Q&A: How Can Wooks Avoid Tax Evasion?

Whether this is caused by an inherent hatred of “The Man” or the failure of the public education system to teach life skills, there’s one thing wooks dread more than their hair: Tax Season. With the April 15 deadline around the corner, it’s time to get rolling on something besides ecstasy. With a foot in the corporate world and a foot in the festival scene, Michael Duvall, of MAD Account and Consulting, has a special insight on wook’s needs when it comes to filing taxes.

For Bassnectar’s sake, he’s handling ours.  

While we must admit, this is an #shamelesspromotion for MAD Accounting and Consulting, we’re hoping you will become more woke on some looming questions about filing taxes. From personal filing to small businesses, Duvall answers ten questions.  

PH: Seriously, what’s the point of filing?
MAD: If you own a business or are self-employed, you are required by law to file your taxes. By not filing you risk fines and penalties by both state and federal agencies. You risk being able to operate as a business.

PH: What if I haven’t filed my taxes in a really long time, or ever?
MAD: In some circumstances, people may not have to file right away when they turn 18 such as when in college. There’s no set date of when you have to file, but it should start the year you start working and making income. If you hadn’t filed in previous years when you were supposed to, you will be required to file a late or amended return which could have consequences if you owed in previous years.

PH: What if I owe money, but don’t have it? Is there a payment plan?
MAD: Yes! The IRS has a repayment plan that can be set up either online or by submitting a paper form. The interest/penalty rate is pretty low and you are able to set the amount you are able to pay, however if you aren’t consistent with your repayment, you could lose that privilege.

PH: What if I got paid under the table?
MAD: Technically, you should still be recording that as income by depositing into the bank in a business account or by filing form W 9, if the amount exceeds $600. The better your records, the less likely you will ever have to worry about an audit.

PH: I make *insert which applies: pins, hoops, spoons, pendants*, could I get a tax break on that?
MAD: If you produce and sell products in a retail fashion you can deduct what’s called your cost of goods sold. That means, you can deduct the costs it took to make the product ready for sale, such as materials, labor, etc. The income you are taxed on can be thought of as the difference between sales price minus cost of goods sold.

There are deductions for your start-up costs, but always be sure to do your research and work with a consultant to estimate those costs, especially around legal and tax compliance. The first year of any business is arguably the most important; it sets the stage for how successful you will be in the future by establishing practices and organization that works for you and meets the requirements of the government and accounting regulatory agencies.

PH: What about travel expenses?
MAD: The federal mileage deduction rate is $0.58 per mile in 2019, but I strongly recommend using a mileage log whether paper or digital if you use the vehicle for personal use as well as business use. Meals can be deducted at 50 percent for qualified business expenses such as while traveling for work or meeting with a potential or current client to discuss business. Always keep all receipts when traveling for your records.

PH: What if I worked for a non-profit?
MAD: Depends what your role is for the non-profit, generally as an employee your taxes wouldn’t change and you’d file a normal 1040, but if you started a non-profit you would need to file IRS form 940 to report your revenue/expenses. The IRS is particularly stringent on these filings so record keeping and accuracy is critical!

PH: How do I use my refund to the best of my ability?
MAD: There is always the option to apply your refund to next year’s return if you anticipate owing in the future. Otherwise, the world is your oyster, spend it where you please!

PH: Can I deduct expenses for my accountant?
MAD: Absolutely, yes. If keeping track of your finances and bookkeeping is too much while running your business, consider outsourcing. A lot can be done on the go with Quickbooks Online, especially if you’re someone who travels a lot for your business.

That’s where I come in.

PH: How do I get in contact with you for help on my taxes?
MAD: Either email me at maduvallconsulting@gmail.com or find my Facebook page! We can discuss what your needs are and how much it’ll cost.

Photo by Alycia Grace

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