Anthony Sykes & Company

             There are simple steps all of us can take now to make the filing process in 2022 go as smoothly as possible. Let’s not overlook the fact that we are about a month away from this starting. Here are a few tips that might keep you from being caught off guard.           Organize your tax records. One of the most stressful parts of tax season is searching for documents. We can start to lessen that stress by gathering, or preparing to gather, forms like a W-2 from an employer, a 1099 from unemployment compensation or a pension. Also make sure to have any records related to digital currency transactions. Make it a habit to keep this documentation for at least 3 years.           Review your withholding. Make sure that your withholding is in the right place to start 2022. If there was a surprise tax bill this year, or a larger than expected refund, ...

          It is easier to create different streams of income than ever before. With that ability comes certain obligations. Primarily, you must understand your tax responsibilities. All income is subject to tax. That includes part time, temporary, and side jobs. The payment may be in cash, property, goods, or even virtual currency. All of it must be reported, this means that a good record keeping system must be used during the year.           In addition, every employee must be classified correctly. This does not mean that the employer decides who is an employee and who is an independent contractor. An accurate classification is based on an examination of how the employer influences the work being done and how it is accomplished. When this is done correctly, all parties understand what is required from a tax standpoint. An employee will have income taxes withheld according to what is stated on the Form W-4 . A ...

            The Internal Revenue Service ( IRS ) recently estimated that there is a $1 trillion “tax gap”. That would be the difference between what it collects, and what people and businesses owe. They feel a big reason for this discrepancy is the explosion of cryptocurrency. Cryptocurrencies by their very nature are designed to be elusive and invisible to the outside world. IRS Criminal Investigations has made great strides into exposing how crime organizations use digital currencies on the dark web and significant arrests have been made. However, more Taxpayers are using these currencies and not accurately reporting them. The IRS taxes Cryptocurrencies as property. So anyone who uses them must pay taxes if they are sold for profit or used to purchase anything. One recent example would be a nonfungible token ( NFT ). A NFT is a collectible that is bought or sold in the cryptocurrency world and it has quickly become a billion dollar market. Some...

        The Criminal Investigations unit of the Internal Revenue Service ( IRS ) had a 91.2% conviction rate last year. This is impressive, but at the same time, Criminal Investigations has been prosecuting fewer cases each year for the past few years. This is because IRS Special Agents are retiring faster than they can be hired and trained. Looking forward, IRS leaders feel they are in a prime position to hire and change this trend.           By adding employees and investing in technology to have a more data driven approach to different investigations, IRS Criminal Investigations looks to grow their investigations, indictments, and overall prison sentences going forward. While cryptocurrency is a new area the IRS is focusing on, they are continuing to give their attention to employment tax. This will be a point of emphasis considering that it is a large part of what funds the federal government. The abusive retu...

         Much has been made about the Internal Revenue Service ( IRS ) and its efforts to increase enforcement of tax law, especially after the passing of the Tax Cuts and Jobs Act ( TCJA ). According to a report released in December 2019, the results of these changes have been significant. This is because the IRS has now adopted an aggressive strategy to combat tax fraud.           You may have heard of the over 10,000 letters that were sent to individuals who had not properly documented their digital currency transactions. Many of those cases will be recommended for criminal prosecution . It is the view of the IRS that this is the new frontier for tax evasion, and they want to stop these crimes as soon as possible. In 2019, the IRS had a 91% conviction rate . It identified $1.8 billion in tax fraud. Prison sentences averaged over 3 years. With all this success, the IRS only sees room for improvement. They ...

         After being silent about virtual currency since 2014, the Internal Revenue Service ( IRS ) has released a ruling, along with a document detailing how this income should be handled. This provides a good amount of clarity and highlights the responsibilities of those who invest in virtual currencies.           In the past, these types of currency were treated as property. This meant that when they were sold at a profit, there would be a tax applied. Going forward, much more detail will be required. For example, virtual currency traders must track their investments in order to prove how much they bought, and they must document transfers between accounts to prove that they are tax-free transactions. This is just part of the IRS plan to enforce tax law on this aspect of finance. Earlier in the year, they sent around 10,000 letters to holders of virtual currencies to warn that they may be subject to penalties...

The Internal Revenue Service ( IRS ) has been sending out letters to many Taxpayers informing them of errors that may have been made in previous Tax Returns. The root cause of these errors has to do with cryptocurrency or virtual currency. By the end of the month, over 10,000 letters will have been sent out.           This is part of an active compliance campaign being conducted by the IRS . As the popularity of virtual currency increases, many do not realize that it is taxed as property from the Federal level. The purpose of sending these letters and having an education campaign is to help affected Taxpayers understand their obligations and know how to fix past mistakes. This also sends a clear message that the IRS will be fully enforcing the tax law in this area. Non-compliance regarding virtual currency is a growing focus within IRS Criminal Investigation. Now is the time to understand how these currencies can truly impact your bottom line.

          Cryptocurrencies, such as Bitcoin, have had special IRS rules made for them over the past 4 years. They basically state that these types of digital holdings are not viewed as currency, they are property . That means in the event there is ever an exchange, that occasion will be taxable .           However, there is another pressing issue that comes up because of the decentralized nature of digital currencies. Are virtual currencies subject to foreign financial reporting requirements? They very well might be. This is an area where a Taxpayer needs to do their own research. They must find out if their currency is on an exchange or a virtual wallet. Taxpayers who choose to venture into this field must know what they have signed up for, and what responsibilities they have. If they don’t, then the IRS might surprise them with some sobering facts.

           Tax obligation is based on a simple principle, that the Government has the right to a percentage of all profits from financial transactions made in this country. Although it is a fact that all understand, many do not fully agree. They therefore devote much time and energy to avoid paying their share. There have been a variety of methods used to accomplish this goal, but one that had recently gained mainstream attention was Cryptocurrency.           Whether it is called Bitcoin, Litercoin, or something else, they all had the same attraction. These forms of currency operate independent of any central bank. This means, in theory, that there could be no restriction of personal wealth and it would not be under the authority of any government because it is digital. These currencies and exchanges have been around for a few years, but have gained some prominence because more people have started to use th...