Don’t Delay In Managing IRS Tax Debt

Don’t Delay In Managing IRS Tax Debt

Debt Resolution, IRS Settlements Offer Help for Serious Tax Problems

San Mateo, Calif., - With tax day behind us, consumers and business owners who owe the IRS are not out of the woods. But while death and taxes are the big two inevitabilities, those with serious tax problems should know that it is possible to negotiate with the IRS to reduce past-due tax penalties and payments, according to Bradford G. Stroh, co-founder and CEO of Freedom Financial Network, LLC.

Americans, carrying more debt than ever, are also more likely to have tax problems than in the past. In 2004, the total of uncollected IRS taxes reached upwards of 0 billion. The number of levies (a key enforcement tool in which the IRS takes possession of assets to collect on unpaid taxes) topped 2 million during fiscal year 2004 - a 21 percent increase from 2003 and triple the 2001 number.

According to Stroh, taxpayers with tax debts under ,000 usually can manage the payment on their own or via an installment plan arranged with the IRS. “Tax problems merit professional help when individuals cannot pay tax liabilities of ,000 or more,” Stroh says. “At that point, specialists can negotiate directly with the IRS on behalf of these consumers, helping them obtain settlements.”

Tax relief specialists usually are attorneys or certified public accountants with special training and experience. Stroh explains that these experts can navigate the intricacies of IRS forms and calculations, help consumers understand the criteria the IRS imposes, and then help them get back into good standing with the IRS.

Depending on the severity of an individual’s situation, two types of IRS settlement are available:

An offer in compromise reduces the principal amount owed to the IRS.

An installment agreement is a payment plan for the amount due and often includes reduced penalties.

“Remember that you cannot let overdue taxes languish,” Stroh warns. “The IRS is serious — and increasingly aggressive — about tax collection and evasion. Tax debt can result in a lien on a house or garnished wages.”

Advisors can help consumers with the following steps:

Evaluate the situation and determine the amount of taxes owed to the IRS.

Ascertain whether the situation meets IRS standards for “doubt as to collectability” (i.e., unable to pay the full tax burden), “doubt as to liability” (i.e., consumer might not owe the tax), or “economic hardship.”

Establish the full amount owed, including taxes, penalties and accumulated interest, and understand whether collection limitations or penalty cancellations are possible.

Determine the best method for managing and eliminating the tax debt.

Negotiate with the IRS to settle on an agreed course of action and resolve the debt.

While facing and handling tax debt can be painful, last year’s bankruptcy reform legislation made it even more crucial for consumers to act. Historically, consumers in severe IRS debt might file for Chapter 7 bankruptcy protection or wait for the 10-year statute of limitations on tax liability to expire. Now, people are much more limited in the ability to obtain Chapter 7 filings. The bill’s new “means test” leads many consumers instead to file Chapter 13 bankruptcy, which establishes a repayment plan, rather than wiping out all debt. Consumers with tax debt may find it much less costly and simpler to work with a debt resolution firm’s tax relief service, which allows individuals to set up tax payment plans while avoiding court fees, attorney fees and bankruptcy judgments on their records.

“Whatever means you choose, tax season means it’s time to face the inevitable and manage your tax burdens,” Stroh says. “Fortunately, experts are available to help you along the way.”

Freedom Tax Relief, LLC (http://www.freedomtaxrelief.com) provides consumer debt resolution services through its Freedom Debt Relief and Freedom Tax Relief divisions. The company works for the consumer, negotiating with creditors to lower principal balances due that can often result in savings of up to half the amount owed. Based in San Mateo, Calif., Freedom Financial Network serves more than 5,000 clients nationwide and manages more than 0 million in consumer debt, offering an alternative to bankruptcy, credit counseling, and debt consolidation.

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Taxes Tools

Taxes Tools

To get caught up with the tax returns which you have missed in previous years, you will need to get current by submitting past year taxes. This is basically obtaining the old tax forms, gathering all the information and preparing it as you would have done it. After that, you can then have access to the tax back calculator. The online software will ask you a set of questions, which can include details on your income, your marital status,

 

A tax back calculator makes an assessment of your refund based on information that includes your income, whether you’re single or married, how many kids you have, and how much taxes you’ve paid so far. The calculator takes this data into consideration and gives you a projection of the amount you can expect to receive.

