Sorry! Don't look here for advice on tax fraud

Even best tax software can never replace a good accountant

Dollars & Sense

April 21, 2002|By Liz Pulliam Weston | Liz Pulliam Weston,SPECIAL TO THE SUN

My friend and I each have substantial amounts of cash. My balances are in the five digits, while my friend has more than $100,000. Our problem is that we owe substantial amounts to the IRS and other tax agencies. We want to park this cash someplace where it will be safe and we have access to it, but where the IRS can't find it. Please don't advise me to resolve my tax problems. I tried, and it's impossible!


Your issues - whatever they are - can be resolved, as soon as you abandon the idea that you can somehow hide your assets from the IRS. Find an attorney who specializes in solving tax problems and hire him or her. Your local bar association can offer referrals. It may take some time, and the willingness to pay a few bucks, but your situation isn't "impossible."

By the way, how dare you ask for help in committing tax fraud! Have you never read this column before? The whole point of this column is helping people resolve their financial problems in ethical and legal ways. If you want criminal or bogus solutions, there are plenty of fly-by-night outfits that are willing to take - and disappear with - your cash.

Can you recommend a tax software package that could replace my accountant? I'm a television writer who receives two or three W-2s each year. I'll claim some work-related expenses (commuting, movie admissions, a new computer, etc.). I have a feeling that my return is a fairly simple one and that my accountant probably isn't doing much more than I would if I had some good software. What do you think?

The leading tax software - Intuit's TurboTax and H&R Block's TaxCut - gets better every year. But software probably will never replace a good accountant, particularly for someone at a high risk of audit. And that's you.

People in the entertainment industry tend to get audited more frequently than others. The kinds of things you want to deduct are the items that tend to draw the most scrutiny.

Having an IRS-savvy pro on your side will reduce the likelihood of your return being plucked for review, and your accountant could better handle any audit questions than you could.

That's not to say everyone has to have their return prepared by a tax professional. Folks with relatively simple returns - one W-2 from one employer, little or no capital gains income and few write-offs other than a mortgage deduction - can handle their own returns.

But people with complicated financial situations, such as small-business owners, investors and those with multiple employers, are better off getting some help.

I think you overstated the tax disadvantages of owning a home in joint tenancy with one's children. In most cases, the IRS will acknowledge that the transfer was a gift and include the entire value of the home in the parent's estate, thus giving the heirs the full step-up in tax basis you said they could lose. Owning a home in joint tenancy with children is a reasonable solution for people of modest means who hope to avoid probate.

You're right - my answer should have said the heirs "could" face a bigger tax bill, not that they "would." If the heirs had contributed anything to the home, the IRS could take the position that a portion would not receive a new basis for tax purposes.

That doesn't mitigate the legal disadvantages of joint tenancy, however. If one of the children gets sued or declares bankruptcy, the creditors could come after the parents' home. In this litigious and debt-ridden society, that's probably more risk than most parents want to bear.

Liz Pulliam Weston is a columnist for the Los Angeles Times, a Tribune Publishing newspaper.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.