FULL INTERVIEW: Eric Lee Talks Tax Management, Filing For Extension, + More

Eric Lee Talks Tax Management, Filing For Extension, + More

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Episode Transcript

Speaker 1 (00:02):
All right, it is way yet. Angela ye, I'm Angela Yee.
And Jasmine from the Jasmine brand is here. And because
we care and we know people have taxes, do all right,
Eric Lee is here a tax attorney. Is that the
right thing to say? Tax attorney? Tax attorney? Okay? Actually
I actually use Eric and he's been amazing for me.
So I want to make sure that we get some

(00:24):
of these things out because I know it can be
very scary when you know you either owe money to
the irs or you just haven't filed your taxes and
you don't have it together. All right, So the deadline
is usually April fifteenth, but it's April eighteenth this year.
It's April eighteenth this year. And with some of your
listeners in various states, due to some of the FEMA

(00:48):
emergency declarations, their extensions have been actually possibly transitioned all
the way to October sixteenth. Wow. Yeah. So for example,
if you're in New York and if you were part
of the storms back into some and if you live
in Suffolk County, Erie County, it goes into October sixteenth.
So it's very important for your listeners to check on

(01:09):
the IRIS website as well as the female websites to
make sure where their extensions may have been extended to,
because you could have an extension and I don't even
know it, right, that's right, And do you have to
do anything for that extension, like you don't have to
file it's just automatically, great question. No, it's automatically extended.
But you have to look at which state it is.
Like for example, in Arkansas where the storms that just
occurred back in the end of March, their date is

(01:32):
extended to July. Okay. Now, if you have a listener
who believes that they won't be able to finish by
July in Arkansas, then they should file an actual extension, okay,
as soon as possible. And so when we talk about
filing an extension, right, what's the deadline for that. Let's
just say you know you're not going to have your
taxes ready and you're like, okay, look April eighteen, maybe

(01:55):
that's your deadline. Is that also the deadline file for
an extension? Yes, yea, So it depends if we're talking
about a corporate or a personal return. If it's corporate,
the deadline was March March. And then if you file
an extension. Then I'll go into September. September fifteen, okay,
so you go ahead, let you finish. But then if
it's a personal return, April eighteen right now, and then

(02:19):
file an extension will go up to October sixteen, so
it's basically six months from the date of the actual deadline. Okay.
If they owe you money, Okay, let's just say the
IRS owes you money and you file late, all right,
do they give you penalties for that? They will assess
late filing penalties, but there may also be interest that

(02:43):
they pay you. Oh yeah, so it's actually, you know,
a win win on both sides. Now, if you have
any listeners who may actually have some penalties, right, there
will always be some phone numbers where they can call
if it is the first time they made a late filing,
or if there's a really good excuse okay late filing,
like if you're actually live in one of these areas,

(03:03):
family emergencies, COVID whatever, Usually the IRS will be very
gracious and actually return or wave that penalty. So at
least try at least try. Okay, Now, what if you
haven't filed your taxes in years? There's a lot of
listeners who are like, man, I haven't even done my taxes,
you know, since twenty fifteen. Then what, well, you better

(03:28):
get all your materials all together, because originally when your
listeners go, look up, when can we actually file a
tax return? Or how far back can the IRUs look? Right?
Normally it's three years, not bad forget it. But if
you do not report income and if you definitely if

(03:48):
you miss income by twenty five percent, they can go
all the way up to six years. Six years. Okay,
So you have a client, you have a listener who
hasn't filed since twenty fifteen, First off, get professional, Get
a professional to actually called rus and indicate, hey, Eric
Lee hasn't filed a tax return since twenty seventeen. We

(04:08):
are fully colledgnizant about that. We are trying to set
up a deadline where we'll actually gather all the materials
to actually send in our tax returns twenty seventeen to
twenty eighteen, twenty nineteen. Okay, do not think that just
because the IRUs hasn't contacted you that they won't right, Okay?
Is there a time when they don't contact you anymore?
You know how they'd be like, oh this job's off
your credit report after seven years? Is there a period