 

When it comes to taxes, many of us are clueless about what our withholding should be, if we should pay an estimated tax or if we qualify for EIC (Earned Income Credit). The IRS and other websites offer these free tax tools, so just search for the term and take advantage of the free help. Take a look at these tax tools that will help you figure it all out:

 

TurboTax Deluxe and H&R Block at Home Premium are the two top selling tax software preparation programs. Both have high reviews but there is a definite difference in pricing between the two.When it comes to filing your taxes, a little organization can go a long way towards making tax season much less painful.

 

Before you begin your search for an online tax preparation program, there are certain factors you should consider and important tax documents that you’ll need to have at the ready. With the deadline for filing for 2009 tax season fast approaching, you may be wondering which tax tools will be the most beneficial for your particular situation; in fact, this question may have kept you from filing yet. If you are expecting a refund,

 

The last few weeks I’ve been sharing questions that you can ask your tax preparer to determine whether or not your tax preparer is right for you.The first thing you should consider when searching for tax prep software is the type of taxes you need to file. If you own a business or a home-based business, there is even software that can work for you.

 

Numbers can really be tricky when it comes to computing your taxes. One wrong computation and you might actually pay the wrong amount. In order to avoid this you’re definitely going to need some help and it takes more than just a calculator. What worse that paying taxes? The answer would be getting all the computations wrong. This would mean you not being able to get all the deductions you deserve and at the same time,

 

Before the March 1st RRSP deadline, tax payers are asking themselves important tax related questions; Should I put my money in a Tax Free Savings Account (TFSA) or in my RRSP?, When is the right time to move from a province to province?There are many different types of people out there. No, that statement isn’t a new revelation or any big surprise.

 

According to Intuit’s Annual List of Tax Procrastinating Cities, Toronto topped the list. (These statistics were gathered in late April of 2009 - data related to 2008 tax year). Intuit is a maker of Quicktax, Quicktax tax online preparation software, Canada’s leading manufacturer and tax software provider.

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How to Settle Irs Back Taxes

How to Settle Irs Back Taxes

The IRS offers multiple back tax resolution programs to taxpayers based on their individual financial status. However, before the IRS will consider an offer to resolve back taxes, taxpayers must be fully compliant with their tax obligations. The exact tax obligations vary, but typically taxpayers must have all past-due tax returns filed and they must remain compliant with ongoing payments.

The simplest and fastest way for taxpayers to settle their back taxes would be through fully paying their back taxes to the IRS. However, even if a taxpayer has the required funds to repay the IRS, it can still be a daunting task to engage in. Obtaining accurate and consistent information about your tax account from the IRS can be quite a struggle. However, through our Full Pay Service we will provide the correct payoff amount, a break down of the specific years owing, and clear and specific payoff instructions. We will even follow up with the IRS and ensure your payment is received and processed.

Another option for IRS tax debt settlement would be through an Offer in Compromise. An IRS Offer in Compromise allows taxpayers that cannot afford to fully pay their back tax liability, the chance to lower their due amount according to their financial situation. The IRS looks at a taxpayer’s past, current and future financial situation when evaluating whether an Offer in Compromise should be accepted.

If a taxpayer does not qualify for an IRS Offer in Compromise then another tax settlement option is negotiating an Installment Agreement with the IRS. An Installment Agreement allows taxpayers that cannot afford to fully pay their back tax liability the option to pay their back taxes through monthly payments, which for some is more manageable. Depending on the circumstances and the amount of time that the IRS has left to collect the tax debt, the Installment Agreement may pay all or part of the back tax liability.

The fourth option for IRS tax settlement is when the IRS places a taxpayer’s account on Currently Not Collectible (CNC) status. The IRS will make this decision when they have determined that they are presently unable to collect the taxes from the taxpayer by full payment or through an Installment Agreement. Once the account is placed on a CNC status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Unless the taxpayer’s financial situation changes, the account will remain on a CNC status until the tax liabilities expire. However, if the taxpayer’s financial situation improves the account will be taken off of CNC status so that the IRS can collect the taxes through full payment or an Installment Agreement.

The last option for a taxpayer hoping to settle their tax debts is through filing for bankruptcy. When filing bankruptcy the taxpayer must examine the age and type of back taxes. Recently assessed federal income back taxes and business-related federal payroll back taxes cannot generally be discharged in bankruptcy. If you are considering filing bankruptcy you should speak with a bankruptcy attorney regarding whether your IRS back taxes can be discharged in a bankruptcy.

