agent who now works as a sales and marketing executive. During her real estate career, she dealt with some medical issues, which caused her to fall behind on some of her bills. Among these were her tax return filings and payments to the IRS dating back to 2008. Due to the nature of being in real estate, Jane was considered self- employed in the eyes of the IRS and, thus, did not have any taxes withheld from her earnings. In 2014, the IRS decided they were tired of Jane ignoring the many letters they sent her over the years in an attempt to collect tax and reconcile her tax situation. As a result, they decided to contact Jane’s bank and issue a bank levy against her. Unfortunately for Jane, she had recently collected a few large commission checks and was sitting on a lot of cash at the time. So, the IRS walked out of the bank having levied $32,873 of Jane’s money! Imagine the emotional roller coaster Jane experienced when she learned the IRS had just dipped into her bank account and taken $32,873. Yikes! Here is where this story gets better. In 2016, Jane decided to hire Toph to help her get some resolution and final closure on her tax situation. After doing an investigation of Jane’s IRS account activity, Toph uncovered that the IRS had erroneously calculated Jane’s tax liability and incorrectly levied her for the $32,873. After discovering this, Toph and Jane strategized

the various methods they could implement to fight back against the IRS and began putting them into action.

headphones like Audio-Technica’s ATH-M30x model, which run about $70, are a better choice than earbuds for their superior sound quality, noise isolation, and comfort. Editing Software When it comes to audio editing software, great options are freely available. For example, if you’re a Mac user, you likely already have access to GarageBand, a highly user-friendly program that comes with pre-installed, royalty-free jingles you can use to spice up your content. PC and Mac users alike should also consider Avid’s Pro Tools | First — a free version of the sound mixing software used to make Hollywood movies! Learning to use this free software will save you plenty of money you can reinvest into your hardware.

After going back and forth with the IRS for 10 months, the IRS finally agreed with Toph and Jane and sent her a refund check for $16,185! Additionally, and as of this publication, Jane has another $10,000 refund pending from the IRS. Stay tuned for an update on this in a future issue of Toph’s Tax Resolution Times.

P.S. As of this publication, Jane finally received her additional $10,000 in refunds and her case is officially closed! Congrats, Jane, and thanks for letting us help you get even!

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Getting the Right Answers on Your Taxes

It’s no secret that taxes can be complicated. Most of us don’t have backgrounds in tax code or tax preparation or anything tax- related. Before I met Toph, I hired someone to do my taxes. I didn’t know what to do. I knew very little about the tax system. But at the same time, if you had asked me if I would recommend hiring a tax professional over doing your own taxes at home, I wouldn’t know how to answer that question, either. But after I met Toph, I learned a lot, and I learned just how important hiring a tax professional can be.

someone to enter the data for you. These types of services aren’t designed to give you the complete care and attention you (and your taxes) need. For one, tax software is designed from a “one-size-fits-all” approach. They want the software to apply to as many people as possible. The problem is that everyone has a different tax situation. The software can’t deal with every variable. It can’t catch every human error. Plus, the more complicated the tax situation, the less useful these services become.

Most people have a general idea of how to do their taxes, with the help of software. Or they hear about tax strategies from friends. “You should do this, not that,” or “make sure you deduct this.” Everyone has their opinion on what you “need” to do, without being fully informed. Many people try to get by. Along these same lines, a lot of people rely on “do-it-yourself” tax software or “big box” tax preparers to get their taxes done. Using one of these services might save you money in the short term, but if you’re self-employed or a small-business owner, the long term might be a completely different story.

Toph, for instance, corrects the tax documents of many of his clients all the time. He’ll go through their taxes and catch something the software or the last tax preparer didn’t catch. Additionally, he’ll amend the client’s tax documents in order to get them a bigger return or reduce what they owe. As 2019 comes to an end and the new year begins (and the new tax year), it’s important to think about who you entrust your taxes to — especially when you have questions that need answers or concerns about what you may owe in the coming year. That’s one of the great things about Toph: He’s local and he gives his direct line to every client, so if they do have questions, he can answer them.