(04:30):
of time that they can't go back any further? They're like, Okay,
you got away with it because you ten years ago
you didn't file. We never called you out on it.
Is it ever too late? Technically? It is never too late.
Technically it falls under the very last moment when you
actually committed the wrongdoing. Right, But if you're constantly not
filing intentionally, you're constantly do sech a limitations does not

(04:55):
run right or it does not end, so you're constantly
committing this wrong. So there tically, the iris can always
go back to you if you have not foiled a
tax return. I know this is a broad question, but
how far in advance should people be preparing for the taxes?
Obviously they shouldn't wait to the week of. But you know,
if you're a regular person, you know, how far in
advanced would you start, you know, preparing for your taxes? Well,

(05:17):
sometimes it's hard, right, it depends for your average listener.
It will be once when you get your W two
from your employer, right, and you can batch up some
of your e trade um documents or some of you know,
that's right, you should be able to file your tax return.

(05:38):
Obstensibly you should be okay at the end of January
right now. Certainly you have some listeners are a bit
more complicated that have a you know, a bunch of businesses, right,
and that may take a bit longer because you can't
file the personal return until the corporate returns filed, right,
so that may take a little bit longer. All right, Now,

(05:58):
let's talk about people who have kids. Right, Let's just
say you're not together, you have children. Who gets to
file the children because that's a big deal. I know
that's something that Jasmine was asking about as well. But
how do you decide that? Is it? Um? Unless they
say you have joint custody with these kids, they spend
equal amounts of time, who files that? Well, it depends
on first of all, if there was actually a divorce,

(06:22):
right because the divorce decree whatever, maybe never married, say
they were never married, you would theoretically look at who
is actually the higher income earner of the parents. Okay,
right now. There are many cases, including in my clients,
where one just race file claim the child. Yeah and that, yeah,

(06:45):
that's all it messes up the other does. So what
do you do? Well, um, but hold on, you were
you were saying, the person that makes the most money
should claim the child absolutely and explain why because, um,
because their tax bracket is at the highest Okay. So
whereas if a person is at the ten percent bracket, right,
and they don't really have much taxes to actually pay

(07:07):
in and they're claiming a child, you know, two thousand dollars,
they may not even need that two thousand dollars credit, right,
whereas the other parent would actually use that credit. That's right, Now,
what can you do at that point? Um, hopefully it's amicable, Yeah, right,
A lot of times it's not. Though, Yeah, if it's not,

(07:28):
you know, that's going to be a completely different issue.
Can do like you were saying, like what that example
the Angela just gave that happens to people where someone
races they may have agreement or not, and someone races
to file and they file first, they file first, and
they claimed the child. So the other person, you know,
is sol or what if both people do it here? Yeah, okay,

(07:49):
well if both people do it, then the second one
to file we'll get notified. So that really really first come,
first serve um. In the cases where it's amicable, let's
just say that they agree like, oh, I'm sorry, Jasmine,
I should not have filed right, right, then theoretical I
should amend my tax returns and then you're able to

(08:11):
claim said child. If it's not amicable, then, um, you
know that does become a very very difficult situation. Yeah,
you whoever, first it's a race, it's first confirst. Yeah,
and then you know that may be part of you
may have to look into the child custody as well
as just like child support situations, you may have to amend. Um,

(08:32):
you guys may have to play within certain other contours
of the relationship. Okay, if for children you can write
can you write things off like childcare or what kind
of things can you write? That's great? You know, like
for example, we were just talking about the dependent character.
There's a dependent care credit. Right if you're working three
thousand dollars, three thousand dollars, a dependent care can be

