3 Ways To Get A Fresh Start With The IRS

by Megan Kunis

Who couldn’t use a fresh start—especially when it comes to alleviating tax debt? If getting rid of debt were as easy as closing our eyes and snapping our fingers, we’d never learn the meaning of discipline. No, if getting rid of debt was that easy, then the Internal Revenue Service (IRS) wouldn’t even be necessary. But debt is a real thing that plagues most American taxpayers and while many may have it under control, there are millions who don’t. That uncontrollable debt can spill over to having issues with federal debt—something you might want to avoid altogether if at all possible.

Yet, many don’t.

The IRS’ Main Job

And aside from collecting tax debt, the IRS is very necessary for ensuring that the taxes collected are fully accounted for so that lawmakers and congressmen can disperse them to the proper legislative channels. In order for them to do this, they need to have an accurate budget of the numbers. This is projected by the number of American taxpaying citizens and their household income. The level of their income will determine exactly how much they owe in taxes.

So if those taxpayers who owe don’t file or pay the amount that the IRS claims they owe, this puts the US Treasury in a compromising situation. Take, for example, your paycheck. If you’re expecting a certain amount of money to be directly deposited into your bank account, then chances are you may have already planned to spend that money on paying bills, groceries, etc. If you don’t receive that check, then you’re put in a compromising position. With the US Treasury, they’re in a compromising position that could be well into trillions of dollars!

Success Tax Relief does not want you to be in a financially compromising predicament. If there’s a way we can help you get a fresh start, then we want to provide you with 3 simple steps in helping to clear your tax debt once and for all.

  1. Monthly Payments

Even if you owe the IRS thousands of dollars, they will work out a monthly payment plan that won’t leave you in hardship. All you need to do is communicate your intention to pay.

  1. Avoid Tax Liens a Little Better

There’s really nothing that you need to do to make this work for you except avoid your tax debt from increasing. To do this, just avoid any missed or late payments because late payments equal penalty fees, and penalty fees and missed payments mean you’ve forfeited the payment agreement, and you’re right back to where you started—in debt and/or in trouble!

  1. File for an Offer in Compromise

It’s quite possible that you might be eligible for an Offer in Compromise that allows you to pay less than you owe. This isn’t an option that everyone is qualified for. Each case is different.

To determine if you qualify for an Offer in Compromise or if you need assistance working out a monthly payment plan to the IRS, then contact Debt-Ridden Tax Relief for a free consultation. 

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Don’t Leave Money On The Table! Access Your Education Tax Benefits.

by Junita Jackson

A report by the Government Accountability Office found that nearly 14 percent of all tax filers failed to claim a credit for which they were eligible. Tax credits help us afford higher education expenses by reducing the amount of income tax we have to pay or by issuing a refund. Unfortunately, millions of students and their families are unaware or don’t apply for the correct tax benefits, leaving much-needed dollars on the table—an average of $466 for each qualified filer!

Are you one of them?

Recently, NCLR joined Rep. Danny Davis (D–Ill.) and others on a campaign to get more people to apply for their education tax benefits. The Tax Breaks 4Students campaign encourages eligible students and families to apply for tax credits.

While eligibility criteria vary for each credit, there are a number of options available for students and families. The two largest tax credits available are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), although there are many others.

American Opportunity Tax Credit

The AOTC can be claimed for the first four years of post-secondary education if a student is enrolled at least part time in courses. The maximum tax credit for AOTC is $2,500, and up to $1,000 is available as a refund if you owe no taxes. If you are a current graduate student, you are not eligible for AOTC; however, you may be eligible for the Lifetime Learning Credit.

Lifetime Learning Credit

The LLC provides up to $2,000 per year for a student enrolled at least part time. Unlike the AOTC, the LLC has no limit on the number of years it can be claimed, meaning it is available to graduate students and those in continuing education programs. However, if the credit is greater than the total amount owed in taxes, it will not be issued as a refund.

How do I claim these credits?

The IRS provides an interactive guide to help you determine whether you qualify for a tax credit. Only students who attend schools participating in federal student aid programs can qualify for the AOTC. Once you confirm eligibility, the IRS provides Form 8863 to help you calculate the education tax credit. Most education institutions will mail you Form 1098T, which provides this information for you.

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Unpaid Business Taxes: How To Settle Your Debt And Avoid Bankruptcy

by Zach Haris

If your business is in danger of facing bankruptcy, there may still be a way to avoid it. The ramifications for a business bankruptcy is pretty dire and can affect not only your business but other companies who are involved with you in hopes of improving their own efforts toward success. By declaring bankruptcy, you are opting out of paying your debts to these companies that are expecting money from you. This, in turn, affects their business’ bottom-line revenue, because now they’re taking a loss.