– Ashley Sheldon

These services are all about inputting data into software. The major difference between “do-it-yourself” software and a “big box” tax preparer is that you’re paying

Cranberry Gingerbread

TAKE A BREAK

Gingerbread is a holiday classic of the very first order, but it’s often a construction material rather than a treat. This recipe, on the contrary, is purely for eating.

Ingredients

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1/2 cup canola oil, plus more for greasing 3/4 cup unsulphured molasses 3/4 cup packed light brown sugar

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1 1/2 cups fresh cranberries, coarsely chopped

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2 cups all-purpose flour 2 tsp baking powder

2 large eggs

1 tsp baking soda

1 tbsp fresh ginger, peeled and finely grated

1/2 tsp ground cinnamon 1/2 tsp ground cloves

1/2 tsp kosher salt

Directions

Heat oven to 350 F.

cinnamon, cloves, and salt. Mix dry ingredients into wet ingredients until blended. Scrape batter into loaf pan and bake for 50 minutes.

Grease a loaf pan with canola oil.

In a large mixing bowl, mix together 1/2 cup canola oil, molasses, brown sugar, eggs, ginger, and cranberries. In a separate bowl, sift and combine flour with baking powder, baking soda,

Solution on Page 4

Transfer to a rack, let cool for 20 minutes, slice, and serve.

Inspired by Food & Wine Magazine

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TOPH SHELDON CPA FOR THE SELF-EMPLOYED ® 9200 MONTGOMERY RD., STE. 7B CINCINNATI, OH 45242 513-342-4000 TOPHCPA.COM

PRST STD US POSTAGE PAID BOISE, ID PERMIT 411

INSIDE 1 The Best Investment

Launch a Podcast on a Budget

How a Tax Problem Became a Refund

When You Have Tax Questions, Are You Getting the Right Answers?

Cranberry Gingerbread

Willie Nelson Falls Out of Tune With the IRS

Toph’s Tax Nightmares

The IRS Sings Willie Nelson a Tune While many celebrities and public figures have tangled with the IRS, few stories are as interesting as Willie Nelson’s — or end with a record being produced to settle a tax bill. Nelson’s tax troubles began during the ‘70s after the musician made several bad investments and quickly racked up debt. Unfortunately, Nelson was surrounded by people who did not have his best interest in mind, including his manager, Neil Reshen. As Nelson’s debt grew, Reshen had filed tax extensions on behalf of Nelson but never actually followed through on those extensions. Around this same time, Nelson also followed the recommendations of accounting firm Price Waterhouse and put his money into tax shelters as a way to recoup some of the money lost in previous bad investments and to build up his portfolio. It didn’t work. In 1978, Nelson fired his manager, but by then, the damage was already done. In the 1980s, the IRS disallowed Nelson’s deductions because of past penalties and interest. However, Nelson’s debt to the IRS continued to rise. Then, in 1990, the IRS seized a majority of Nelson’s assets. According to the IRS, the musician owned $32 million in back taxes. Hit by a tax bill he couldn’t pay, Nelson’s attorney negotiated with the IRS and brought that number down to $16 million and then renegotiated to bring it down even more to $6 million. Despite the reduction, Nelson still couldn’t pay. As a result,

a large portion of Nelson’s estate was auctioned off. But it wasn’t all bad news; many of Nelson’s own friends bought the items at auction so Nelson could recover them later. Nelson also released the album“The IRS Tapes: Who’ll Buy My Memories?” Every cent made from“The IRS Tapes”would be sent to the IRS to pay down the $6 million tax bill. Nelson also filed a lawsuit against Price Waterhouse, saying that the company put his money in illegal tax shelters. The accounting firm settled with Nelson and by 1993, after a tumultuous two decades, he had successfully paid back his debt to the IRS.

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