(08:55):
written off six thousand if there's more than one child. Okay,
so that you know that's substantial. It used to be
much much larger. But we have a different Congress now,
so I mean, but you know, six thllsands still better
than nothing. What are some things that we should know about,
some credits that we should know about that maybe people
don't commonly use enough. Two things. One is especially with

(09:19):
given what has happened in the markets stock as well
as in crypto last year. Many listeners probably have a loss, okay,
and they're just thinking like, oh my gosh, I just
lost so much money because bitcoin just you know, this
money in bitcoin and right. And one of the things

(09:40):
that they don't realize is they actually need to collect
gathered those statements from their investment professionals and make sure
those statements are given to their tax professionals because even
though they had a huge loss, they may have gains
from other areas so that losses could be net against.
And trust me, we have so many clients who may
have a brokeage account here and a brokerage account here,

(10:01):
but only for whatever reason, show the gains because they
only think about the gains or they don't even want
to talk about the losses. Right, But the losses will
net against the gains, that's one thing. Second of all,
let's just say that there are no gains. Even if
you have losses, you stick at three thousand dollars a year, Okay,
So let's just say I theoretically I have lost fifty
thousand dollars from bitcoin last year, right, I still get
three thousand to net against my W two wage income

(10:23):
at iHeart, okay, which is something, which is something and people,
you know a lot of times do forget about it
another thing. And this actually I see with my friends
they have Airbnb, right, but they don't do it that often?
Do you just have it like once a while whatever? Right?
First fourteen days tax free? First fourteen days is tax

(10:47):
What do you mean? So for example, if I run
out my house through you know, through Airbnb, all right,
and it's one hundred dollars each visit, right, okay, and
I've done sixteen nights, sixteen nights of last year, the
first fourteen days is tax free. Okay, I didn't know that.
That's an interesting credit. It is, and it used to
be part of UM. Wealthier individuals who had um these

(11:13):
mansions near golf courses, and what they would do during
like the Masters is actually just runt out their homes
for Oh. Absolutely absolutely, I mean you know, the code
is definitely structured UM to benefit the people who can
hire the tax professionals who actually have the income to
actually shelter, right, all right, and what are some things

(11:36):
we can do to make sure we don't get audited,
because that's a really scary thing for somebody when they
get that notice from the IRS that they're being audited.
And I'm sure there's ways that two can avoid that,
because what percentage of people get audited very little on
on a certain stance. Right, So they're totally seventy nine
thousand audits last year. That's not bad, that's not bad.

(11:58):
But the more income you have, more likely yeah audited.
Also the more incorrect information. And so when you're talking
about like audits, right, one thing that our listeners should
actually pay attention to, right, the listeners here, make sure
you gather all the information before the tax return is filed. Okay,

(12:19):
So let's just say I have two W two's, right,
So I have one from iHeart and then I have
one from Starbucks. Okay, and I only give the iHeart
W two to my accountant totally forgot about it or
maybe by Starbucks to B two game in late, got
lost in a mail whatever, Right, So I file the
tax return under one W two forget this second one.

(12:40):
Trust me, I'll get flagged okay, right. Partnerships and other businesses, right, No,
I have a lot of those. You do, and at
the end of the year, you're supposed to get a
K one for every business that you're a partner. I
can't stand when peop would be late with the kin.
Can I get my K one? Can I get my
K one? Right? We had that last year, right, And

(13:00):
it's there's also a situation where if you miss the
K one, or maybe you just have a listener who
has five businesses forgets to send in one K one
that will be flagged. Okay, right. Lastly, informational simple stuff,
social security numbers, e I N numbers, which is the

(13:20):
number for your business, as well as checking account numbers.
Make sure those are correct. I know this sounds ridiculous,
but every time mess up, people mess up, even in
my firm, I'll type it in and then I'll run
it by my partner. I'd be like, okay, this is
the number six two four one d DA and then
Christina has to like check it off. We have to

