Toph Sheldon, CPA for the Self-Employed August 2019
AUGUST/SEPTEMBER 2019 VOLUME 3, ISSUE 6
T O P H ’ S TAX RESOLUT ION T I M E S
513-342-4000 WWW.TOPHCPA.COM
Lessons Learned as a CPA for the Self-Employed®
4. You don’t want to represent yourself in front of the IRS. There are some cases in which you may be required to speak to the IRS in person.
As a tax problem-solver for the self-employed, I’ve learned a number of lessons from working with my clients and protecting them from the IRS, which is a behemoth of an organization. They have people and tools working year-round to make sure taxpayers are doing what they are supposed to: paying their taxes in the “right” amounts, as determined by the IRS. We all know working with the IRS can be a headache. But as we enter the back- to-school season, a time of learning, I want to share a few discoveries I have made working as a CPA for the Self-Employed®. 1. Don’t assume the IRS is correct. I’ve seen firsthand that many times, the IRS in the wrong. So many IRS employees don’t know their own rules and guidelines. As a result, they make mistakes, ones that result in taxpayers paying more than they should or even being audited. Often, people who call the IRS looking for answers know more about tax law than the IRS employees themselves. 2. The IRS is an impersonal machine. The IRS is not interested in your story, your family’s story, or the story of your business. Many of the people I work with are self-employed, and they rely heavily on their business to support their families. They have their hopes, dreams, and livelihood tied up in their business. But the IRS does not care about this. They are just there to try and assess or collect tax revenue, and if they can get away with taxing you unfairly, they may. Your family has the right to protect your wealth and your income. 3. You have the right to challenge the IRS. If you think something isn’t correct with your tax bill, you have every right to say something. You never have to accept what you’re expected to pay at face value. You may have done your due diligence and found something the IRS missed. Or you hired a tax professional who caught some miscalculations on the part of the IRS. If you see a discrepancy, challenge it. Pay what you know you owe, not what you assume you owe.
Representing yourself can be disastrous. It’s like going to court and representing yourself regarding a matter you know very little about, if anything. You will be put on the defensive and risk
the possibility of incriminating yourself despite your innocence, all in a high-pressure situation.
The IRS would love it if you represented yourself. It would be you against a team of highly trained legal and tax professionals, not your average IRS employees. Their goal will be to get you to say something to incriminate yourself. While they are not targeting you personally, the IRS may be targeting your money and assets. And like speaking with representatives of any other government agency, you have the right to remain silent and the right to representation. Of course, I am here to make sure you don’t have to worry about these issues. If you have questions about your tax situation or about the IRS in general, give me a call at (513) 342-4000, and let’s get it figured out.
–Toph Sheldon
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GONE CAMPING
4 Things to Keep in Mind on Your Next Family Camping Trip
While summer is winding down, families are looking to go on a few end-of- season adventures, camping trips included. Before you head out into the wilderness with your family, it’s important to be prepared. In fact, “be prepared” is the best piece of advice when it comes to braving the great outdoors. But what does being prepared entail? Here are four key tips. Have a first-aid kit nearby. A good rule of thumb is to keep one in your car at all times. You never know when you’ll need it. Kids may get a few bumps and scrapes while out hiking, or you might encounter poisonous plants, such as poison ivy or poison oak. Having quick access to cold water, soap, antiseptics (hydrogen peroxide or rubbing alcohol), and calamine lotion or hydrocortisone cream can keep infections at bay. Teach fire safety. When you build a fire, especially with kids, teach them about fire safety. This includes building the fire itself. Pick a spot away from brush and overhanging branches and create a pit surrounded by rocks. Before lighting a fire, have a bucket of water and a shovel nearby so you can quickly extinguish it when ready. Finally, remember to only build a fire as big as you need. A larger fire can be difficult to manage and keep under control.
It’s Time for a Change
We Have a New Office!
We are moving! We’re growing and need more office space. So this summer, we’re moving the whopping distance of a few doors away!
You will still be able to find our office at 9200 Montgomery Road. However, we are no longer occupying office 5A. We will now be in 7B! Everything should be moved in by the beginning of August. While we’re in the same building, this is still somewhat of a big move for us. Like with any change, there is some resistance. Moving is hard and requires a lot of work, but this kind of change is often a necessary one. To be perfectly transparent, I have procrastinated this move for a while. There is a saying that goes,“Procrastination is the enemy of success.”Dale Carnegie summed up this idea well when he said, “Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy.” Many people are afraid of taking a chance, and part of this fear comes from the risk involved. Your mind may race with questions like these:“What if something goes wrong?” or“What if I end up spending more money than I expected?”And you can spiral into asking what-if after what-if. This sentiment applies to many of the folks I work with. Some people are afraid of taking the plunge and finally calling a tax or accounting specialist. There are many reasons why people don’t make that call or why they procrastinate for as long as possible, and much of this boils down to fear regarding tax issues — especially the fear that they will end up owing more. While the IRS can be an imposing force, finally taking action and pushing past the fear can be the first step toward turning your tax situation around. When you make that call, it does breed confidence and courage.
Keep an eye on the sky. Weather can change at a moment’s notice, and sometimes, it doesn’t give notice at all. Keep a
close eye on the sky and monitor the weather on a radio. If a storm appears, seek shelter immediately and stay out of low-lying areas. When you’re in mountainous or hilly terrain, a little rain is all
it takes for flash floods to occur. If you’re in a ravine when it starts raining, get out immediately.
