2 Huge Mistakes I Made Filing Taxes for My Business Last Year
10 months ago
Now that the shock of my 2014 tax experience has subsided, I’m ready to speak on it.
Without question for me paying taxes is the absolute worst part of running a business.
Prior to freelancing, I looked forward to getting my W-2 in the mail so I could plug it into TurboTax and get a refund. Wham bam, thank you ma’am. No need to even think about taxes for another year.
Fast forward to now and the process is a hell of a lot more complicated.
Last year was the first year I filed taxes with self-employment income.
I was nervous to say the least. I started off using TurboTax going through the sole proprietor questions, but when I got to the business tax deductions I wasn’t 100% confident that I knew what I was doing. I was super scared I’d take a random business deduction, get audited and end up in IRS prison.
Unrealistic. But, you know… these are the things that keep me up at night. (Ask my husband, he’s programmed to just nod + snore at my 3 a.m ramblings.)
So I threw up my hands and decided to hire someone.
I found the person on Yelp.com. The tax advisor had a brick-and-mortar business with good reviews and services other than tax preparation like bookkeeping for small business. He was super nice, ran through my business deductions and finished my tax return quickly. He charged I believe $120 to $150 for two tax forms which I thought was pretty reasonable based on my research.
He instructed me to mail out two checks for the tax payments (state and federal) with the tax return receipt stubs and he filed the return.
The Letter From the IRS
This year in mid-February, I got a letter from the IRS stating that my account had a credit.
I was kinda excited. A credit on my account means less taxes to pay this year. Holla!
When I called the IRS to figure out what my next steps should be, I found out that the credit on my account was actually due to my 2014 tax return never being filed. My money is there and there’s no tax return to match it up to.
As soon as she said those words I think I had a mini-stroke.
Blurred vision, heart palpitations, cold sweats… I dug up the folder from last year with my tax return and the amount I had in a credit matched exactly what I sent to the IRS.
My first concern was fees and interest. But, the rep at the IRS said it’s unlikely I’ll get charged anything extra because the money was there.
I called the tax advisor to find out exactly what happened. He looked through his backup and apologized profusely saying he made a huge mistake. He forgot to file it.
I think he expected me to blow a gasket.
But I was so low on energy after my mini-stroke I just wanted to find a solution to this problem. He promised to pay any fees if there are any. Then he e-filed both state and tax for me. For real this time.
It’s funny because after this happened I’ve heard a few other stories of peeps who’ve had their taxes messed up royally by a tax preparer. The sad thing is these tax preparers don’t always take responsibility for their mistake. If anything I did appreciate that he was super apologetic and willing to make things right.
The big error was obviously made by him, but I played my own part in it.
These are the two mistakes I made:
Error #1: Procrastinating Like a MoFo
By now you know that I hate taxes.
If I’m anxious about something,
I’ll put off addressing it for as long as I can I used to put it off.
Filing taxes is something I just didn’t want to do, so I waited until pretty much the last week before taxes were due to find a tax preparer. He finished my tax return on April 13.
Just to be clear taxes were due on April 15.
Yea. My bad.
Of course, it’s his job to file my taxes correctly. I mean I paid him. But, he was also under a lot of pressure at that time. People make mistakes under pressure.
Would he have made the same mistake had I come in several weeks earlier? I can’t say for certain, but my guess is it would be less likely. This year, we’re filing taxes the DIY way (me + husband), but I’m going to give myself some more wiggle room to figure things out and make sure I’m taking as many deductions as I can.
Error #2: Not Asking for Confirmation
After he finished the tax return I was on a high. Nobody could tell me nothin’.
I levitated/did the Harlem shake/whip, whip and nayed nayed out of his office.
And never asked for a confirmation that the tax return was filed.
Um. Duh. Who does that?
I’ve just always taken the confirmation for granted since I get it through email from TurboTax. When he offered to e-file again for me last month, I made sure to ask him for a confirmation.
If you go with a tax preparer, please make sure to do the same.
Taxes and Entrepreneurship
If there’s anything that would make me throw my hands up and work for an employer, it’s paying self-employment taxes. I hate seeing so much of the money I bust my butt for run right through my hands to Uncle Sam.
But, since it’s unavoidable the best action we can take is being proactive about it.
Have you ever had a tax mishap?
— This post or page may contain affiliate links. Don’t worry, though. I only promote products that I’ve used or truly believe in.
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