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Garnished Wages- Avoiding Garnished Wages with a Tax Attorney

Garnished Wages- Avoiding Garnished Wages with a Tax Attorney

It is difficult to recover financially with a history of garnished wages. Because of past due tax debt, many individuals have had their bank accounts levied and their wages garnished. There are numerous efficient legal actions you can choose to deflect getting garnished wages. Holding Up tactics or brushing aside the IRS or other tax agencies is the ugliest thing you can do. To avoid irreparable damage to your credit and financial integrity, it is extremely important to do your best to pay your tax bills on time. Make contact with your creditor and make substitute agreements if you are financially unable to meet your responsibilities. You need the help of a registered tax attorney to represent you and protect you from costly court transactions and potential seizure of assets.

You must require the aid of a skilled tax attorney to make sure that your rights and financial interests are protected. Having professional tax representation at this situation will give you a sense of protection and serenity. Tax professionals have the expertise to implement the tax laws and codes aright, and are experienced in talking terms with the IRS. You should necessitate to employ a tax expert to protect your rights, terminate the garnishments, and preserve your assets if you have garnished wages or received a bank garnishment.

Handling tax problems exclusively, uninitiated and unprepared, affords penalties and fines to escalate. Only a tax professional person can guarantee the best overall financial resolution of your tax problem. Engaging a tax attorney is a prudent investiture.

Time is essential in finding aid in situations like these. You can find a tax attorney using an on line search engine or looking in the local telephone yellow pages. When dealing with garnished wages, you only have a small window of opportunity. Oftentimes a tax attorney can resolve the garnishment matter with a easy telephone call.

Call a tax attorney if you have questions, problems or concerns regarding the issues surrounding garnished wages. It will give you surety having the representation of a professional who is practiced in the tax laws and can expedite settlement of your tax liability. Take action now and do not let doubt and fear prevent you from doing so. Wage garnishments can be temporary if you hire an accomplished tax attorney. You will survive the cease and desist order and judgments when you have a tax professional on your side. The solution to your tax problems is Instant Tax Solutions.

Bank account levy

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Obama and Biden release tax returns ? Vice President still stuck in the Alternative Minimum Tax

Obama and Biden release tax returns ? Vice President still stuck in the Alternative Minimum Tax

Shortly after April 15 President Barack Obama and Vice President Joe Biden released their 2008 income tax returns. What these tax returns showed is that the President is not paying the Alternative Minimum Tax, but that the Vice President is still stuck in it, as he has been for several years. We had seen this when they made their prior year tax returns public during the presidential campaign last fall.

Vice President Biden’s income puts him and his wife in the “wealthy” category, as defined by the President – those individuals with incomes over 0,000. But with total income of 9K, just barely over that threshold, it may seem odd that he would be subject to the AMT. Unfortunately, our VP’s situation once again confirms that the Alternative Minimum Tax in its current form is not in any way related to the original AMT enacted 40 years ago. As it has for quite a while, it continues to hit “ordinary” Americans working hard for a living who just happen to be caught in its “sweet spot.” And that sweet spot continues to grow – currently over 4 million taxpayers and counting.

Why Biden in the AMT but Obama is not? As we’ll see in future articles, he is making just enough income, and has just the wrong level of itemized deductions, and it is the interplay of these two that does it. The President, on the other hand, with the substantial book royalties he is earning, had nearly million of income, at which level the “regular” tax is higher than the Alternative Minimum Tax.

Is there anything the Vice President can do about this? Of course there is - nearly everyone can reduce his/her/their AMT liability. In VP Biden’s case, his focus should be on timing his tax deductions in a more AMT-efficient manner. Especially with the higher tax rates looming on the horizon – remember that rich people like him will soon be paying the promised higher taxes – the Vice President easily could save on his taxes by doing some simple planning. All this would take is a little modeling with a tax software program to see how tweaking his deductions and moving them between this year and next year could have a direct impact on his  Alternative Minimum Tax.

The tax returns for both the President and the Vice President were disclosed on the White House web site – www.whitehouse.gov.

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Questions To Ask Your Tax Preparer

Questions To Ask Your Tax Preparer

Copyright (c) 2010 Tom Wheelwright

This is the time of year when tax returns are on people’s minds. It’s also the time of year when I get asked how you know you are with the right tax preparer.

There are questions I always ask someone when they are wondering if their tax preparer is right for them.

