This is a tale of two unrelated business practices. One is my doctor, and the other is TaxMaster. I write this because there is still some confusion about our offerings and I hope this will be helpful. And I have a special offer at the end for you to keep the same fee next year as this year, so please keep reading.
A couple of years ago, my doctor sent out a notice to her patients saying that if we wanted to continue to be her patient, we had to pay her $600 a year, in addition to whatever co-pays were necessary at the time of a visit. Foolish me, I thought that the $600 included additional services, like being able to ask a question in between visits. I was wrong.
I called her office because I had a health concern. She called me back, and gave me a two minute answer, which was basically, “You are okay. Don’t worry about it.”
Then I got a bill for $40 for the phone call.
I called the office: Didn’t the $600 include phone calls? No. It was, they explained, a standalone fee that paid for nothing besides my ability to remain her client.
We don’t do that.
That business model causes me to be hesitant to call her, because I know that it will cost at least $40 for the answer.
We want you to call us if you have a question. As I’ve said many times, “We would rather put out a fire over the summer than to sift through the ashes next April.”
Some of you remember my father. Some of you might have worked a few years or even decades with him, and then with Arnold alongside Tina. Those of you fortunate enough to have worked with Arnold and then Tina over the decades, received accurate and thorough tax returns, but I doubt that this is why you took the time to meet with them.
I believe that most of you didn’t simply come in to receive a tax return and sign it. Most of you came in to pick his brain, listen to his wisdom, and receive valuable advice.
We had what some business experts might call a flawed business model: we offered wisdom, insights, creativity, and valuable advice, along with a product called a tax return. Unike my doctor, we continued to offer those insights and valuable advice throughout the year without additional fees because you had already paid for the tax return, and this came with the return. We explained that the price of the return included the value of our wisdom and advice all year round as you needed it, even though you paid the same fee, or even less, than those, who went to franchise firms and received none of that wisdom or advice.
And that’s because we knew that if you thought it would cost you $40 for a 2 minute answer, or $300 for an hour to talk with us in between tax seasons, you might try to figure it out yourself.
We were not quantifying the value of what we were providing to you in addition to the tax return. When we got new clients because a franchise firm messed up a return the year before, we were shocked to realize that these franchise firms were charging more for the tax return than we were, and they closed up shop After April 15th.
That’s when we decided to raise our fees a few years ago. We were providing much more value, wisdom and expertise, and we were not valuing it. If we weren’t valuing it, then you weren’t going to either. So we built that into our tax return fees. Over 300 of you called or emailed or made appointments with me between last tax season and this one, and we were able to provide you with the peace of mind you deserve, without additional fee for service, because we included it with the return.
We don’t sell tax returns. We sell wisdom, creativity, advice, decades of knowledge and expertise, and income tax returns. We always have.The tax return is the end result of careful planning.
Many of you recognize the value because you called and asked for it or made appointments to see us after tax season. But because you had paid for it with the tax return, you treated it as if it was free and so did we.
That is a poor business model.
We are not following the model of my doctor. We would never have you pay us $600 just to gain access to us, and then charge a la carte for services after that. We provide Advisory Services, and the tax returns, whether you decide to take advantage of our additional Advisory Services, which we quantify, or not.
If you DO decide to take advantage of our additional Advisory Services, explained in your organizer on TaxDome, we have a one-time SPECIAL OFFER at the end of this email to freeze your fee for next year. So read on!
Now, about those 1099s…..
Remember when you checked the contents of your mailbox and found a birthday card from your grandma or a handwritten letter from a friend? Those are the kind of surprise pieces of mail you are happy to find.
Still, not all surprise pieces of mail are welcome… especially when they have to do with your taxes. But thanks to the gradual lowering of the reporting threshold for payments on goods and services via third-party vendors, that’s exactly what could happen to you this year.
And, just in case you’re tempted to toss it, thinking Venmo misclassified the payment you received for your living room set as a “business” transaction… let me give you the same word of caution I give to all my clients. Every tax document is important and should be kept on hand – even if you think it’s wrong.
So, let me ask you: Did you receive a surprise 1099-K this year?
That’s something we can address when we speak with you:
212-247-9090
We can address this and every other tax document ahead of the tax deadline. That way, if you have a surprise amount you owe, you’ll still have time to arrange payment for it.