Always stick together. It’s a good idea to hike with a buddy and keep a whistle around your neck or in your pack. You never know what you might encounter or when you’ll need help. Hiking with kids is also a great time to teach them to recognize landmarks and be aware of their surroundings. If you have a digital camera or smartphone, show kids how to create a trail of digital breadcrumbs or pictures to help them find their way back to camp.
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Couples, Taxes, and Healthy Communication Always Know What You’re Signing
When you sign your tax return, do you know what you are really signing? For many married couples who file jointly, not knowing what you’re signing can be a huge mistake. You should never sign a tax return with your spouse — or any joint filer —without knowing what is on the tax return and what tax is being paid. Toph occasionally gets clients whose spouses are in the dark: They don’t know the full story of their tax situation, yet they still willingly sign the document. To make these kinds of situations worse, many couples don’t realize that when they both sign the tax documents, they are both responsible for its contents, even if one doesn’t know what’s in the document. For the IRS, and the law, ignorance isn’t an excuse.
spouse can get answers to any questions they have; there can be open communication with no surprises. To me, that sounds like a healthy relationship! Without this kind of communication, it opens the door to all kinds of problems, not to mention trust issues. Imagine getting a certified letter from the IRS and having no idea why this has shown up in your mailbox? I would be freaking out! I’m thankful to be married to an experienced CPA so I won’t find myself in this situation, but this isn’t the case for many people. It’s scary to get a letter from the IRS and realize what was paid, or not paid, to the IRS. You’ll wonder if you made a mistake or if your spouse made a mistake. This is a situation you
never want to find yourself in.
A lot of people rely on tax prep software, like TurboTax, to do it themselves. They rush through the tax filing process to get it over with and have their spouse sign it without sitting down together to discuss their taxes. This highlights one of the reasons why working with a certified public accountant (CPA) is so important for couples and joint filers. Sitting down with an CPA is an opportunity for both spouses to see exactly what is going in the tax return. Each
My advice to couples is this: Make sure you are both involved in the tax process. Sit down with your CPA, ask questions, and make sure you’re all on the same page. It’s the best thing you can do for your taxes and your relationship!
– Ashley Sheldon
Senegalese Lamb Skewers
TAKE A BREAK
Inspired by Food & Wine magazine
Adapted from a recipe by famed Southern chef Sean Brock, these skewers are seasoned in a Senegalese style and served alongside mustard-flavored onions.
Ingredients
Equipment • For the lamb: •
For the onions: •
Bamboo skewers
1/2 cup distilled white vinegar
• • • •
/2 cup Dijon mustard 1/2 tbsp agave nectar
2 lbs trimmed leg of lamb, cut into 1-inch cubes 1 tbsp peanut oil, plus more for grilling
1 yellow onion, thinly sliced Salt and white pepper, to taste
• •
Salt and black pepper, to taste
Directions
1.
In a bowl, coat lamb with 1 tbsp oil and generously season with salt and pepper. In a mixing bowl, whisk together vinegar, mustard, and agave nectar. Toss in onions and season with salt and pepper.
3.
Heat a grill or grill pan to medium and oil the grates. Thread lamb on skewers and grill for 6–8 minutes.
2.
4.
Solution on Page 4
5.
Serve alongside onions.
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TOPH SHELDON CPA FOR THE SELF-EMPLOYED ® 9200 MONTGOMERY RD., STE. 5A CINCINNATI, OH 45242 513-342-4000 WWW.TOPHCPA.COM
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INSIDE 1
Lessons Along the Way
2
We’re Moving!
Stay Safe While Camping
3
Tax Documents: Do You Know What You’re Signing?
Senegalese Lamb Skewers
4
Money Troubles Catch Up With Nicolas Cage
Toph’s Tax Nightmares
The IRS Goes After a National Treasure Nicolas Cage is a Hollywood staple. He’s been in the movie business since 1981 and has featured in over 100 films. But despite being a hardworking actor and, at one time, among the highest-paid actors in the business, Cage found himself in tax trouble. In 2009, Forbes reported that Cage was earning $40 million a year. However, between 2005 and 2009, he bought and sold a number of properties around the world. This included a 40-acre island in the Bahamas, a medieval castle in Germany, another castle in England, and a manor house in Rhode Island. After all of these purchases and sales, the IRS filed a federal tax lien on one of Cage’s properties — this one in New Orleans, Louisiana. The lien was filed in response to unpaid federal taxes. According to the IRS, Cage owed $6.2 million in federal taxes for the 2007 tax year. Then the IRS hit Cage with a second lien, this time for $350,000 in unpaid taxes from 2002 to 2004. Cage claimed innocence in the matter and filed a lawsuit against his business manager, Samuel J. Levin. The lawsuit was for $20 million, and Cage claimed “negligence and fraud,”detailing that his business manager“failed to pay taxes when they were due and had placed [Cage] in speculative and risky real estate investments, resulting in (the actor) suffering catastrophic losses.”
beyond what he earned as an actor (which is mind-boggling when you remember he was making $40 million yearly). Levin continued to say that Cage had a shopping problem, and the fact that he owned 15 properties at the time (in addition to 22 cars, nine of which were Rolls-Royces, as well as extravagant artwork) was evidence of this. Unfortunately for Cage, his lawsuit didn’t pan out and the IRS didn’t back down. In the end, Cage sold off a significant portion of his properties and numerous collectibles — including an“Action Comics”No. 1, which was the debut comic of Superman in 1938. The comic sold for $2.16 million, and Cage successfully paid the IRS, but it’s not over for the actor, because he’s still paying off numerous other debts.
Well, Levin filed a countercomplaint. He detailed conversations with Cage, in which he allegedly told the actor he was spending far too much money—going above and
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