(13:43):
do that, right, yeah, yeah, because sometimes human error, that's
what it is, absolutely keystroke error, whatever it is. I
was going to ask the biggest mistake you see what
people found on taxes, but is a human error or
sometimes a human error, sometimes system error. The biggest one
that we've been seeing in the past two years. People
have been changing their accounts a lot, especially with and
when they're moving from one account. Let's just say Morgan

(14:04):
Stanley to e Trade. Okay, and maybe they have purchased
Microsoft at fifty dollars ten years ago. Then when they
moved it, they did not report what they purchased it at. Okay,
they sold their Microsoft at one hundred and sixty today,
right because the forms did not show the amount that

(14:27):
was moved. When it comes to me, the tax preparer,
I may see a zero, so instead of being now
when you get stocked to be taxed, you have to
look at the amount that you sell it at as
well as the amount that you purchased at. So it'd
be one sixty fifty one ten. If I see a
goose egg in one of the forms, I assume that

(14:48):
it's zero, then I would be taxed at one sixty,
which would be a difference of twenty five dollars per
sharing taxes. Okay, that's a big, big air a special
these days. And that's only if you sell are moving,
just move. Oh, it could be moving. It could be
a key stroke error within the financial planning firm. It

(15:11):
could be like a lot of things. But we do
see a like a lot of errors right now with
what it's called ten nine and m T nine, like
where we just don't really see the historical cost of
the equity or the bitcoin. All right? What about writing
off too many things? Because that's another thing people, But oh,
you could just write this off. You could write this off.

(15:31):
You could write off your clothes, you could write off
you know, all of these dinners. You could write so
many things off. What is the limit? And how do
you know what you can and can't write off? Well,
first of all, you have to have a business, right
you can. This is just my life. I want to
write it was we talked about business at dinner. How
do you like? How do you know? Well? First of all,

(15:51):
you know, first of all, you have to have a
ordinary business. Okay. The expense must be substantial and traditionally
related to the business, okay, okay, And if it isn't,
it must be substantiated. Okay. So if it's a meal, right,
like let's say the three of us set up a
real estate real estate company, all right, and then we

(16:12):
had a meal. And let's just say that we had
a meal in Detroit, right, Okay, that is obviously a
business deduction. That was obviously a business meal. Right. But
if say all the three of us were just celebrating
and we're just hanging out and we're going to like
opera and we're just you know, buying, buying bottle service. Yeah,
the Mediterranean sorry, gets very excited. It does. One brought

(16:39):
it in you. I didn't say anything, then you chimed in,
and then it made me think about the averagehips. I'm sorry, continue,
I can't focus now because I'm thinking about aera chips.
But um so if we did bottle service, yes, right,
that's obviously not a business business, you know, so there
needs to be sub stantiation with then the operations. Right.

(17:03):
If you read this promoting a new single, well, you
know what, that's very very interesting, right, Like what is
a promotional expense versus what is actually a business expense? Right? Okay? Um?
Or is the promotional expense really related to business? Right?
We have clients who go to Vegas, right and they

(17:25):
actually are having shareholder meetings, are actually having these dinners,
they're actually trying to promote their record or the movie
or their project. Okay, that's perfectly fine. But then they're
onto floor and they're gambling. What do we have to Yeah,
so then the're on the floor and they're gambling. Right,
And invariably every year, I'll get one or two calls,
Oh I just lost xcent to tables. Yes, but it

(17:47):
was a business expense. Yeah, it's a business expense. I
was Evangela. I was talking about my movie whatever you know, no, right,
because because you have to look at you have to
substantiate the business tie to it, right. And then certain
people talk about vehicles because what if I'm researching a
movie about gambling. Well, for example, if you go, oh,

(18:10):
that's a great one, right, that would be okay. I mean,
you know, if you're actually doing a legenerate research, um,
and if your business has something to do with the
interview regarding this project, yeah, that would be fine. Okay.
What do you get taxed on when you win in
the casino? Like what amount if you if you win
more than well, you're supposed to report all your games, okay, Okay,

