President Abraham Lincoln did establish the IRS agency in 1862. The agency operates under the US Department of Treasury.
Its primary purpose is collecting individual and employment taxes. Other functions of the IRS are handling the estate, excise, gift, and corporate taxes.
There have been various reports that President Joe Biden avoided paying Medicare taxes before taking office. The article answers the question.
Does Joe Biden owe Back Taxes?
According to reports, president Joe Biden skirted several payroll taxes in 2017. The taxes were to fund Obamacare and Medicare.
The CRS criteria claim that Biden owes IRS and Americans hundreds of thousands of dollars. There’s a specific non-partisan report that claims Biden owes approximately $500,000.
It indicates that Biden didn’t pay Medicare through a tax-code loophole.
President Biden has been pushing for a bill worth $3.5 trillion. The bill’s primary purpose is to fund health care, child care, and education.
It targets tax fraud and increases higher incomers’ taxes.
The rich have to pay a fair due. The bill has a House of Ways and Means Committee that will end any tax-avoidance trick. President Joe Biden used a trick, plus it will boost the IRS auditing budget.
Who Owes The IRS More Taxes?
The study from Internal Revenue Service claims that millionaires owe IRS more than $2.4 billion in unpaid taxes.
When prioritizing Taxpayer Delinquent Accounts, the internal revenue service doesn’t consider taxpayers’ wealth or income.
Instead, it focuses on the balance due dollar amount. Many high-income taxpayers don’t pay their tax debts, yet they can.
IRS did state in its report that it will highly and effectively prioritize high-income taxpayers that don’t pay taxes t in their crackdown.
The Worst IRS Audit Triggers
There are certain times when the IRS randomly pulls tax returns for an audit, regardless of what a person did. However, you can prevent an audit if you properly mitigate standard audits.
Plus, you’ll be safe if you receive an audit notice. Proper and adequate records and documents are the best preventative measure of IRS records.
If you can accurately refer to your records, it will reduce your chances of making mistakes as you input the items on your tax return.
Plus, in case IRS selects your tax return for audit, and you can find your records quickly and efficiently, it will expedite the appeal process. Here are some of the things that trigger IRS audits.
1. Major Change In Deductions and Income Than Prior Year
If your income suddenly plummets or skyrockets and the amount is suspiciously large than the previous tax year, chances of the IRS examining your records will be extremely high.
However, the emergence of the COVID 19 pandemic had some slight influences on the IRS approach. It’s because the pandemic did cause some Americans to lose all their income.
Plus, some inadvertently started home-based businesses in short periods and were successful.
However, if you have a substantial increase yearly or frequent changes, you will surely warrant internal revenue service attention. People usually have little to no control over income fluctuations.
However, it’s advisable to document the changes and why they happened. It can be because of change in a business environment or temporary disability.
2. In case You Misreport Your Taxable Income.
Americans report wages on form 1099 and form W-2. The reports are not limited to investment income and self-employment. You have to report both series to several state tax agencies and IRS.
It’s common for reports to have some transpose and math errors like $84,000 as $48,000. IRS under-reporter system and tax software usually correct the errors.
However, if you intentionally misstate your income, IRS will likely flag your tax return for audit. Always check and ascertain that you have all the 1099 and W-2 you expect.
3. Claiming Home Office Expenses
Several taxpayers deduct portions meant for their businesses from their homes. It’s becoming a common trend since the most workforce is going freelance. The deductions can be utilities, mortgage, rent, and other expenses.
The audit target is common since home offices are exclusively for business purposes. You will receive a nullification on your deduction if you allow your other household members to use your home office.
It’s, however, relatively rare to get a field audit that an IRS agent checks your home office. The examination will be more probable if you give too great numbers, such as putting a claim on more than half of a studio apartment.
You need to measure your home’s square footage carefully. If you aren’t using the entire room, you should use room tape or a divider on the floor.
It will help you know your work area’s accurate measurement to calculate your business percentage correctly.
4. Doing Business With Your Car
IRS understands that most people use their cars for various business activities. It’s because having a separate business vehicle is not always financially feasible.
It’s the same thing when using your home for business. The one thing that raises an audit flag is simply the car elements.
You need to have accurate details of mileage logs. It allows you to separate your personal and business miles correctly.
In addition, it’ll help you determine whether the business mileage option or actual cost is beneficial.
You will also know what you did spend on your vehicle for business. Despite the method you use for your car, the tolls and parking will always be deductible.
Other business travel modes such as taxis, public transit, and airfare are usually deductible by actual cost. It’s advisable to use business payment modes other than personal cards and cash.
5. Excessively Large Charitable Gifts
You will give the wage reports on forms 1099 and W-2. Note that it’s not limited to investment income and self-employment.
You have to offer the report of both series to several state tax agencies and the IRS if the IRS notices that you’ve given some large charitable gifts.
They’ll try to find out the source of the money and the reason behind the considerable deposit. It’s common for some of the wealthiest Americans to hide their finances behind charities.
6. Each Number Ending With 0 or 5 or Suspicious Round Numbers
People usually have expenses such as $100 on their report or even $15. However, if almost all numbers in your report are tidy, it can lead to suspicion.
According to IRM, this is poor record-keeping and number estimation from one’s memory. All numbers cannot end with 0 or 5. It’s more unreal for small business taxpayers.
Since they substantiate extra expenses, note that if your item has several numbers that end in 0 or 5 on schedule C, the more schedule you’ll get.
You need to round up numbers to down or up to the next dollars, such as $62.49 to $62. However, IRS does not accept any estimation.
You should be keen on how you arrive at your totals and ascertain the numbers aren’t suspicious, with many ending in 5 or 0.
How Long Can IRS Collect Back Taxes?
In general, IRS collects unpaid tax debt in ten years. After the person successfully wipes the debt clean, the IRS writes it off. It’s known as a ten-year statute limitation.
IRS does not make the statute popular because of its financial interest. Most taxpayers who haven’t paid tax bills do not know if the statute of limitations exists.
Like other IRS rules, you should note that the statute is quite complex and therefore difficult to understand.
As a taxpayer or tax debtor, you need to know what is financially advantageous. Do not wait out on IRS. If you understand this option, you will have the upper hand over IRS.
The Minimum Monthly Requirement For An IRS Installment Plan?
Suppose you are unable to pay your taxes. There’s an option of a monthly installment plan with the IRS.
A monthly installment is an ideal option since it allows you to sort your taxes over time. You will avoid levies, garnishments, and other collection actions.
Even though you should know that you’ll still have penalties and interests because of late payment, installments make your repayment method less strenuous since it’s more affordable. Your minimum monthly plan hugely depends on the amount you owe.
Applying for an installment agreement is straightforward. You can do it over the phone, online, or through IRS forms.
You’ll have the freedom to select the amount you feel you can comfortably pay monthly. IRS will enquire about the amount you can afford to pay monthly.
It’s advisable to pay as much as possible – this way, you’ll quickly reduce your penalties and interest. If you don’t decide, the IRS will select payment for you. Usually, the minimum payment is the amount you owe divided by 72.
Various platforms such as New York Post and Fox NewsNews report that President Joe Biden has a possible tax debt of more than $500,000.
According to Congressional Research Service, a non-partisan institution, Biden incorrectly used S corporations to skirt book sales and speaking fees taxes. However, the white house did report to support President Joe Biden.
According to the report, Biden’s salaries are reasonable. That’s if considerations are on the services they performed and entities’ nature.