We want you to know that help is available. Of course, we have tax specialists at our Tampa CPA firm who would be happy to assist you, but we understand that not everyone in Tampa needs a CPA  to prepare their 1040 tax return.  

So, where can you go for help? 

The IRS Offers Free Filing Tools

The IRS cares about U.S. taxpayers. Really. And if they had the time, they would be happy to talk to you, but budget cuts have left the service understaffed, under-resourced and, for the most part, overwhelmed. 

But they’re trying.  

For example, the IRS now offers Free File, which allows you to do your taxes for free online. There are two free options, depending on your income:

• Guided Tax Preparation provides free online tax preparation and filing through one of the partnerships the IRS has created. Taxpayers whose adjusted gross income is $73,000 or less qualify to use this method to complete and file their 1040 tax return.

• Free File Fillable Forms Is a free option for taxpayers whose adjusted gross income is greater than $73,000. If you are going to use this option, you really need to know how to prepare your own 1040 tax return without the help of any handy software to guide you. You’ll have to rely on the IRS’s form instructions and publications. 

Filing your 1040 tax return electronically is more important than ever – especially if you are expecting a refund. Filing online is safe and secure and you will find all of the federal tax forms you need, equivalent to a paper 1040 form.

If you’re filing a 1040 EZ, you probably don’t need the assistance of one of our Tampa tax specialists. But if you do need help or just don’t want to go it alone, you’ll find the assistance you need at Walter S. Sanders & Associates, a small CPA firm in Tampa that offers personalized service. Contact us to take the first step.

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Whether you are filing your individual 1040s or are responsible for the taxes of a small business, you can avoid surprises at tax time by getting a clearer picture of your finances. One of the best ways you can do that is by creating a budget.  

Budget Basics

There are a lot of definitions of budget floating around out there. We like one from Nerd Wallet, which says, “A budget is a way to balance income, expenses and financial goals for a specific length of time.”

We like that definition because it brings your goals into the equation. If you think of a budget as just numbers, the idea of making everything balance can seem remote (or even worse, like a story problem from your high school math class!). When you tie those numbers to your goals – whether you want to take a dream vacation or buy a house – they start to have real meaning in your life. 

As the folks at Nerd Wallet explain, there are many different budgeting plans. Whichever method you adopt, it is important to remember that, “Any budget must cover all of your needs, some of your wants and — this is key — savings for emergencies and the future,” they say. 

At Nerd Wallet, they like to use the 50/30/20 rule as a basic framework for creating a budget:

• 50% of your income should be designated for your needs.
• 30% of your income can go toward the things you want.
• 20% of your income should be targeted toward savings and debt repayment.

If you have a small business in Tampa, QuickBooks might be a good tool for you to consider. But whether you are looking to set up a business or personal budget, the Tampa accounting firm of Walter S. Sanders & Associates is here to help.

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If you had had a business in Tampa, QuickBooks would not have been needed to keep track of everything needed to fill out that form. 

Of course, 1040s have changed significantly since then! 

The First Income Tax in the U.S.

You’ve heard the old saying that only two things in this life are certain – death and taxes. It’s based on something that Benjamin Franklin said back in the day. But it doesn’t specify what kind of taxes. 

In Franklin’s time, following the Revolutionary War, the main form of taxation was excise taxes, which Investopedia defines as “a legislated tax on specific goods or services at purchase such as fuel, tobacco, and alcohol.” Most excise taxes are paid directly by businesses and only indirectly by consumers. 

As the St. Louis Federal Reserve tells us, “The United States’ first federal income tax was levied during the Civil War. It became clear to Congress that this would not be a quick war, and the government needed to generate more revenue.”

The date was 1862 and the income tax was 3% percent for those who made anywhere between $600 and $10,000. The well-to-do, who were earning $10,000 or more, paid a 5% tax. The tax was collected for 10 years.  

According to the St. Louis Fed, federal lawmakers tried to bring the tax back in 1894, but it was ruled unconstitutional in 1895. That led to the passage of the 16th Amendment to the Constitution, which gave Congress the authority to tax income, in 1913. And Americans from Tacoma to Tampa have filed 1040 tax returns ever since.

If you need help with yours, we hope you’ll contact Tampa CPA Brian Sanders.

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“Now with tax season upon us, individuals and groups will once again attempt to defraud taxpayers and the US government out of millions of dollars, using techniques and technologies that range from the old school to the cutting edge. This year is no different, and the IRS has been feverishly issuing warnings about how to spot the red flags and strategies for staying out of scammers’ crosshairs,” CNET says. 

Here are two of the tax scams to watch out for in 2020 from CNET:

1 – The IRS impersonation phone call

This one isn’t new, but it still manages to get honest taxpayers to fall for it. It involves someone calling and claiming to represent the IRS to demand that you pay your taxes immediately. “Calling from a phone number that appears to belong to the IRS on your caller ID, they will threaten, badger and intimidate you into making a rash decision. Usually they will often ask for a transfer of funds by gift card or wire transfer. Thieves are increasingly extending this scheme to email and social media channels,” CNET warns.

Don’t fall for it! The IRS will never phone you or show up at your house to demand an immediate payment — especially via gift card or wire transfer. 

2 – Fake texts, emails, or social media messages

“Thieves have had years to refine their email trickery and have recently expanded into text messages and social media messages,” CNET says. These are phishing scams that use e-mail messages to trick you into revealing personal and financial information that can be used to steal your identity. “One particularly bold gambit involves scammers using the IRS name and logo to warn taxpayers about the very scam they’re perpetrating, before soliciting sensitive personal information. Note that attackers are increasingly targeting tax professionals in addition to taxpayers.”

Don’t fall for it! “The real IRS will never initiate contact to request personal or financial information,” CNET says. “If you do receive such a message, the IRS asks that you forward it to phishing@irs.gov. Do not reply to the original message.” 

We all know it can be hard to get through to the IRS. Brian Sanders, a certified Tampa CPA, and the Tampa accountants at Walter S. Sanders & Associates are available if you have questions about your 1040 tax return or have received a questionable communication purporting to be from the IRS.

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