Tax Refunds & Advice

Are you a sole proprietor? In other words, do you work for yourself? Many people fit into this category, and tens of thousands more will join them in the months to come. Of course, working as a sole proprietor has its benefits and drawbacks from an income tax point of view. Before you work your first day, you need to make sure that you have all of the tax details taken care of.

The first thing that you need to realize is that you no longer have an employer that will withhold the proper amount of tax. Instead, you are responsible for handling your taxes. More specifically, the IRS does not want you to send one payment per year. After all, when you worked for a company they were receiving payment out of each paycheck. For this reason, you need to send quarterly tax payments based on the income that you earn.

Does all of this sound confusing? If so, do not let this scare you away from becoming a sole proprietor. Sure, it is a change of mindset, but once you settle in, it is not nearly as complex as it sounds. To ensure that you are setup properly and on the right track, you should meet with a tax professional or CPA before beginning to work for yourself. Not only can they supply you with the appropriate forms, including those that you will mail to the IRS with payment, but they can also answer any questions. And you are sure to have some concerns on your mind if this is your first go-around as a sole proprietor.

As a sole proprietor you need to take care of your own taxes. Once you know how much to pay and the process for doing so, this will be easy to accomplish. You may be intimidated for the first few months, but soon enough it will be second nature.   

Actor Wesley Snipes is going to be away from the big screen for quite some time. At the end of April, Snipes was sentenced to three years in prison for failing to file tax returns. Although he came up with a $5 million down payment on back taxes that he owes, the court was still unkind. In fact, he received the maximum amount of jail time requested by prosecutors. As you can see, he was not cut any slack because of his name or celebrity status. Many believe that this may have worked against Snipes as a way of showing the general public that everybody has to pay taxes.

Prosecutor Robert O’Neill said, “The courts sent a really clear message that Americans must file and pay taxes. If you have a legitimate dispute with the IRS, contact the IRS and dispute what you believe you’re due and owe. You can’t just totally fail to satisfy your legal obligation like Mr. Snipes did.”

Snipes’ trial began in January 2008 for his failure to file income tax returns between the years of 1999 and 2004. During this time, he earned approximately $38 million. To go along with this, prosecutors argued that he lied on his 1996 and 1997 returns by filling for $11 million in refunds.

Although Snipes will be spending three years in jail, this does not mean that his tax debt gets wiped out. He will still owe the IRS millions of dollars in back taxes, as well as interest and penalties.

As you can see, nobody is above the law when it comes to paying taxes. Wesley Snipes learned this lesson the hard way, and hopefully this will show Americans that filing on time is of utmost importance.

Many Americans have already received their economic stimulus check, and millions more are slated to do so in the weeks to come. The question is: how are you going to spend this check? While the government wants you to spend this money “recklessly” you are under no obligation to do so.

According to recent polls and expert opinions, there are several areas in which Americans are considering spending their economic stimulus check:

1. Save, save, save. A large number of people who receive a check will take the money and stock it away for a rainy day. With the economy heading for a recession (if it is not already there) fear is on the rise. By saving this money, people can add a bit more security to their financial situation.

2. Spend it like the government wants you to. There is nothing wrong with spending your check on an item that you have had your eyes on. This can include anything from a new computer to a down payment on a car. If you want to have some fun with your “found money” head to your local mall and spend away!

3. Give it to charity. While this is sure to be the least popular option, it is something to consider if you are unsure of what to do with this extra cash. Before you do this, make sure that you are in the position to do so. After all, if you are in the midst of a financial struggle you would be much better off keeping the money for yourself.

You can use your economic stimulus check in one of the three ways listed above, or in any other way you see fit. And remember, there is no hurry. In other words, you do not have to spend the money the day that you receive it. If you are unsure of how to proceed, save the money until you make a final decision.