Bankruptcy. Not Cool. Not Cool at All!

Imagine if you loaned a friend $100 who promised to pay you back. That’s $100 that you’re expecting to put back in your bank account. You may have already spent that those funds trusting that your friend is going to make good on his or her promise—especially if there was a signed agreement that he or she signed. Then next month, they file for bankruptcy! What does that mean for you? It means that you’re out of $100 and if you jumped ahead and spent that promised money, then that snowballs into another debt that won’t get paid, or money taken out another stream of revenue to supplement the loss.

Either way, it doesn’t look good for you.

When you file for bankruptcy, you’ll suddenly understand the origin of the term, “You’ll never do business in this town again!” because no one will want to conduct business with someone who can’t successfully manage a business.

Bankruptcy is Avoidable!

One way you can settle your business debts is to negotiate with each of your debtors to accept a reduced payment to settle the loan. Many businesses will gladly accept that than nothing at all once they learn that you’re going out of business. In fact, they will appreciate your efforts of coming to them first trying to work something out rather than leaving them high and dry.

This may sound pretty simple, but before you start making negotiations, you’ll first need to prioritize your debts. There’s still payroll and payroll taxes that need to be met as well as other business expenses like rent/mortgage and utilities. Make a list of all the most pressing debts that your business has and address them accordingly.

Still, Need Help?

Even with prioritizing your debts, deciding which businesses get paid and which ones don't can still be a painful process. Another way to settle your debt and avoid bankruptcy is to let the tax experts handle everything.

Success Tax Relief has over 30 years of experience getting people out of tax debt, whether it’s personal or business-related. We specialize in audits, Offer in Compromise, tax preparation, installment agreements, personal credit counseling and helping you re-establish your business credit. Read all of the services we have to offer here.

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Do You Owe State Taxes?

by Megan Kunis

As a United States (US) citizen, everyone owes state taxes. The real question is: how many states do you owe?

Many people think that they are only obligated to pay state taxes in the state in which they reside. The truth is it’s possible to owe state taxes in multiple states. There are mainly two reasons why one would have to pay state taxes in multiple states:

  1. Relocation

Wherever you live in the US, each state has you recorded as a resident. If you were a homeowner or a renter, and/or collecting wages, that state has the record of you residing in there. Your duty as a US citizen, it is not only to pay federal taxes, but also the state taxes.

Think of it this way: If you’re residing in Florida, then you expect certain things to be well maintained like public parks and beaches. You expect the protection of law enforcement and firefighters to put out fires, the streets to be well taken care of, etc. Taxes take care of all of these things and as a residing citizen, you will be expected to pay your share, whether you own property or not.

So, if you live in Texas this year, but expect to move to Louisiana next month, then when the 2018 tax filing season approaches, you will be expected to file state taxes for both Texas and Louisiana. Now, there is a possibility that you may not have to pay any state taxes depending on how much was taken out of your paycheck throughout the year. In most cases, many people receive a state refund.

  1. Conducting business in that state.

As a business owner, it’s becoming quite common to take care of taxes in multiple states, especially with so many eCommerce businesses competing with each other. Whether you have a brick and mortar location in just one or several states, or selling a product in a state other than where you live, you may be obligated to pay sales tax on the item where you sold the product in. This means that you need to be informed about the different sales tax in each state that you conduct business in.

This is why a tax lawyer is so important to have on your team when conducting business on this level. Many business owners find out all too soon that they’re in over their head when it comes to conducting business in multiple states. While the business itself is the same, where they’re located may have to be operated slightly different according to the tax laws of that state. This might be intimidating for a business owner, but old hat to a seasoned tax lawyer.

Worlds Forum Taxation and Advisory not only have an experienced tax lawyer on hand to manage your business tax obligations, we also have professional tax preparers, and CPAs at your service.

 

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4 Different Types Of IRS Audits And How To Deal With Them

by Selina Stewart

Here’s what you need to know about different types of IRS audits and how to deal with them as a self-employed entrepreneur.

What is an IRS Audit?

An IRS audit is a thorough examination of your tax account and financial information to ensure that figures are reported correctly and that you’re adhering to tax laws. As tax returns are filed they are compared to the average figures for other accounts in this category.

If your figures seem to be elevated, or show anomalies, your return is put into a pool of other returns and randomly picked for more in-depth review by an experienced auditor. After a review, your return may be accepted and filed away, or the return is forwarded to an examining group for further analysis.

There are a few types of IRS audits:

  1. Correspondence Audit

A correspondence audit is the most common and simplest of the IRS auditing processes. The IRS will send you a letter in the mail requesting answers to specific questions or needed clarifications related to your tax return.

