Based on your monthly expenses, mortgage(rent), phone, auto pymt, food, entertainment, insurance, etc, the IRS will impute the amount of your income and figure the tax on an annualized basis. Happens fairly regularly for people who do not file, when the IRS catches up.
After seeing several local providers in Vegas over the last two years, when I have visited on betting sprees, I struck one the other day, an Independent who said the IRS fell on her after only operating there for six months and wanted their dues. Is this really possible? Or was she jerking my chain?
Of course it's possible. Illegal income is fully taxible. Remember, the feds got Al Capone on tax evasion.
The 6-months number is a tad fishy though. I'd expect the feds to wait until she filed her end-of-year tax return before going after her...unless the 6-months in question included the end of a tax year.
Tip to providers: Pay your taxes. The IRS are the nastiest bastards on the planet and they will come and kick your ass.
Ciara, I am very new at this. Will you please tell me what dbas and c-corps are? I am wondering how I am going to claim my income this year as the IRS would now something is fishy as my income is not conducive to paying the mortgage. Thanks in advance!
Google is your friend. Everything you need to know can easily be found by using it!
However,
DBA stands for Doing Business As. As a self-employed person, I can do business under my own name, or I can file a DBA certificate stating a name for my company. So instead of Bryan XXX, I could do business as BryanIsUs by filing a DBA certificate stating that I am "doing business as" that company name. Companies can also do this - I pay my rent to a company that, on all it's leases, states it is actually another company doing business as the company I lease through.
A C-Corp is a corporation that pays Federal Taxes - basically your garden variety well known corporation like Microsoft, IBM, etc. It is differentiated from an S-Corp, which is usually much smaller in terms of stakeholders and they (the shareholders) pay the tax, not the corporation.
Please, if you want to know more, do a little research. You could find out so much more than I just typed in less than five minutes using google or any other search engine.
Based on your monthly expenses, mortgage(rent), phone, auto pymt, food, entertainment, insurance, etc, the IRS will impute the amount of your income and figure the tax on an annualized basis. Happens fairly regularly for people who do not file, when the IRS catches up.
It is totally possible, but I think it would take longer than 6 months. I keep excellent records of my income and claim my business type as modeling. Then I dont have to worry about the Feds taking my money later on and I actually find it relaxing to sit down once a week and compile my financial records
This reply comes years after the original thread but being an employee of the agency myself I'd say this provider probably had a regular job and failed to file tracable income from it and she was required to file based on what she made in that regular job.. Probably has nothing to do with her provider money and cash leaves no trail. If that is the case then we'll take notice how can she afford that big BMW on that secretary salary. We are not going to care so much where or how she made her money as we are getting her compliant on back taxes and returns not filed.
We are not the evil empire so many have made us out to be. It's a reputation that was changed in 1998, a mandate by Congress. We only enforce the laws created by your elected officials that's all..
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