So here we are, in the most loathsome time of year, and we’re not referring to the weather.
We’re talking about tax season.
Faculty members from Florida State University’s College of Business offer tips to help ease the anxiety of the paperwork, personal allowances and, if you’re late, penalties for filing your taxes. They also offer tips on how to avoid scams and fraud.
The Internal Revenue Service established Tuesday, April 18, as the filing deadline to submit 2022 tax returns or an extension to file and pay tax.
Consider our experts’ advice:
Allen Blay, chair and EY Professor, Department of Accounting
(850) 644-9847; firstname.lastname@example.org
Blay’s areas of expertise include: auditor decision-making, corporate financial distress and auditor independence.
“If you own 100% of a small business such as a sole proprietorship or an LLC Partnership, you can pay your under-18 children almost $13,000 tax-free to them, and you get to deduct it as a business expense. This is probably one of the most under-used and misunderstood advantages of owning your own business – including an online business, a store or even rental property. You don’t even have to withhold payroll taxes. As long as you can document legitimate work your child is doing for the business, the income earned by the child is deductible for your business and is covered by the standard deduction for the child ($12,950 in 2022). You can still claim your child as a dependent on your return. Just make sure you document the work as you would for any other employee.
“You can even fund an IRA for your child, or your child can use their earnings to contribute to a college savings plan. Just make sure you follow the rules, document everything – and pay them for work they do.”
Anne Ehinger, assistant professor, Department of Accounting
(850) 644-8209; email@example.com
Ehinger specializes in taxation and accounting for income taxes.
“Make sure to file a tax return, even if you’re not required to do so. In general, taxpayers with gross income that exceeds the standard deduction are required to file a tax return. However, if you had enough withheld by your employer to cover any taxes you might owe, the IRS isn’t going to assess any interest or penalties on you. I think a lot of people don’t file a tax return for this reason — they figure the withholding by their employer should be enough to cover any taxes they might owe. But it’s always a good idea to file a tax return even if you don’t owe additional money, for two reasons:
“First, whether you file a tax return or not, you have only three years from the original due date of the return to claim a refund of any overpayment of taxes or any tax credits for which you qualify. To get this money, you must file a tax return.
“Second, the IRS has a certain amount of time to come back and audit your tax return after you file it (generally three years). However, if you don’t file a tax return, the clock never starts ticking. This means the IRS could come back and audit you many years later. So, assuming you’re preparing your tax return in good faith and not intentionally committing fraud, filing a tax return gives you a level of certainty that the window for being audited will eventually close.”
Chris McCoy, assistant lecturer, Department of Accounting
(850) 644-4558; firstname.lastname@example.org
McCoy specializes in taxation, financial accounting, and cost and managerial accounting.
“Continue to be incredibly careful about tax scams. While these scams are less technical than loopholes and emerging tax issues, they continue to do massive damage to real people. Scammers use the fear of the IRS, AI-generated scripts and telephone number spoofing to try and steal from people. The biggest lesson here is that the IRS doesn’t call or text. It sends things through the mail. If someone calls saying they are the IRS, don’t say anything. Don’t ask to be put on a do-not-call list. Don’t give them your name. Just hang up immediately. And if you see IRS on a caller ID, don’t answer it — and block the number.”
Jeffrey Paterson, Deloitte Professor, Department of Accounting
(850) 644-7887; email@example.com
Paterson specializes in taxation and financial accounting.
“File your tax return early. If filing early reduces your stress, it might save you from making mistakes on your return. Filing early has at least one more potentially very important benefit: It reduces the likelihood that someone else files a fraudulent tax return in your name. Each year honest, hard-working taxpayers find that the IRS rejects their income tax returns because someone else has already filed returns in their names. The money goes to the fraudster, and he or she quickly disappears. The taxpayer is left with the problem of dealing with the IRS. You cannot eliminate the risk that someone else files in your name, but you can reduce it simply by filing early.”
Paterson also recommends that tax filers obtain an IRS Identity Protection PIN, or IP PIN – a six-digit number that prevents someone else from using your Social Security number or Individual Taxpayer Identification number to file a tax return.
Miles Romney, assistant professor, Department of Accounting
(850) 644-7861; firstname.lastname@example.org
Romney specializes in tax issues in mergers and acquisitions and tax and accounting litigation.
“Ask forgiveness rather than permission. If you legitimately believe something qualifies for a tax deduction or credit, then claim it on your return. On the off chance your claim is actually audited, you will have the opportunity to defend your position. If you defend it successfully, then you get to benefit from the tax savings. If you end up not defending it successfully, you will pay the difference in tax plus penalties and interest. You will not go to ‘tax jail.’”