This week, I’ll share the first one which is:

What Steps Are Taken to Verify Your Tax Return is Accurate? Have you heard of the term “GIGO”? It stands for Garbage-In-Garbage-Out and unfortunately it is commonly used in the tax preparation industry. It refers to the following situation:

Information is provided to the tax preparer that is wrong, either knowingly or unknowingly The tax preparer uses the information “as is” and does nothing to verify the information is correct The end product - the tax return - is not accurate

I see this most often with accounting software, such as QuickBooks. The taxpayer hands over a copy of the QuickBooks file and the tax preparer uses that to prepare the return. However, there is no discussion about the accuracy of what is in the QuickBooks file.

Filing an inaccurate tax return can result in audit, penalties, interest and additional tax!

This is why this question is so important!

Individual Tax Returns v. Business Tax Returns

With individual returns, much of the information is provided via legal forms, such as W-2s, 1099s and 1098s. These forms provide a certain level of reliability that the amounts are accurate.

However, with business returns, almost all (if not all) of the information is based on the accuracy of the recordkeeping. Now, I have seen the records of hundreds of businesses and the accuracy varies from very accurate to not even close to accurate - and this is true whether or not the recordkeeping was performed by a bookkeeper.

Isn’t Verifying the Accuracy of My Information Part of the Tax Return Preparation?

It is often assumed that verifying the accuracy of your information is part of your tax return preparation, but it isn’t.

If your tax preparer is not going to verify your business return numbers, then you need to be very confident that your recordkeeping is accurate (and just because you use a bookkeeper does not necessarily mean it is accurate).

If you are not confident your recordkeeping is accurate, then you should have your tax preparer take a few extra steps to verify the accuracy.

Your tax preparer will charge for these extra steps, but it is well worth it to make sure the numbers used on your tax return are accurate.

How Do I Know My Information is Being Verified? In order to verify your business recordkeeping, your tax preparer needs additional information. This additional information is used to verify that the amounts reported in the recordkeeping match up and make sense.

While this process may not uncover all errors, it does provide a certain level of reliability and provides the tax preparer with a sense of how accurate the recordkeeping is.

The additional information requested usually includes:

Year end bank statements Year end credit card statements Year end loan statements Purchase or sale documents if your business purchased or sold assets Organizational documents Prior year tax returns Ownership changes

If your tax preparer is not asking for this information, then odds are, your tax preparer is not verifying your information and is relying solely on the records you provide.

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IRS Payment Plans and Current Year Refunds

IRS Payment Plans and Current Year Refunds

How Will Your Refund This Year Affect Your Payment Plan for Prior Years?

It can happen pretty easily.  You make more one year than you did the previous year, but don’t adjust your withholding.  Or, you claimed more deductions on your W-4 than you ended up claiming on your tax return.  In any case, you owed money to the IRS that you couldn’t pay.  So, you set up a payment plan.  But what happens if you get a refund for this year?

You Owe, You Owe, So Off Your Refund Goes

That’s right.  Even if you’ve set up a payment plan with the IRS to pay down a previous years’ debt, the IRS will take any refund you receive for later years and apply them toward that debt.  The good news is that if you’re paying interest on that debt, this payment via your refund will lower the amount of interest you end up paying.  It will also reduce the amount of time you are paying on this debt because the principal amount is being reduced.

How Do I Avoid Using My Refund Toward Previous Tax Debt?

You can’t avoid the IRS taking your refund; however, you can avoid having a refund in the first place.  The key here is to reduce your tax liability instead of increasing your refund.  Take a close hard look at your Adjusted Gross Income, or AGI.  This is basically the total of all your income minus any deductions and credits.

At the beginning of the tax year, use a free calculator online to determine approximately what your tax liability will be at the end of the year.  Adjust your withholding from your paycheck accordingly using your W-4 form filed with your employer.   This way you’re not overpaying into the system causing a refund at the end of the year.  Take the additional money in your paycheck and have it automatically deposited into an interest-bearing savings account.  Not only will you now make money on those savings but you will have it immediately available to you in case of an emergency.  You could also take this extra money to pay down the principal balance on what you owe the IRS to avoid some of the interest charges.

You can also reduce your AGI by contributing to an IRA or 401k.  This money goes into that account tax free and builds interest for you over the years as you reach retirement.  Not only is this money reducing your AGI but it’s another way for you to save without giving your refund to the IRS.