(18:33):
And this is a great question because I don't know
if if you win more than twelve hundred dollars on
at the slot machines, right, it automatically stops the machine.
Somebody has to come over. They're going yeah, yeah something
or yeah, well that would become of okay, but one
thing that your listeners should know is that the income

(18:54):
that they made over at the win, let's just say
five hundred dollars, right, can be net against any gambling
losses for the same year. Okay, all right, We're going
to keep checking a lot of stuff, I know. And
then also one other question about I think I heard
someone say they wanted to buy a certain car because
you can partially write part of it all or something
like that. Yeah, can you explain that? Yeah, So, first

(19:15):
of all, you have to have a business, yes, and
then the vehicle must be at least fifty percent utilized
within the business. Okay, okay, if you try to work
every day, that's right within the business within the business, right, so,
and then it must be over six thousand pounds. So
that's what I hear had a way a certain amount,

(19:35):
and I thought that was kind of odd, but okay, well,
you know, because they don't want you to be the
The code is very interesting. It's not just about the money.
It's about the policy, right, Like we're writing this because
we're trying to promote certain certain behavior, right. And the
reason why it's considered odd why is it six thousand
pounds because theoretically the IRUs is trying to promote you

(19:55):
to buy commercial vehicles, like true vehicles that would be
used on a not stay nice right, a BMW truck. Well,
BMW truck could possible. Yeah, okay, exactly where your car.
But I mean that's why sometimes where you'll see like
some of the more expensive cars, the roles portions now

(20:19):
they're exactly within six thousand pounds now on purpose, So
you could for the rich people to write it off.
What about all these people working from home now and
writing off you know, you're yeah, maybe you're right. Can
you write off part of your rent? Can you write
off if you have a mortgage, part of that but
because you're working from home? Well, um, yes, your question. Yeah,
you have to look at the total square footage of

(20:40):
the house, okay, and then how much you actually devote
to your business, So then it must be fractional or
in proportion to that. Otherwise you could take the standard calculation,
which is fifteen hundred dollars. Okay, yeah, because like, let's
just say our producer Dan, he edits a lot of
stuff at home. You know, he might leave here and
then go home work into the night, editing, editing, editing.
That counts well if Dan has a separate business, yes, okay, yes,

(21:05):
But if he's just doing it as an employee of iHeart,
it does not. Yeah, you have a separate business together. Sorry,
but it starts to your accountant. But he's not like mine.
We'll talk later Dan, all right, So we just want
to make sure that everybody knows that they got to
hit these deadlines, and you can. Can you call let's
just say there's interest because you paid late. Another thing

(21:28):
that I know you've always had me to do is
you have to make a payment even if you're getting
an extension. Yeah, can you talk about that because that
helps people if you owe money. Yeah. So for example,
we're coming up right April eighteenth, and if you shouldn't
you need to speak with your tax professional and determine
what is actually my projected or estimated tax. Even if

(21:51):
I found an extension back in all the way into October, right,
that doesn't stop the i RS from actually assessing the
tax that I truly owed back in April. Okay, So
even if it's an extension, it doesn't mean that, oh
I stopped the payment or the calculation for the payment.
I still owe it in April. So that's very very important. Right.

(22:12):
So that's about you always tell me you make sure
you make some type of payment, because then it's less interest. Well,
you can estimate what you think you might owe, that's right,
and that's the job of your professional to actually estimate
the amount that you owe. Right. In some cases, some
of your listeners may withhold or overpay into the system
and then they owe you money. That's right, then they

(22:33):
would or well the RS would then owe that listener
and money. That's correct. Okay, yeah, yeah, So it just
depends on the individuals withholdings. All right, we do you
want to make sure everybody's getting into the money. Yeah,
and a great conversation. Yeah, So I just want to
thank you. So anything that we miss that you feel
like is important for our listeners to know as a
tax time is approaching us April eighteenth, unless you live

