Can I claim my child on my tax return? This question comes up frequently with taxpayers. The taxpayer’s child must pass the four “qualifying child” tests. These four tests are related to relationship, residence, age and support. There are also rules that need to be followed in the child is claimed by two or more taxpayers in a given year.
This is one area that causes taxpayers significant tax problems. If you claim a child on your tax return and the child does not qualify you may have a tax problem due to the fact the IRS will disallow this benefit. The problem gets worse if this goes on for a number of years and is discovered after many years of filing. If you have a tax problem due to this and are wondering what your options are you should consult a tax professional.
Friday, September 12, 2008
Friday, September 5, 2008
Unfiled Tax Returns - Am I In Trouble?
You have not filed a tax return or two or three or maybe even more and you’re wondering if you’re in trouble with the IRS because you haven’t heard anything from them. The answer is YES! You are in trouble. Don’t get a false sense of security just because you have not heard from the IRS. They’ve got your number (and your numbers!). The IRS maintains a file on every taxpayer. They have a record of all income you have earned from all sources.
It is not unusual for a taxpayer to go for a period of time with unfiled returns and not hear from the IRS. This does not mean the IRS has forgotten about you. They have not. At some point in time the IRS will send the taxpayer an SFR which stands for Substitute For Return. When they prepare the SFR they will prepare it in such a way as to apply the maximum tax and will include all penalties and interest. Then they will seek collection. It is at this point that you, the taxpayer, will need professional tax help.
On a more important note it is important to recognize that the IRS considers non-filing to be a criminal offense. The IRS always reserves the right to pursue prosecution by referring cases of non-filing to the Criminal Investigation Division of the IRS. Don’t let this happen to you! If you’re unfiled get your tax returns filed quickly and accurately!
It is not unusual for a taxpayer to go for a period of time with unfiled returns and not hear from the IRS. This does not mean the IRS has forgotten about you. They have not. At some point in time the IRS will send the taxpayer an SFR which stands for Substitute For Return. When they prepare the SFR they will prepare it in such a way as to apply the maximum tax and will include all penalties and interest. Then they will seek collection. It is at this point that you, the taxpayer, will need professional tax help.
On a more important note it is important to recognize that the IRS considers non-filing to be a criminal offense. The IRS always reserves the right to pursue prosecution by referring cases of non-filing to the Criminal Investigation Division of the IRS. Don’t let this happen to you! If you’re unfiled get your tax returns filed quickly and accurately!
Pennies On The Dollar Tax Settlement
You owe the IRS a large sum of money and you want to settle your tax debt for “pennies on the dollar.” The Offer In Compromise is the key to your problem. This is a program offered by the IRS whereby you can offer the IRS LESS than what you actually owe to settle your entire tax debt. You must qualify financially for the program, however.
The program is complex requires a high degree of sophistication to effectively calculate your offer amount and structure your offer. This is best handled by someone with considerable experience in this particular method of tax resolution. You can do it yourself but if you do you may be putting yourself at great risk.
If you choose to “go it alone” there are some things you should consider. You may offer the IRS too much! This may put you in a position that you cannot afford which would ultimately jeopardize your agreement. Or you may offer too little in which case the IRS will consider your case a frivolous offer and reject it. If your offer is denied on this basis the IRS may construe your frivolous offer as an attempt to delay or obstruct the collection process and may turn your case over to the Criminal Investigation Division of the IRS for criminal investigation. Don’t chance it! Hire a professional! At the very least obtain some degree of professional tax consultation. Good luck!
The program is complex requires a high degree of sophistication to effectively calculate your offer amount and structure your offer. This is best handled by someone with considerable experience in this particular method of tax resolution. You can do it yourself but if you do you may be putting yourself at great risk.
If you choose to “go it alone” there are some things you should consider. You may offer the IRS too much! This may put you in a position that you cannot afford which would ultimately jeopardize your agreement. Or you may offer too little in which case the IRS will consider your case a frivolous offer and reject it. If your offer is denied on this basis the IRS may construe your frivolous offer as an attempt to delay or obstruct the collection process and may turn your case over to the Criminal Investigation Division of the IRS for criminal investigation. Don’t chance it! Hire a professional! At the very least obtain some degree of professional tax consultation. Good luck!
Thursday, September 4, 2008
Help! I'm Getting Levied!
Help! I’m Getting Levied!
If you get a notice that you are going to be levied by the IRS you need to get help immediately! When the IRS notifies you are getting levied you need to take action to stop this process ASAP! The IRS has the authority (and the power) to have your employer send a significant portion of your pay check directly to the IRS as payment toward your IRS debt. The amount the IRS can take varies depending on your filing status.
