Tax Scams You Should Avoid

We are all familiar with the old adage, "There are only two things in life that are guaranteed: death and taxes." While every citizen files taxes each year, some of us are more familiar with the process than others. Accurately and correctly filing taxes is important and mistakes, even innocent ones, can lead to anxiety-inducing audits and monetary fees. Below I have complied some of the more common "Tax Scams" that you should be avoid while filing your taxes.

1. Frivolous arguments: It is a common misconception that you can get gain hundreds of dollars on your tax refund by filing for loopholes and tax liabilities. The IRS has an entire page on their website dedicated to "frivolous tax arguments" that should be avoided completely when filing. You can get the maximum amount of money back on your taxes without making exaggerated claims. Furthermore,  filing frivolous claims can result in a $5,000 penalty from the IRS. 

2. Income Tax Schemes: Abusive tax structures are essentially plans to avoid paying the taxes you legally owe by concealing your true financial situation. This is primarily achieved by trying to disguise your ownership of expensive assets by using shell companies or foreign financial accounts. If you become involved in an income tax scheme and are caught by the IRS, you can face severe penalties. 

NB: It is important to remember that ignorance of the law is never a valid legal defense. If you are ever convicted of a tax-related crime, it will not work to plead ignorance that your actions were illegal as your defense. That is why it is important to work with reputable professions who can ensure that

3. Misusing trusts: Trusts have useful and valid legal benefits, but they can also be abused. Consult with a lawyer and/or tax professional before you commit any assets into a trust. 

Keep Your Valuables Safe: Protecting Yourself From Natural Disaster

This is an reminder of the importance of keeping all of your important financial documents safe in case of a natural disaster or other such emergency.

1. Scan your records so that they're electronic
It is simple to scan all important documents (tax records, bank statements, insurance policies, etc) onto your computer and then save them in the manner on your choice. Some good options would be an external hard drive or send to a specific gmail account.

2. Buy a safe and store important documents in it
If you're simply not the computer savvy type and don't want to scan your financial documents, consider storing them in a safe.

2. Get out that camera and document your valuables
You should take photos of your most valuable items. This will allow you to have physical proof of your items, their condition and their worth when you claim the loss with your insurance. These photos may also be useful if you wish to claim the loss of your items as a deduction on your tax return.

3. Have an emergency plan
In the event of an emergency, the best thing you can do is have a plan (and a back up plan) for you and your family. In situations like these, preparation truly does save lives. Make sure you and your family have a separate plan for a variety of different emergency situations, such as earthquakes, floods, and tornadoes. It can also be helpful to rehearse this plan together as a family so that you can identify problems areas and familiarize each family member with the routine. If you are having a trouble forming a comprehensive plan on your own, this PSA guide can help.

IRS Releases Two New Publications About The Affordable Care Act

The IRS announced the release of more information concerning the Affordable Care Act (ACA) for families. The two new electronic publications, which can be found on the IRS website at www.irs.gov, are helpful for educational use by individuals and tax professionals who have questions or concerns about the new Marketplace.


The first is Publication 5152, which discusses the importance of keeping the IRS updated to changes in circumstances. Changes in family size or income can affect your Premium Tax Credit and should be reported as soon as possible. The Premium Tax Credit is a refundable credit designed to assist families with moderate household incomes in affording the health insurance they need. If the Marketplace is not updated within a reasonable timeframe, families may receive too much or too little in advance payments. The publication also discusses the necessity of filing your federal tax return if you intend to claim your Premium Tax Credit.

The second is Publication 5156, which outlines what you need to know about the Individual Shared Responsibility Provision. This provision requires you and every member of your family to have a minimum amount of health coverage. The publication contains information about whether or not your family can qualify for an exemption or how much your payment will be if you or your family members do not have the minimum coverage.

Our health care system has undergone major changes in the last few years, so it is important for both individuals and families to have current and accurate information about their rights and responsibilities. Educating yourself on these provisions and the intricacies of the Affordable Care Act can help you make the right decisions for your family.

Tips for Starting a Business

Starting a business can be an overwhelming process. Here's a guide to the different kinds of businesses you can establish to make the process easier for you.

There are several types of businesses and it is important to choose which one to use carefully. The type of business you choose to establish will affect how you pay taxes and the legal status of the business. The most common types of business are the corporation, S corporation, partnership, sole proprietorship, and LLC.

After the jump, I explain the types of businesses you can form and their pros and cons.