(22:54):
in one of those areas where you get an extension,
if any of your listeners are actually looking to any
EV cars. Especially this year, the rules have definitely changed.
It used to be just a seventy five energy credit
for purchasing an EV car. The rules are completely different
for so the manufacturer actually has to qualify with the

(23:14):
federal government. Okay, that's not on your listener. But what
will be on your listener is whether or not that car.
Let's just say it does qualify, if that particular car
actually qualifies. So when they purchase an EV they need
to ask the dealer if this particular car with this
VIN number actually qualifies. Wow, you have to know the

(23:35):
VIN number and everything. They have to look it up.
But there's a lot of work. That's why you need
a tax attorney. For sure. I'm not doing any of
this about myself because I feel like there's more of
a Chiantio get audited too when you do your taxes
on your own. Yeah, yeah, there can be definitely because
again there is the less chance of error right, right,

(23:56):
when you have more people look over the task return right, Right?
Do you think if you have like a just a
straight up, like you know, employee, it's just a standard
check you get every single week or every two weeks,
and then is it necessary to hire someone or do
you think something that is just very straightforward is something
you can do yourself. It depends. It depends on the

(24:17):
bandwidth of the listener, right, It depends on what's actually
going on in his or her life. It also depends
on the amount of that check. Right, Right, what I think,
you know, everyone kind of knows like where their capabilities are.
And I'm very good to other people's finances. You can
ask my husband. I'm not very great with my own, okay, right,

(24:39):
And so does your taxes? Who does my taxes? Thankfully?
I have a partner, right, thankfully, Christina does my taxes.
Howard does my taxes? You know, I don't do my
own personal taxes. You know, it's kind of like being
a doctor, right, I should not be my own physician. Okay. No,
I think that's important too, because it might be things
like we just learned a lot of different things about
tax breaks that maybe you don't know about, and so

(25:00):
if you're trying to do your own you might be
neglecting money. Yeah, money that you could beginning. So I
do feel like that is important, Yeah, absolutely absolutely, And
you know it's an important conversation. One thing for your
listeners when you get a tax professional, right, make sure
and this is one thing that I learned from my
mentor Donald. He told me that when you have a client,

(25:22):
go through the tax return with your client and have
them explain it back to you. Okay, because nobody's life
is reduced onto one line of a tax return, right,
nobody's life is just like, oh, this is my income.
That's it right, right, it's there's so much that went
into it. So make sure that your tax professional actually
gives you a courtesy of like going through it and

(25:43):
explaining what dislignement, what dislignement, This is how a calculation is. Okay,
all right, well good, you have a lot of work
could out for you. Then there's a lot of lines
and things that I have to do with. But I
appreciate you for coming through and for voluntary to do that,
because I know a tax season is always a nerve
record time for me and so for a lot of people,
and for some people it's a great time because you

(26:04):
get a check. That's right. Yeah, So how is how
am I looking? You're looking good? All right, you're looking good. Yeah.
You did give me a pound of documentation though, so
keep on my documents. It's the least I can do. Yeah,
so you know I have to get a crate to
like haul all your stuff that But thank you so much,

(26:24):
Eric Leean. Where can people find you? Um? You guys
can find me over at info at intrinsic dot biz.
Info at intrinsic I N t R I N s
I C dot biz. And don't forget to give to charity, guys.
That's also something that makes you feel great and you
can write it off. Oh yeah, absolutely, yes. Make sure
that you gather all of your receipts from the charities.

(26:47):
Make sure that the charities are legitimate. Make sure that
they actually provide you with the letters near that time
at the end of the year. Yeah, because if you
don't get that letter, it's gonna be difficult to claim.
Can you claim your friends on your taxes? Wish Angela
wants to claim me? I do. She's like my child.
You could claim me. All right, it's where you put Angela. Yea,

(27:08):
let's get it where y'all