You will know if you are getting levied because the IRS will send you a notification in the mail. The notification you will receive will be either a “CP504 – Urgent!! We intend to levy on certain assets. Please respond NOW” or an “L1058 - CALL IMMEDIATELY TO PREVENT PROPERTY LOSS – FINAL NOTICE TO INTENT TO LEVY AND NOTICE OF YOUR RIGHT TO A HEARING” These notices are your last chance to take action. If you receive either of these notifications you need to call a professional tax resolution specialist.
If you get a notice that you are going to be levied by the IRS you need to get help immediately! When the IRS notifies you are getting levied you need to take action to stop this process ASAP! The IRS has the authority (and the power) to have your employer send a significant portion of your pay check directly to the IRS as payment toward your IRS debt. The amount the IRS can take varies depending on your filing status.
You will know if you are getting levied because the IRS will send you a notification in the mail. The notification you will receive will be either a “CP504 – Urgent!! We intend to levy on certain assets. Please respond NOW” or an “L1058 - CALL IMMEDIATELY TO PREVENT PROPERTY LOSS – FINAL NOTICE TO INTENT TO LEVY AND NOTICE OF YOUR RIGHT TO A HEARING” These notices are your last chance to take action. If you receive either of these notifications you need to call a professional tax resolution specialist.
Friday, August 29, 2008
Business Taxes - Am I Liable?
Business Taxes – Am I Liable?
Are you a business owner? Does the business owe taxes? If so, you may be liable for the taxes and need to speak with a tax professional. There are two types of taxes associated with a business (excluding sales taxes) and they are income and payroll taxes. Most small business owners get into trouble in the area of payroll taxes. It is the responsibility of the business owner to withhold the appropriate amount of payroll taxes and then pay the federal government and the state government (if applicable).
Payroll taxes are due on the 15th of the month immediately following the month for which the taxes were withheld. If the taxes are not paid the IRS will notify the business owner of the amount owed. If not paid within the timeframe requested then the IRS will take actions to collect. If the business is unable to pay the taxes the IRS can force the business to close and then go directly to the business owner to pay the taxes at which point the business owner becomes personally liable for the payroll tax(es).
The good news in this is that often times dealing with the IRS can be somewhat easier as an individual taxpayer than as a business. Payroll taxes rank as one of the top IRS collection priorities. Taking a proactive approach to this problem is always the best option. If you think you have an issue with payroll taxes consult a tax professional today.
Are you a business owner? Does the business owe taxes? If so, you may be liable for the taxes and need to speak with a tax professional. There are two types of taxes associated with a business (excluding sales taxes) and they are income and payroll taxes. Most small business owners get into trouble in the area of payroll taxes. It is the responsibility of the business owner to withhold the appropriate amount of payroll taxes and then pay the federal government and the state government (if applicable).
Payroll taxes are due on the 15th of the month immediately following the month for which the taxes were withheld. If the taxes are not paid the IRS will notify the business owner of the amount owed. If not paid within the timeframe requested then the IRS will take actions to collect. If the business is unable to pay the taxes the IRS can force the business to close and then go directly to the business owner to pay the taxes at which point the business owner becomes personally liable for the payroll tax(es).
The good news in this is that often times dealing with the IRS can be somewhat easier as an individual taxpayer than as a business. Payroll taxes rank as one of the top IRS collection priorities. Taking a proactive approach to this problem is always the best option. If you think you have an issue with payroll taxes consult a tax professional today.
Thursday, August 28, 2008
Surviving an IRS Audit
Surviving An IRS Audit
Have you been audited and now owe the IRS money? If so you may need to talk to a tax resolution specialist. The key to surviving an audit is to effectively plan for an audit. A large percentage of taxpayers are sole proprietors who work out of their homes, use their personal vehicle for both personal and business purposes and have a variety of expenses to write off.
Many things can trigger an audit. The IRS will flag returns that have either excessive write offs or under reported income. One way to effectively prepare for an audit is to get your records in order! Everyone, not just small business owners, needs to set up a good system of record keeping to maintain all documents that will be required during the course of an audit. A good system of record keeping would adequately maintain all records relating to income, expenses, home and investments. A basic record keeping system would keep track of the following:
Income
Form(s) W-2
Form (s) 1099
Bank statements
Brokerage statements
Form (s) K-1
Expenses
Sales slips
Invoices
Receipts
Cancelled checks or other proof of payment
Home
Closing statements
Purchases and sales invoices
Proof of payment
Insurance records
Investments
Brokerage statements
Mutual fund statements
Form (s) 1099
Form (s) 2439
Rules to recordkeeping
Many people wonder how long they must keep their income tax returns after the due date of the return. If you did not report income that was more than 25% of the gross income shown on your return you must keep the return 6 years. If you filed a fraudulent return or did not file a return then there is no limitation. If you owed additional tax on a return and your did not file a fraudulent return and you did not report income that was more than 25% of the gross income shown on the return then the limit would be 3 years. Any time a claim is filed for a credit or a refund after filing the return then you must keep the return must be kept the later of 3 years or 2 years after the tax is paid. If a claim was filed for a loss from worthless securities then the return must be kept for 7 years.