Using an online tax preparation site will help you get the most deductions and credits when filing your taxes.  The system is designed to ask you questions about your income, family and expenses and may catch credits you wouldn’t have known you qualify for, thereby lowering your tax liability even further.

Keep Paying on Your Debt

No matter what you do, be sure to keep making those payments to the IRS.  If you don’t, things can get ugly fast.  The IRS can put a lien on your house and other property, garnish your wages or even haul you off to jail for not paying your taxes.  Communication is the key, so make sure if you anticipate any problems making your tax payments you contact the IRS before missing a payment.

Yes, the IRS will take your refund this year for prior-years’ tax debt.  The good news is you can avoid getting a refund at all by adjusting your withholding or you use that extra money to pay down your debt to the IRS.

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Let?S Talk Taxes

Let?S Talk Taxes

With tax time here, now is the time to consider how you want to claim — the standard deduction or file an itemized income tax return.  Why should you do this? It’s simple.  Often overlooked deductions can make a HUGE difference in lowering your tax bill if you decide to itemize.

The standard deductions are fine for those who have an uncomplicated tax situation.  But the amount of your mortgage interest payments, state taxes, property taxes, charitable contributions and hurricane losses, if any, could be more than the standard deduction that is given.  What does this mean? If you do not itemize, you may not save as much as you are entitled to. With this in mind, you should take a look over the following list of often missed credits and reductions before you start the process of completing your 2009 tax return:

1. Education Expenses: There are many education related deductions and credits available to you if you are making tuition payments, paying off your college degree or student loan interest or just saving for your child’s education.  You then owe it to yourself to check out the explanation of education tax benefits available on the IRS website.  http://www.irs.gov

2. Deductions for Home Office: Are you self employed? Is your home office your principal place of work?  Is your gross income more than your related deductions? You should then be able to claim this deduction.  Are you employed by a company? If so you can deduct the home office ONLY if it is for your employer’s convenience.  You MUST also pass the “exclusive use” rule to qualify for deducting a portion of your home’s expenses, including mortgage interest, real estate taxes or rent, utilities, property maintenance (mowing, snow removal) or even repairs.  Caution, this is a RED HOT issue for the IRS so be certain you pass the “exclusive use rule”.  If you don’t have an office in your home, you may still deduct your mortgage interest and real estate taxes on both your main residence and any second home.

3. Deductions for Charity: You can deduct all that you have given to charity, especially if you have given cash gifts, or in-kind donations of clothing, toiletries, food or appliances that you can then deduct at fair market value.  You should go through your receipts and your credit card statements to make sure you don’t forget all that you have given.  Only donations to 501 (c)3 organizations qualify.  If you donate items other than cash and the amount is over 0, you must have a receipt from the organization who received your donation.  Also remember that the IRS will want to see proof of cash donations, such as checks, stubs or statements from the charity.

4. Miscellaneous Expenses: Did you know that gambling losses, job search expenses, safe deposit fees, subscription to investment publications and even tax return preparation expenses could be claimed as tax deductions?  Also, unreimbursed business expenses may be eligible to be claimed as a deduction.  Your total miscellaneous expenses, however, must exceed 2% of your adjusted gross income to qualify.

5. Don’t pay in cash: Cash may be convenient but it’s also practically guaranteed to be forgotten come tax time, unless you’re one of those folks who’s great at writing down every single purchase. In some cases,  if you do not  get a receipt when you pay in cash, you will be unable to make a deduction.  When you can, write out a check or use your debit card so you can prove the purchases for the doctor visit, charitable donations and business expenses; the IRS considers a canceled check or credit card/debit card receipt to be appropriate for purposes of record-keeping.

6. Other itemized deductions: Florida doesn’t have an income tax, so for the year 2009 Form 1040, you may deduct sales taxes you pay.  You can either use your actual sales taxes paid or use the IRS table.  If you don’t itemize, and use the IRS table, then you can also deduct the sales tax you paid on big ticket items such as Cars, Furniture household items like a new kitchen.  Also, if you are a teacher, you may deduct up 0 for any school supplies you purchase.  This year the energy tax credit has been extended, so if you purchased  a new water heater, air conditioner, solar device,  or impact windows, you might be entitled to a 00 tax credit

7. Capital Losses: With the market downturn in 2009, you can deduct up to 00 in NET losses on investments.  Any losses in excess of that may be carried over to 2010.

