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To File Or Not To File That is The Question ?

Essential Tax Tips for Food & Beverage Workers: My Personal Experience

As someone who has piloted through turbulent conditions of tax issues and learned much along the way, I want to share a few tax tips for the upcoming tax season. These tips are a mix of my personal experiences and corresponding advice from a tax professional.

When I first started this magazine, I sought questions from F&B’rs for our tax pro to respond to.  By far the most common question among food and beverage workers was

“ What happens if I  haven’t filed my taxes in a long long time?”   

This issue isn’t just a hypothetical question,  it was my reality as well.  

I went nine years without filing taxes.

It began with missing one year, which then snowballed into almost a decade of avoidance.

Honestly, I’m not even sure why. Perhaps it was a mix of procrastination and dread. Like many in the F&B industry, taxes were being deducted from my paychecks, so I was contributing, but not complying with filing requirements.

I felt like such an insignificant factor in the IRS’s grand scheme that they wouldn’t even notice. Yet, even if that were the case, I realized I’d never be able to purchase property, and I lived in fear of the IRS looming over my shoulder. In hindsight, this was simply foolish.  

Uncle Sam Taking $$

Uncle Sam Taking $$ | Image by Jerbear

So, I decided to change my course and resolve this lingering tax issue. I remember calling the IRS a few years back, uncertain of the response I would get. While I can’t recall every detail of the conversation, the gist of it was surprisingly straightforward and helpful.

The IRS sent me the income information they had received from my employer for the past six years and instructed me to file those returns. Contrary to what I expected, the IRS representatives were not only understanding but also expressed gratitude for my candor.

 

Realizing that tackling past years’ taxes was a task beyond my expertise, I sought help from a tax professional. At that time, finding tax software capable of handling previous years’ filings was a challenge. Now, I’d recommend using FreeTaxUSA, as they offer software for filing past years’ taxes.

The result of resolving my tax situation was indeed varied: for some years, I discovered I owed money, while in others, I was pleasantly surprised to find out I was due refunds. It’s important to remember that while refunds can only be claimed for up to three years, any outstanding taxes still need to be settled.

The IRS approached my situation with a level of fairness that I didn’t expect, 

and the interest accrued turned out to be less intimidating than commonly thought. They worked with me to establish a payment plan that was practical and manageable. When the next tax season rolled around, they simply subtracted what I still owed from my refund.

If I had continued to neglect my tax filings, would the IRS have pursued me?

Did they even care?

While I can’t definitively say, the relief and sense of liberation I gained from resolving these issues, coupled with the ability to finally own property, absolutely affirmed the value of facing my tax responsibilities head-on.

With that in mind, here are a few more tax-related suggestions  

  • File your tax return. (learn from my mistakes)
  • Keep a Daily Tip Record. You can download form 4070A from the IRS or get one of these tip tracking apps(serverlife, Just the Tips, or Tip Mule)
  • Download a copy of “Tips on Tips”  3148 it’s a guide for F&B’rs tip compliance. 
  • Understand Tip Pooling Rules, report only your share of the tips.
  • Self-Employed or Contract Work : If you do any freelance or contract work, like catering events on your own, keep track of all your business expenses, as these              can be deductible. This includes supplies, travel, and a portion of your home if used for business.
  • Deductible Work-Related Expenses:   Keep track of any work-related expenses that are not reimbursed by your employer. This can include uniforms, travel                   expenses (if traveling between jobs), and professional development courses.
  • Make Use of Retirement Plans Contributing to a retirement plan, like a 401(k) or an IRA, can reduce your taxable income.
  • Earned Income Tax Credit (EITC):  If you didn’t make too much on the books you might be eligible for it.
  • Child Tax Credit: The Child Tax Credit for 2023 has returned to pre-2021 levels. This means the credit is worth up to $2,000 per qualifying child, and the                     refundable portion is limited.
  • Tax Payer Advocate Service:  This is just a really good resource for tax help.

So here are my unprofessional tips and guides, I hope they help you get a ton of money back from the IRS or save you a few bucks.  

 I’m not a certified tax expert,

but these pointers have helped me manage my taxes better, and I hope they do the same for you. Alongside these tips, you’ll find links to resources that have been particularly useful to me. So, take a plunge into these insights, and perhaps you’ll discover strategies to enhance your tax return this year.