5 Reasons to File Delinquent Tax Returns: There?s Still Hope if You Haven?t Paid Your Taxes This Year

5 Reasons to File Delinquent Tax Returns: There?s Still Hope if You Haven?t Paid Your Taxes This Year

The April 15 tax deadline has come and gone. For the millions of taxpayers who failed to file legally required tax returns, tax help is available for those who act now! Even taxpayers who received an extension for filing are not granted more time for the payment of taxes owed and may need income tax relief.

The act of not filing your tax returns can lead to more significant financial problems in the long run. Not to mention, failure to file tax returns may be construed as a criminal act by the IRS, punishable by one year in jail and ,000 for each year not filed. Needless to say, it’s one thing to owe the IRS money, but another thing to potentially lose your freedom for failure to file a tax return.

 The longer you put off dealing with overdue taxes, the more serious your IRS problems will be. So I recommend filing any tax returns that are due as soon as possible to avoid additional interest, penalties and potential IRS collection tactics, such as a levy on your bank account.

 With the federal budget deficit for the current year expected to top .8 trillion, Americans can expect more tax audits and increased IRS actions. So anyone who owes back taxes will want to avoid becoming targets of aggressive IRS collection efforts that can financially cripple them for life.

 Here are 5 reasons to file your delinquent tax returns:

 1) You can go to jail for not filing your taxes

Even if you haven’t filed your tax return for one year - it is still considered delinquent and could be construed by the IRS as a criminal offense. Actor Wesley Snipes didn’t report more than million to the IRS and he was convicted of three misdemeanor counts of failing to file a tax return. Richard Hatch, who won the first season of CBS’s hit show Survivor, is in prison for failing to report million in prize money.

The IRS goes after those U.S. taxpayers who try to avoid taxes, and Average Joes as are just as likely as high-profile individuals to be targets of the tax-collecting agency. At every level, the agency has become increasingly aggressive in pursuing tax cheats. Are you willing to lose your freedom because you failed to file your tax returns?

2) You can incur a 25% penalty for not filing your tax returns

In this economic downturn, Americans may opt to not file because they don’t have the funds to pay the taxes owed. The best thing for taxpayers in difficult financial situations to do is file their tax return, pay what they can and work with the IRS to establish a payment plan that will keep them compliant.

Additionally, if there are any delinquent tax returns that are due, they should consider filing these returns as soon as possible to avoid the wrath of any potential IRS action, such as a levy on their bank accounts.

3) You can incur additional penalties for not paying your taxes

If you fail to pay your taxes due, you will incur additional penalties for failure to pay. Taxpayers who request an extension of time to file should keep in mind that this it is not an extension of time to pay. To avoid additional penalties, taxpayers should file by the deadline and pay as much as they can, even if they are unable to pay the entire amount due. You will still have a failure to pay penalty, but it’s much less. Then you can work with a specialized tax resolution expert to help you negotiate a tax settlement.

4) You can be subject to an increased tax bill if the IRS prepares your taxes for you

The IRS may prepare a “Substitute For Return” for delinquent taxpayers, in which they won’t be able to file for all of their personal exceptions or allowable deductions. Because these returns are filed in the best interest of the government, the only deductions they’ll usually see are the standard deduction and one personal exemption, subjecting them to a larger tax liability. So it’s important for individuals to file their 2008 tax return as well as any prior delinquent tax returns as soon as possible to save money and avoid significant long-term consequences.

5) You must have all prior tax returns filed to be eligible for income tax relief

All back tax returns must be filed before the IRS will even entertain any type of tax settlement like an offer in compromise or monthly payment plan arrangement. The good news is the sooner you take care of your delinquent taxes, the less penalties and interest you’ll owe.

I believe there’s a solution to every problem. For delinquent taxpayer, it’s never too late for to resolve your tax debt and avoid IRS penalties.

For more information on receiving income tax relief or help resolving back taxes, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.

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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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What if I lost my last year tax return?

What if I lost my last year tax return?

It happens every year. Just when you get motivated to get rolling on your taxes, you realize you can’t find the return you filed last year.

First off, don’t panic if you can’t find the return. Yes, you need it to know what you claimed last year and how those claims relate to this year’s return. All is not lost, however. The IRS will provide you with a copy of your past tax returns if you ask nicely. Here is how to go about it.

The IRS will not send you the actual income tax return. The agency, however, will send you their version of it. This is known as a tax return transcript and is a layout of the information you provided.

It is essentially your return, but doesn’t look like it. You can rely on the transcript as though it was your original return.

When you contact the IRS to get the transcript, it is important to understand there are two types available. As is usual with the IRS, there are two choices just to confuse you. The first is the tax return transcript that is essentially the return you filed. The tax account transcript is your original return as modified by any changes made by the IRS or you. Which one is the correct one? If the IRS has not contacted you about an issue with the return, it is the tax return transcript. If they have, it the tax account transcript.