8. Earned Income Credit:  Those taxpayers whose income is below a certain level and who have dependents may also qualify for additional tax credits. If the credit results in a refund, the IRS will mail it to you.

9. Education and Child Care Credits: Depending on your circumstances, you may be eligible for tuition payments for your dependents’ college expenses.  For those of you who have children in daycare, there is also a credit for the amount you pay to your daycare provider.  You MUST have a receipt from the provider listing their name, address, amount you paid and their Tax Identification Number.

10. Medical deductions: Be sure to include your payments for medical insurance if you receive Medicare.  You may also be able to deduct medical insurance premiums, co-pays, other out of pocket expenses, hospital, doctor, dentists and any other medical visits.  Remember that there is a 7 ½% take away before you can itemize.

11. LASTLY: Be sure to include ALL your W’2’s, Form 1099’sand any other documents which report income to you, such as bank  or brokerage statements.

Tax Deduction Checklist
The best tax deductions checklists are found in three places:

Your past years’ tax returns 2) With your tax professional 3) Through an online tax website

The IRS website provides plenty of useful information on tax filing which could end up saving you a lot of money on this year’s tax return.  Take a few minutes to go over all the information you have on taxes so you can save yourself the most in the end.

CHOOSE YOUR TAX FILING METHOD! You may wish to hire a tax professional if you have had any major changes to your income such as an inheritance, lottery winnings, an investment windfall, or the like, or simply feel overwhelmed at the thought of the task.  On the other hand, if your goal is to prepare your own tax return, there are great software programs for help with tax preparation, such as TurboTax, Quicken, or TaxAct. These programs are inexpensive and will walk you through your tax return with a series of questions that make it a relatively painless process.
INFORMATION PROVIDED ABOVE MAY NOT BE OF USE TO YOU AND THEREFORE YOU SHOULD CONSULT A TAX PROFESSIONAL CONCERNING YOUR ELIGIBILTY TO USE A DEDUCTION.  EVERY PERSON’S SITUATION IS UNIQUE.

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The Savings Highway, Home Based Business or Hobby? How IRS Determines Tax Savings

The Savings Highway, Home Based Business or Hobby? How IRS Determines Tax Savings

The Savings Highway, Home Based Business or Hobby? How IRS Determines Tax Savings

The Internal Revenue Service reminds all home based business operators to follow appropriate guidelines when determining whether an activity is a home based business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, the IRS guidelines explain the rules for determining if The Savings Highway  qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a Savings Highway business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

Auditors are being told to use several tests to
determine if your “activity” is really a “hobby”
or a “business.” Hobbies get a few tax breaks,
but home-business owners get substantianly more!

If they can reclassify you as a hobby, the IRS gets
more of your money.

IMPORTANT: As A Savings Highway representative.  One of the tests that is not well
understood, has to do with how much time you
spend on the activity.

You need to prove “Material Participation” in
your Savings Highway opportunity. Here are seven ways to prove you qualify for the tax savings:

1: If you work your business at least 500 hours
per year. Tax Savings Allowed

2. If you work your business at least 100 hours per
year AND no one else working in your business
puts in more time than you do.Tax Savings Allowed
In order to determine wether the Savings Highway is a qualified home based business or hobby, taxpayers should consider the following factors:

3. The taxpayer does substantially all the work in the activity.Tax Savings Allowed

4. The activity is a significant participation activity (SPA), and the sum of SPAs in which the taxpayer works 100-500 hours exceeds 500 hours for the year.Tax Savings Allowed

5. The taxpayer materially participated in the activity in any 5 of the prior 10 years.Tax Savings Allowed

6. The activity is a personal service activity and the taxpayer materially participated in that activity in any 3 prior years.Tax Savings Allowed

7. Based on all of the facts and circumstances, the taxpayer participates in the activity on a regular, continuous, and substantial basis during such year.  However, this test only applies if the taxpayer works at least 100 hours in the activity, no one else works more hours than the taxpayer in the activity, and no one else receives compensation for managing the activity.Tax Savings Allowed

In order to determine wether the Savings Highway is a qualified home based business or hobby, taxpayers should consider the following factors:

*
Does the time and effort put into the activity indicate an intention to make a profit?
*
Does the taxpayer depend on income from the activity?
*
If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
*
Has the taxpayer changed methods of operation to improve profitability?
*
Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
*
Has the taxpayer made a profit in similar activities in the past?
*
Does the activity make a profit in some years?
*
Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

The IRS presumes that an home based business is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.

