Learn About Your Money

You don’t have to feel insecure about your tax knowledge. Taxes CAN be explained in plain, jargon-free language that 99% of taxpayers can understand. 

By the end of the book, Your Tax IQ will be higher & YOU WILL understand:

  • How is your tax liability or tax refund calculated
  • Where to find help & assistance
  • How to avoid some common tax mistakes that can lead to an audit
  • How to fix e-file rejections if you file yourself
  • What deductions & credits you can claim & how to avoid audit red flags

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About The Book

Everyone makes mistakes, but some mistakes, especially tax mistakes, can be costly. Minor negligence can lead to a full-blown audit. The best preventive measure you can take is to avoid tax mistakes in the first place.

About 52% of taxpayers paid someone else to prepare their taxes. Even if you decide to hire someone to help you file your taxes, you should have a basic understanding of your tax returns and what benefits you can qualify for. 

There is no lack of tax information. There is a disagreement on the exact length of the IRS code, but most agree that IRS Title 26 is about 6,550 pages long, not including the 60,000 pages of related case law. Hence, for an average taxpayer, tax information is largely confusing, complicated, and overwhelming.

This book is trying to change that by providing taxpayer-friendly information that won’t overwhelm but rather empower individuals.

Most Americans hate (26%) or dislike (30%) doing their income taxes. One way to change that is to improve your understanding of your tax situation.

What’s inside

Not Claiming Injured Spouse Relief

For taxpayers who are married, they have two filing statuses to choose from- MFJ or MFS. In the majority of cases, filing MFJ is more advantageous as a status. When a couple files MFS, they lose all these valuable benefits:

  • Higher tax rate than for MFJ
  • Can’t take credit for child and dependent care expenses
  • Can’t claim EIC
  • Can’t claim adoption credit
  • Can’t claim education credits or deductions
  • Can’t exclude interest income from qualified US savings bonds used for higher education expenses
  • Most other credits are reduced
  • Can’t take standard deduction, if your spouse itemizes

Once you file a tax return using the MFS status, you do have an option to file an amendment and change the filing status to MFJ. However, you can’t file a return as MFJ and then amend to MFS, with some exceptions.

Original Return

Amendment

MFS

can amend to MFJ

MFJ

CAN’T amend to MFS

If you file MFJ and have a refund, certain creditors can legally intercept it to pay your or your spouse’s debts. Most creditors can’t seize tax refunds, but government agencies can, such as:

  • Federally backed student loans;
  • Delinquent alimony obligations;
  • Past-due child support;
  • Federal and state tax debts due on separately filed returns;
  • Unemployment compensation debts.

In the case when one spouse owes all or majority of the debt, the other spouse can file Form 8379, Injured Spouse Relief, and request their share of the refund. This is an excellent alternative to filing MFS. The taxpayers can reap the benefits of the MFJ filing status and not have their entire refund offset one of the spouse’s debts, which frequently is why couples want to file MFS in the first place.

The way to file form 8379 is to either:

  • File it with an MFJ return;
  • Include it with an amendment on Form 1040-X; or
  • File it by itself after filing the tax return. 

The injured spouse relief can only address refunds, not tax liabilities. In order for a taxpayer to use it, the taxpayer must have contributed to income and paid some taxes on the return in withholdings or estimated payments.

Summary Table 19. Incorrect Filing Status & Dependency Mistakes

  • Filing the wrong filing status such as filing as HOH when you should file as Single without a dependent.
  • Claiming dependents that others supported or claimed.
  • Filing as not a dependent when you were supported by others.
  • Not including Form 8332 by the non-custodial parent, when a custodial parent releases the claim to the dependent.
  • Filing MFS instead of claiming Injured Spouse Relief on Form 8379 for refund offset due to spouse’s solely owed debts.

How to Avoid These Mistakes?

It is crucial to select the correct filing status for yourself as filing requirements, deductions, credits, and tax liability will be affected. The best way to avoid choosing the wrong filing status is to answer all the tax preparer or tax software questions honestly.

If you are claiming a dependent, make sure you have supporting documents that can confirm expenses paid for education, medical services, living costs. If a situation arises when the IRS requests information to claim the dependency, you will have everything ready.

File your tax return early to make sure someone else doesn’t claim your dependent first. Once one taxpayer uses a SSN on a tax return, the IRS e-filing system will reject any other filings that try to claim the same SSN. If that happens, the only way to dispute the claim is to file via paper and provide supporting information.

Recognize that the definitions that the IRS uses for tax purposes are not the same that taxpayers use in daily life. For example, according to the IRS definition, your child may not be your dependent because you didn’t provide more than half of his/her support, and he/she didn’t live with you for at least half the year, but he/she is still your child.

If you have young adult children working who are in college, communicate with them to make sure it is clear how they should file their taxes. Communication is the key here.

If you have a signed divorce or separation agreement that includes Form 8332, a release of claim to the dependent by the custodial parent, make sure you include a copy of it with your return; otherwise, certain credits could be disallowed.

If you or your spouse have legally enforceable past-due debts that will offset part of your refund, instead of filing MFS and losing valuable credits and deductions, consider including Form 8379 for Injured Spouse Relief with your tax return. Form 8379 provides a way to receive all the benefits of filing MFJ and not loose part of the refund allocated to the spouse without the debt obligations.  

^

Common Taxpayer Challenges

Overcomplicated tax code, lack of tax knowledge, inability to pay, complicated EITC qualifications, etc.

^

IRS Forms & Code

Overwhelming information, confusing tax form instructions, hard-to-follow definitions, too many exceptions, etc.