You will likely have to perform a correction of your tax return that may either result in paying in more money or receiving a refund for an accounting error. Either way, the correspondence letter will state the reason for the inquiry and often offer a simple resolution via an exchange of papers.

If you have data or receipts to back up specific claims, this is the time to send them in to help make your case. This type of audit is usually solved within a short time period once all the information has been collected. Be sure to keep copies of all correspondence in case anything comes into question again in the future.

  1. Office Audit

If the IRS has further questions about your return that extend beyond the normal correspondence letter, you’ll receive an invitation for an in-person audit meeting at one of their local offices.

This type of audit is a bit more serious than a correspondence audit and requires more of your time. However, an office audit is usually completed within one day since most information will be supplied on demand, and you’ll have time to supply any additional information that’s requested.

  1. Field Audit

A field audit is the most serious situation as the solutions to the issues could not be resolved with a simple letter or office visit. The IRS will visit your place of business and may look around to verify the legitimacy of your workplace, employees, and other business expenses.

It’s strongly encouraged, in the case of a field audit, that you hire a professional Enrolled Agent, tax professional, or CPA to be an advocate for you and your business. They will be able to answer questions on your behalf and ensure you’re getting fair processing.

  1. Random Reviews

In addition to traditional audits, you may be subject to a random review of your tax situation. The IRS isn’t looking for anything in particular when they perform these random reviews and will simply look at your return for inaccuracies.

These reviews are generally performed via a correspondence letter with notice that your account is being looked over. Usually, you won’t receive a follow-up letter if the review of the return doesn’t result in any red flags. In this case, you shouldn’t be too alarmed as the IRS agent isn’t looking for anything in particular.

How Far Back Can the IRS Audit?

The IRS tries to audit tax returns soon after they are filed, but can sometimes be as far back as the last three years. If there are additional errors or substantial mistakes, the IRS usually won’t go back more than the last six years.

To back up any business deductions, credits, and other income information, it’s recommended that you keep all tax receipts and information for at least seven years. Or in the case of an asset, save the records for as long as you own the asset, plus three additional years.

If you are notified you’re being audited, remain calm and have a talk with your tax professional. Usually, these situations resolve themselves quickly and easily so you likely don’t have anything to worry about.

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How Trump’s New Tax Plan Might Affect Your IRS Debt

by Zach Haris

It’s really too soon to tell how any changes within the Trump administration will affect taxes, but one thing is certain, if you are currently in debt with the Internal Revenue Service (IRS), it is fully expected for you to pay what you owe. That’s not going to change no matter if the taxes are raised or lowered.

Stay Focused! Do Your Due Diligence.

It’s important to not let your emotions get in the way of your financial obligations to the IRS. No matter who is in office, as United States citizens, it our responsibility to uphold our part and pay the taxes we owe. If for some reason you believe that the amount that you owe is incorrect, you have a right to contest these numbers. You can do this by mail or telephone, although we recommend that you do both—in that order. This way, you’ll have written documentation that proves you’re actively communicating with the IRS, and speaking to a representative by phone will show that you’re following up accordingly.

Need Help with That?

We realize personally speaking to the IRS can be intimidating. That’s why the professionals at Success Tax Relief, a tax relief firm are staffed with a team of tax experts to communicate to the IRS on your behalf.

Back to the Whole Tax Thing!

We realize that you still may be a bit concerned about how Trump’s new tax plan might affect your taxes in the years to come.

The plan has been described as “Reagan on steroids”, a plan that follows the concept of the ‘rich getting richer and the poor getting poorer’—all in theory, of course!

According to White House Reporter, Matthew Nussbaum who tweeted a photo of the one-page 2017 Tax Reform for Economic Growth and American Jobs, are as follows:

  • The standard deduction will double, but many tax breaks will no longer be available to individual filers except for home ownership and charitable contribution—this will reduce a number of deductions that you’ll be able to claim.
  • Tax relief will be provided for families with dependent care expenses.
  • “Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers”
  • Repeal:
    • Alternative Minimum Tax
    • Death tax
    • Obamacare
  • For businesses, the overall objective is to level the playing field of the territorial tax system for American companies.

In a Nutshell…

The plan reportedly is not projected to decrease the country’s deficit until after 10 years from now, and it will need a straight party vote. So, as of right now, there’s nothing to be actively concerned about, because it’s too soon to tell. It also doesn’t have much to do with you paying the IRS what you owe.

What Can You Do?

The best thing to do during this continuous transition is to continue taking care of your financial obligations. Worldsforum.com/taxationandadvisory can help you along with this process. We work on your behalf—not for our benefit.

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