If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.

Tax savings for hobby activities are claimed as itemized deductions on Schedule A (Form 1040). These deductions must be taken in the following order and only to the extent stated in each of three categories:

*
Tax savings that a taxpayer may take for personal as well as home based business activities, such as home mortgage interest and taxes, may be taken in full.
*
Tax savings that don’t result in an adjustment to basis, such as advertising, insurance premiums and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.
*
Tax savings that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.

As you can see from the guidelines established by the IRS qualifying as a legitimate home based business such as The Savings Highway are extremely straight forward. (Work at your business opportunity for 100 hours a year, and intend to make a profit). Turn your everyday activities (Eating and Driving) into substantial tax savings when you join the Savings Highway today.

Contact Me:

Jim Roche NJ

(908)413-5363

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How To Settle Your Tax Debt By Negotiating A Payment Plan With The Irs: What You Need To Know If You Can?T Afford To Pay Your Tax Bill

How To Settle Your Tax Debt By Negotiating A Payment Plan With The Irs: What You Need To Know If You Can?T Afford To Pay Your Tax Bill

Qualify for an IRS Installment Agreement and Save Money by Negotiating the Lowest Possible Monthly Payments

IRS Announces Unprecedented Opportunity for Recession-Burdened Americans to Settle Outstanding Tax Debts

Struggling taxpayers may be eligible for tax breaks as the IRS eases enforcement and collection efforts to help Americans in financial distress. Because of the extraordinary challenges of today’s economy, the IRS is pledging to be more forgiving of Americans who have fallen behind on their taxes due to unusual financial hardship.

And one way you can settle your back taxes is by negotiating an Installment Agreement with the government that that allows you to pay liabilities over time.

If you cannot afford to make monthly payments and don’t qualify for another type of tax relief, such as an offer in compromise, there are other options including negotiating that your account be placed in a \”currently not collectible\” status so that you will not be required to make payments and the IRS will not pursue collection action.

What is an IRS Installment Agreement?

An Installment Agreement is a payment arrangement whereby the government allows a taxpayer to pay liabilities over time. Once a payment plan is established, the IRS will not take enforced collection action, including the levy of bank accounts or wages, as long as the taxpayer remains current with all filing and payment obligations. However, interest and penalties would continue to accrue until the outstanding balance is satisfied. Additionally, a tax lien may be filed as part of the terms of the installment payment agreement, depending on the amount of the total liability.

How to Negotiate an IRS Installment Agreement and Set Up a Payment Plan for Your Tax Debt

The IRS encourages taxpayers to pay what they owe as quickly as possible. For those individuals or businesses not able to resolve a tax debt immediately, an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts.

In most cases, the IRS will accept some type of payment arrangement for past due taxes. In order to qualify for a payment plan with the IRS you must meet the following rules and provide the IRS with this information:

*  You must have filed all tax returns (It\’s OK to owe money but you must file).

* You will need to disclose all assets owned including all cash and bank accounts.

* You must not have adequate cash available in a checking, savings, money market, or brokerage account to pay the IRS.

* You must not have the capacity to borrow the amount owed to the IRS from other sources (i.e., a second mortgage on your home).

* You must not have adequate equity in a retirement account from which you can borrow or liquidate; for example, IRA\’s or 401K\’s.

The total dollar amount you owe usually dictates with whom the negotiations will be handled.

* Typically, IRS Revenue Officers are not involved in cases where the amounts owed are less than ,000.

* The IRS will ask you to complete a personal financial statement and if a business is involved, you will also need a business financial statement.

* The IRS has determined allowable monthly expenses for individuals, which will be matched against your actual monthly expenses.

* The difference between your monthly income and your allowable monthly expenses will be the amount that the IRS will require you to pay on a monthly basis.

These monthly payments will continue until your outstanding tax liabilities are paid in full.

What the IRS May Not Tell You About Payment Plans

It is important to note that the IRS continues to add penalties and interest while you are making monthly payments. This may cause you to be paying what you consider a large monthly payment to the IRS and your outstanding balance may in fact be increasing due to additional penalties and interest.

The IRS may not explain this to you! So be careful!

Additionally, for taxpayers that enter into an installment agreement, the IRS may require a signed waiver to extend the time IRS can collect. While it is always in the best interest of the IRS to get a signed waiver, it may not be in the taxpayer\’s best interest. If you are asked to sign a waiver, protect your rights, seek the advice of a tax resolution expert first.

