Life Kit Podcast Summary: "Your 2025 Tax Questions, Answered"
Episode Release Date: February 25, 2025
Host: Marielle Segarra
Guests: Hanna Borukov and Leo Gabovic, Partners at Boruchov Gabovich and Associates PC
Navigating tax season can be a daunting experience for many, filled with paperwork, numbers, and a fair share of anxiety. In this episode of NPR's Life Kit, host Marielle Segarra demystifies the tax-filing process by addressing listener questions with seasoned tax attorneys, Hanna Borukov and Leo Gabovic. The episode provides valuable insights into when to seek professional help, understanding freelance income reporting, managing tax liabilities, and more. Below is a detailed summary of the key discussions and takeaways from the episode.
1. Introduction to Tax Filing Anxiety
Marielle Segarra opens the conversation by acknowledging the common dread associated with tax filing:
"Most of us didn't learn how to do our taxes in school, and so you may worry you're not doing it right and that you're going to get hauled off in handcuffs because you forgot to report one of your 1099s..." (00:22)
She introduces the experts, Hanna Borukov and Leo Gabovic, who will help alleviate these fears by answering pressing tax questions.
2. When to Use an Accountant vs. Tax Software
Marielle: "When do y'all recommend that people have an accountant file their taxes versus just doing TurboTax or Free Tax USA, one of the online softwares?" (03:37)
Leo Gabovic emphasizes:
"If you've just got a W2 and a few common deductions, software today is so intelligent and easy to use. There's no reason to pay an accountant hundreds of dollars..." (03:48)
He advises that freelancers or business owners should consult an accountant to ensure accurate filing and to optimize for success.
3. Reporting Freelance Income and 1099 Forms
Marielle brings up freelance income concerns:
"If you have freelance income, maybe it's a small amount, like $150 or something, and you didn't get a 1099 form for it in the mail, do you still have to report it when you file your taxes?" (04:38)
Hanna Borukov explains the 1099 form for independent contractors:
"It is a form that will get sent to you in the mail if you’re paid over a certain amount..." (04:58)
Leo Gabovic adds:
"Even if you didn't get a 1099, you're supposed to report all income that you receive..." (05:30)
He warns of potential penalties if income is unreported and the IRS becomes aware of discrepancies.
4. Penalties for Not Reporting Income
The discussion shifts to the consequences of failing to report income:
"What happens if you don't report something like that?..." (06:26)
Hanna reassures:
"The likelihood of an auditor scrutinizing $150 is extremely low..." (06:41)
However, Leo cautions about larger amounts:
"I've absolutely seen taxpayers who might have missed $1,500, getting a letter in the mail saying you owe us more..." (06:08)
He underscores the importance of honesty and rectifying mistakes to avoid hefty penalties.
5. Understanding IRS Processes
Marielle shares common frustrations with the IRS:
"Why doesn't the IRS just send you a bill?" (07:34)
Leo explains:
"The IRS uses the information they have, like W2s and 1099s, to file a substitute return..." (08:02)
He highlights the system's intent to encourage timely filing and payment, emphasizing that penalties for not filing are typically harsher than those for not paying.
6. Remote Work and State Tax Implications
With the rise of remote work, taxation across states has become more complex. Marielle poses the question:
"Do I have to pay income taxes because my company is located in a state that has them while I live in a state that doesn't?" (10:57)
Leo responds:
"For example, New York has the convenience of the employer rule, meaning you may need to pay taxes on New York source income even if you work remotely from another state..." (11:21)
He advises checking specific state laws and mentions the possibility of tax credits to offset double taxation.
7. Managing Tax Liabilities When You Can't Pay
When taxpayers owe more than they can afford, there are options available:
"If you can't afford to pay in full, which is a lot of people, there are options like installment agreements..." (13:04) — Hanna Borukov
Hanna outlines several solutions:
- Installment Agreements: Spread payments over time.
- Partial Pay Installment Agreements: Pay what you can afford.
- Offering Compromise: Negotiate a reduced total payment.
- Currently Non-Collectible Status: Temporarily halt payments if finances are dire.
Leo adds the value of involving a Taxpayer Advocate:
"Taxpayer Advocate is an independent organization within the IRS that can help you understand your rights..." (15:45)
He describes them as "the social workers of the IRS," providing personalized assistance at no additional cost.
8. Finding a Good Accountant or Tax Attorney
For those seeking professional help, choosing the right expert is crucial:
"Look at their qualifications, make sure that they are licensed..." (16:39) — Hanna Borukov
Leo Gavovic recommends considering Enrolled Agents as a cost-effective alternative to CPAs:
"Enrolled agents are qualified tax preparers who can represent you before the IRS..." (17:10)
He suggests that for peace of mind, investing in a reputable tax professional can be worthwhile.
9. Recap and Key Takeaways
Marielle concludes the episode with a succinct summary:
- File by the Deadline: Avoid penalties by filing on time or obtaining an extension (09:12).
- Use Software or Professionals Appropriately: Simple tax situations can be managed with software, while freelancers may benefit from professional help (03:37).
- Understand State Tax Laws for Remote Work: Be aware of tax obligations in both your residence and employer's state (11:21).
- Explore Payment Options if Owing Taxes: Utilize installment plans or negotiate with the IRS if unable to pay in full (13:04).
- Seek Professional Assistance When Needed: Ensure you're working with qualified tax professionals to navigate complex issues (16:39).
Marielle also directs listeners to additional resources and encourages subscribing to Life Kit+ for enhanced support.
Conclusion
This episode of Life Kit serves as a comprehensive guide for individuals navigating the complexities of tax filing in 2025. With expert advice from Hanna Borukov and Leo Gabovic, listeners gain clarity on when to seek professional help, the importance of accurately reporting all income, understanding state tax obligations, and managing tax debts effectively. Whether you're a W2 employee, freelancer, or remote worker, the insights provided aim to make tax season a little less intimidating.