Remember, when you are accused by the IRS of owing taxes the burden of proof is on you the taxpayer. You must be able to prove what you claim. If you haven’t already, set up a system of recording keeping today to help you survive an audit. If you are in trouble then get help now!
Have you been audited and now owe the IRS money? If so you may need to talk to a tax resolution specialist. The key to surviving an audit is to effectively plan for an audit. A large percentage of taxpayers are sole proprietors who work out of their homes, use their personal vehicle for both personal and business purposes and have a variety of expenses to write off.
Many things can trigger an audit. The IRS will flag returns that have either excessive write offs or under reported income. One way to effectively prepare for an audit is to get your records in order! Everyone, not just small business owners, needs to set up a good system of record keeping to maintain all documents that will be required during the course of an audit. A good system of record keeping would adequately maintain all records relating to income, expenses, home and investments. A basic record keeping system would keep track of the following:
Income
Form(s) W-2
Form (s) 1099
Bank statements
Brokerage statements
Form (s) K-1
Expenses
Sales slips
Invoices
Receipts
Cancelled checks or other proof of payment
Home
Closing statements
Purchases and sales invoices
Proof of payment
Insurance records
Investments
Brokerage statements
Mutual fund statements
Form (s) 1099
Form (s) 2439
Rules to recordkeeping
Many people wonder how long they must keep their income tax returns after the due date of the return. If you did not report income that was more than 25% of the gross income shown on your return you must keep the return 6 years. If you filed a fraudulent return or did not file a return then there is no limitation. If you owed additional tax on a return and your did not file a fraudulent return and you did not report income that was more than 25% of the gross income shown on the return then the limit would be 3 years. Any time a claim is filed for a credit or a refund after filing the return then you must keep the return must be kept the later of 3 years or 2 years after the tax is paid. If a claim was filed for a loss from worthless securities then the return must be kept for 7 years.
Remember, when you are accused by the IRS of owing taxes the burden of proof is on you the taxpayer. You must be able to prove what you claim. If you haven’t already, set up a system of recording keeping today to help you survive an audit. If you are in trouble then get help now!
Wednesday, August 27, 2008
The Truth About Liens & Levies
The Truth About Tax Liens & Levies
When you owe money to the IRS the IRS has two very effective ways to collect the taxes they are owed, the federal tax lien and the levy.
The Federal Tax Lien – An Encumbrance
When the IRS assesses a tax liability against a taxpayer they are required to give notice to the taxpayer and demand for payment within 60 days of the assessment. If the full payment is not made then a tax lien is thereby created and subsequently encumbers all property and property rights of the taxpayer. This encumbrance applies to all current property and current property rights as well as any and all property and property rights acquired in the future by the taxpayer until the tax is paid in full.
The Levy – A Seizure
A levy is a seizure of your property, In order for the IRS to gain possession of your property thru a levy the following must take place:
1) The IRS must make a notice and demand for payment.
2) The taxpayer must neglect or refuse to pay the tax within 10 days of the notice and demand.
3) The IRS give the person a notice in writing of his or her right to a hearing 30 days before the levy is made on the taxpayer’s property.
Unless the taxpayer asks for a hearing, the IRS may levy upon all property and rights to property belonging to the taxpayer with the exception of certain exemptions. Do you have a federal tax lien or levy? Make sure you user a professional tax resolution company in order to learn what your best options are in dealing with this problem.
When you owe money to the IRS the IRS has two very effective ways to collect the taxes they are owed, the federal tax lien and the levy.
The Federal Tax Lien – An Encumbrance
When the IRS assesses a tax liability against a taxpayer they are required to give notice to the taxpayer and demand for payment within 60 days of the assessment. If the full payment is not made then a tax lien is thereby created and subsequently encumbers all property and property rights of the taxpayer. This encumbrance applies to all current property and current property rights as well as any and all property and property rights acquired in the future by the taxpayer until the tax is paid in full.
The Levy – A Seizure
A levy is a seizure of your property, In order for the IRS to gain possession of your property thru a levy the following must take place:
1) The IRS must make a notice and demand for payment.
2) The taxpayer must neglect or refuse to pay the tax within 10 days of the notice and demand.
3) The IRS give the person a notice in writing of his or her right to a hearing 30 days before the levy is made on the taxpayer’s property.
Unless the taxpayer asks for a hearing, the IRS may levy upon all property and rights to property belonging to the taxpayer with the exception of certain exemptions. Do you have a federal tax lien or levy? Make sure you user a professional tax resolution company in order to learn what your best options are in dealing with this problem.
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