The IRS in most cases, to protect their interest, will file a Notice of Federal Tax Lien, with the County Recorder’s office in the county you reside.  This will inevitably be reflected on your credit report decimating your credit (FICO) score.  In addition a recorded Federal Tax Lien means the IRS has a monetary interest (claim) against all real and personal property owned (at time of filing) and any and all real or personal property acquired in the future while the lien is in effect. Generally, the lien is effective throughout the 10 year Collection Statute of Limitations.

The Benefits of Hiring Professional Tax Representation to Negotiate your IRS Payment Plan

Whether the IRS demands full payment up-front or a payment plan that is substantially higher than what you can afford to pay, a professional tax resolution specialist can help you negotiate an arrangement for the lowest possible monthly payment and also provide you with various options for making those payments.

Additionally, if you owe more than ,000 to the IRS, you will be required to provide full financial disclosure and you will need to hire specialized tax representation to negotiate on your behalf with the IRS.

IRS Pledges Greater Flexibility to Help Distressed Taxpayers

Although the IRS is pledging to be kinder and gentler to taxpayers in these challenging times, you will still need to meet your installment payment requirements. However, the IRS has announced that they will try to be more flexible with taxpayers who miss an installment payment.

“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” IRS Commissioner Douglas Shulman said. “We want to go the extra mile to help taxpayers, especially those who’ve done the right thing in the past and are facing unusual hardships.”

If a taxpayer with an existing installment agreement is worried about missing a payment because of a job loss or other financial hardship, Shulman has assured the public that a missed payment will no longer lead to an automatic end to that agreement.

Additionally, the IRS has announced that it is more likely to forgive a missed payment and they’ve instructed staff to not automatically default someone who is having trouble.

Frequently Asked Questions about IRS Payment Plans

What do you have to do to be eligible for an installment agreement?

To be eligible for an installment agreement, all returns that are due must first be filed.

What are the payment terms?

Installment agreements generally require equal monthly payments. The amount of an installment payment will be based on the amount owed and on the taxpayer’s ability to pay that amount within the time legally available for the IRS to collect. By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date of assessment.

What are the conditions of an installment agreement?

As a condition of an installment agreement, any refund due in a future year will be applied against the amount owed. Therefore, taxpayers may not get all of their refund if they owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. The IRS will automatically apply the refund to the taxes owed. If the refund does not take care of the tax debt, then the installment agreement continues until all of the terms are met.

Does interest stop with an installment agreement?

Interest does not stop accruing until the entire obligation is paid. An installment agreement is more costly than paying all the taxes owed now. Penalties and interest continue to be charged on the unpaid portion of the debt throughout the duration of an installment agreement.

Are there fees to set up an installment agreement?

The IRS charges a user fee of to set up the installment agreement. And it is possible for an installment agreement to be reinstated if the agreement defaults.

Also, installment agreements may be restructured to include additional amounts owed in one agreement. Reinstating or restructuring an existing installment agreement will cost an additional user fee.

What are enforced collection actions?

Generally, IRS enforced collection actions (levy against personal or real property) are not made while an installment agreement request is being considered, or:

While an agreement is in effect,

* For 30 days after a request for an agreement has been rejected, and

* For any period while a timely appeal of the rejection or termination is being evaluated by the IRS.

Can my installment agreement be defaulted?

Yes. Failure to make timely payments can default the agreement. A defaulted installment agreement could subject a taxpayer’s account to enforced collection action and potentially have a negative effect on a taxpayer’s credit standing.

What is an annual statement of balance due?

In accordance with the law, installment agreement taxpayers receive an annual statement from the IRS. The statement provides the amount owed at the beginning of the statement period, the payments (credits) posted to account(s), any fees or assessments, and the ending balance. Currently, the annual statement is sent each year in July.

For more information on negotiating an IRS Installment Agreement or to get professional tax advice on reducing your IRS debt, visit www.taxresolution.com for a free tax relief consultation or call 866-477-7762.

Michael Rozbruch is one of the nation\’s leading tax experts. A Certified Tax Resolution Specialist (CTRS), licensed CPA in the state of Maryland and the founder of Tax Resolution Services (http://www.taxresolution.com/), he helps individuals and small businesses solve their IRS problems and is dedicated to educating the public on tax planning and other strategies for managing their personal and business finances.

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