^

Test Your Tax Knowledge

10 question tax quiz

^

How to Read your 1040

Understand how your tax Form 1040 is calculated through six steps easy to follow calculations. Follow all the schedules that flow into 1040, with examples.

^

Avoid Filing Mistakes

Consider filing for free with IRS Free File, amend correctly, and organize yourself before starting tax preparation.

^

Incorrect Personal Info Pitfalls

How incorrect name, SSN, DOB, EIN & other items can lead to rejections, delays & IRS Letters.

^

Common Filing Status Mistakes

Dependency errors, filing wrong status, not claiming injured spouse relief and missing form 8332 by non-custodial parent.

^

Missing Deductions & Credits

Incorrectly claiming benefits, claiming expired provisions, not claiming EITC when qualifying, missing education credits, etc.

^

Math Erros

Incorrect calculations, arithmetic mistakes & inconsistencies that can lead to an IRS Letter.

^

Business Related Errors

Mixing personal & business expenses, filing schedule C while claiming EITC, underpaying estimated taxes, writing off a loss for a hobby, and misclassifying workers.

^

When False Info Leads to Evasion

How omissions of income, virtual currency transactions, not reporting foreign bank accounts & ignoring IRS Letters can get you in trouble.

^

Understand & Fix E-File Rejections

How to recognize, understand & fix e-file rejections so that you can file your taxes.

^

Audit Triggers

Income-related, claiming EITC, reporting losses, misclassifications, improper deductions, etc..

^

Taxpayer Resources

Tax preparation checklist, visual explanation of 20 tax forms, tax calendar for individuals, tax law changes.

NOTE: The book is currently exclusively available on the Amazon KDP marketplace for 90 days until July 2022. During that time Gumroad purchases are not available.

Overview

The super-wealthy have teams of elite professionals and limitless resources to take aggressive positions and hide their money from tax. According to the University of Michigan, the 5 top 0.5% of wealthiest Americans account for 20% of income hidden from the IRS, which equals $50 billion each year. The 6 rich hire teams of professionals, lobbyists, and anti-tax activists that provide expertise on trusts, estates, offshore operations, shell creation, and cross-border business transactions to dodge tax liabilities.

While the bottom 90% of earners are easier to catch when they don’t report income on Forms W-2s or 1099s, even when the magnitude of their transgression is minimal in comparison. The current tax system is primarily designed to tax labor income. The capital income that the wealthy receive often has an advantageous tax rate compared to labor income. 

The Boost Your Tax IQ book is trying to change all of that in a small way by providing 99% of taxpayers with easy-to-follow, honest, and to-the-point information. The principal point is to return the power to the average taxpayers through knowledge that empowers them to make better choices in their financial and tax affairs.

 

NOTE: This book will not do the taxes for you, but it will empower you with the skills to understand them. Remember that you are responsible for your tax returns (you sign them as a legal document), so you might as well understand what you sign.

Pages

Visuals

Question Quiz

In this book, you’ll learn: 

  • What to do if you have not filed your taxes for a few years.
  • What to watch out for if you are filing Schedule C and receive EITC.
  • Where to find help when you can’t pay your taxes.
  • How to fix e-file rejection when you file yourself.
  • What credits and deductions you qualify for.
  • How to claim a refund for the past 3 years.
  • How to organize yourself for tax season.
  • How to figure out whether your hobby is a business or not.
  • How to tell whether your assistant is your employee or independent contractor.
  • Why your filing status was rejected.
  • Why do you pay so much in taxes.
  • Why itemizing your taxes may benefit only a small percentage of people.

Other books

Everything You Need To Know About Your Tax Form 1040

Understand What You Sign

This book will help 99% of taxpayers file their 2021 tax returns.

By breaking up your tax calculations into 6 steps and using examples and visuals, you will quickly become a pro at your own tax returns.

Notes

Need Your Help

This is a new book so please review on Amazon or another platform. Thank you so much!

Amazon Pricing

This is a self-publish booked with printing on demand, which means the price is higher to account for the higher fees in printing costs and distribution. Below are the current printing costs for different versions.

NOTE: Until July 2020, all Gumroad sales are paused and the book is exclusively sold through Amazon KDP marketplace.

If you buy directly from my Gumroad account I keep all the proceeds. However, from 3/10/22 until 6/8/22 the book won’t be available through Gumroad because it is being distributed through Amazon KDP Select, which requires exclusivity for the period of enrollment.

Thank you for considering & supporting self-published authors.

Book Type Price Printing/ Delivery charge Rate Publisher Author Royalty
Amazon eBook $9.99 $3.31 70% $3.00 $4.68
Amazon Paperback B&W $18.99 $6.39 60% $7.60 $5.00
Gumroad PDF Book $9.99 $9.99

 

About the author.

AkiStepinska scaled

I have a BA in Economics and I am an IRS Enrolled Agent (EA). EA is an IRS designation received after passing a 3-part comprehensive test on individual and business returns. I have worked in international taxation and corporate transfer pricing, a very specialized area of taxation for global multinational companies. Since 2016, I have changed gears and am mainly focused on individual tax. 

I have worked at large tax preparation companies as Master Tax Advisor and Tax Expert, where I helped taxpayers prepare their tax returns, answer questions, and plan for their future. I have also volunteered with the IRS Volunteer Income Tax Assistance (VITA) and the IRS Tax Counseling for the Elderly (TCE) programs. 

All the information that I share is honest and to the best of my knowledge. It is important to remember that each tax situation is unique. Therefore, you should consult a tax or financial advisor who knows your exact circumstances before making drastic changes.

Aki Stepinska

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