We are here to help you with every frustrating and unexpected tax hurdle coming your way. And to give you some further clarity ahead of our meeting, let me explain that 1099-K situation a bit more…
TaxMaster Financial Service Corporation’s
“Real World” Personal Strategy Note
What Is A 1099: What To Do If You Weren’t Expecting One
“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.” – Franklin D. Roosevelt
Did you get an unexpected 1099 tax form in your mailbox recently (physical or digital)? You’re not the only one surprised – millions more people are receiving a 1099 this year than in years past, and most of them don’t know what to do with it.
That’s where we come in.
We get it – another tax form you’ve never seen before is probably not something you want to (or have time to) figure out right now. So, as best I can, I want to help answer your questions about what a 1099 is, why you got it, and what you need to do with it now.
“What is a 1099?”
A 1099 form documents income earned from self-employment, freelance work, investments, or other sources outside of traditional employment. A 1099-K (the one you may have received unexpectedly) is for any income you received from a payment card or third-party network transactions beyond a specific threshold.
AKA – credit card payments, payments through processors like PayPal or Venmo, or transactions through online marketplaces.
An important thing to note here: You still have to report business income from these payment methods on your taxes, even if you don’t hit the threshold and receive a 1099-K.
“What is a 1099 doing in my mailbox?”
Previously, the 1099-K threshold was 20k in payments AND at least 200 transactions. It now sits at 5K (with no minimum number of transactions), but possibly not for long – the threshold is expected to drop to 2.5K in 2025, and then to 600 dollars in 2026.
But, for this tax season, you just need to worry about the 5K threshold.
“What do I do with it?”
Definitely don’t lose it in the mountain of papers sitting on your desk (or let the kids spill apple juice on it).
1) Make sure all the information is up to snuff. Check your tax ID (either SSN or EIN), the total gross amount reported (which doesn’t factor in refunds, fees, or expenses), the payer information, and the transaction type and date.
If anything is off, you’ll need to request a corrected form from the issuer (NOT the IRS) with the contact information in the top left corner of the form.
2) Figure out if the income is taxable – because receiving the form doesn’t automatically mean you owe taxes. For example, personal transactions like selling your couch to a friend (unless sold for a larger amount than the purchase price) or getting reimbursed for a coffee run are not taxable. But if it’s any kind of business income, it’s taxable.
Now, if your 1099-K includes both business and personal transactions, only report the business-related portion as taxable income. And have records available like bank statements, invoices, and receipts that prove which transactions were personal or business.
3) Report it on your tax return. For business income, report it on Schedule C if you’re self-employed or a sole proprietor. For occasional or hobby sales, report your gains on Form 8949 and Schedule D for Capital Gains and Losses.
And if it’s not taxable, keep the documentation just in case the IRS pokes its nose in. I’ve seen it plenty of times – my clients get Form 1099-K for their personal transactions, simply because payment processors and third-party networks don’t know the difference between your business and personal affairs.
If this is the situation you’re in, you can file a statement with your tax return explaining why the 1099-K income is non-taxable.
And as with everything tax-related, you need to keep records (like receipts, transaction histories, business expenses, the works) in case of any hiccups. The IRS cross-checks your 1099-K against your tax return, and if you don’t report correctly, it can trigger an automated underreporting notice.
Still tracking with me? If not, that’s okay. Because we can help you get your surprise 1099-K taken care of when we prepare your returns. This is something that’s likely affecting you for the first time, and I get how frustrating it can be trying to navigate a new hurdle with your taxes. Which is why I’m here to help. Let’s find a time to chat:
212-247-9090
NOW, ABOUT THAT SPECIAL OFFER:
In addition to the “Compliance Services,” which are priced to include
- your ability to ask questions in the off-season,
- these emails
- ID protection
- audit protection
- And a year-end review upon request to avoid nasty surprises,
We also offer several packages of Advisory Services that go into depth on various topics. We have more topics than we can list, and we can swap out one for another that is more pressing for you that is on the list.
These topics will be addressed in 2-5 meetings over the off-season, depending on the package you choose.
HERE IS THE OFFER:
If you choose one of our Additional Advisory Services, we will offer you next year’s return and Advisory Service for the same investment you made this year. If the compliance and Advisory Service comes to, say, $2,100, this year, combined, that is the fee that you will pay next year, starting in July. If you want, we can lock in the same fee ($2,100 in this example) provided that you pay (in this example) $350 a month for 6 months, July through December.
We will provide different or similar Advisory topics for you next year, as you prefer, and you can go into next tax season knowing that your fee will be the same as it was this year.
This is a one-time offer. Feel free to speak with your Tax Professional to see if this is right for you.