The IRS will give you any return for the past three filing years. The service is free. To get the copy, you can call the IRS at 800-829-1040. Alternatively, you can get a copy by filling out and mailing in IRS Form 4506-T. It takes two weeks to a month for the agency to get the copy to you. If you discover you have a problem just before the relevant filing deadline, file for an extension so you don’t run afoul of filing laws. Remember, you have to pay any taxes due regardless of the extension, so try to guesstimate what you will owe.

If you lose a past tax return, there is no need to panic. The IRS will be happy to send you a copy. After all, an audit agent probably has the file on their desk as we speak!

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What if I lost my last year tax return?

What if I lost my last year tax return?

It happens every year. Just when you get motivated to get rolling on your taxes, you realize you can’t find the return you filed last year.

First off, don’t panic if you can’t find the return. Yes, you need it to know what you claimed last year and how those claims relate to this year’s return. All is not lost, however. The IRS will provide you with a copy of your past tax returns if you ask nicely. Here is how to go about it.

The IRS will not send you the actual income tax return. The agency, however, will send you their version of it. This is known as a tax return transcript and is a layout of the information you provided.

It is essentially your return, but doesn’t look like it. You can rely on the transcript as though it was your original return.

When you contact the IRS to get the transcript, it is important to understand there are two types available. As is usual with the IRS, there are two choices just to confuse you. The first is the tax return transcript that is essentially the return you filed. The tax account transcript is your original return as modified by any changes made by the IRS or you. Which one is the correct one? If the IRS has not contacted you about an issue with the return, it is the tax return transcript. If they have, it the tax account transcript.

The IRS will give you any return for the past three filing years. The service is free. To get the copy, you can call the IRS at 800-829-1040. Alternatively, you can get a copy by filling out and mailing in IRS Form 4506-T. It takes two weeks to a month for the agency to get the copy to you. If you discover you have a problem just before the relevant filing deadline, file for an extension so you don’t run afoul of filing laws. Remember, you have to pay any taxes due regardless of the extension, so try to guesstimate what you will owe.

If you lose a past tax return, there is no need to panic. The IRS will be happy to send you a copy. After all, an audit agent probably has the file on their desk as we speak!

Easy Prior Year Taxes

Changes to tax in the past year may affect you and your return - find out what has changed

Changes to tax in the past year may affect you and your return - find out what has changed

It is time to start organising yourself for 2008-09 tax return preparation and lodgement. The past financial year has seen some changes to the taxation landscape that will certainly make a difference to lot of Australian taxpayers this “tax time”.

Changes include education tax refunds and family tax benefits as well as changes in the Medicare levy surcharge threshold and claiming donations to charity.

Education tax refund
Eligible parents who incurred education expenses for primary or secondary school students in their care on or after 1 July 2008 are able to claim a tax refund for a proportion of the incurred expenses.

Generally, eligible parents are able to claim 50% of their education expenses for the year. The maximum claimable amount for primary and secondary school children is 0 and 00 respectively. This results in a maximum refund of 5 for primary school children and 0 for secondary school children. Parents can claim the full refund for each child who meets the schooling requirement. Independent students under the age of 25 who are undertaking primary or secondary school studies are also eligible to claim a refund on some of their education expenses.

You should be aware that not all expenses can be claimed. Purchases such as laptop and home computers and school text books are able to be claimed, whilst school fees and uniforms are not. The most important thing is keep you receipts in order to verify the eligible purchases in your return.

Family tax benefit
Effective from the 2008-09 financial year you are no longer able to claim the family tax benefit in your return. In order to claim the benefit for both current and existing years you must claim it as either a fortnightly or a lump sum payment through the Family Assistance Office.

Family Assistance Offices are located in Medicare Australia offices and Centrelink Customer Service Centres around the country or you can contact them on 13 61 50 for assistance with your family tax benefit queries.

First home saver accounts
First home saver accounts were introduced in October 2008. For those with a first home saver account the Government will make an annual contribution to that account based on contribution amounts for the year. You are not required to pay tax on any earnings by the account and as a result you don’t need to declare any income from this account on your tax return. If you are not required to lodge a tax return, you will need to lodge a First home saver account – notification of eligibility form before the Government will pay any contributions.

Medicare levy surcharge thresholds
For the previous financial year, 2008-09, the Medicare levy surcharge thresholds have been increased for both single persons and families. For single persons who earned above ,000 during 2008-09 and did not have private patient hospital cover a surcharge of 1 percent for any period during the year that they did not have the cover will be levied. For families the threshold is increased to 0,000.

For the 2008-09 financial year only, you are considered to have been covered by private hospital cover all year if you took out an appropriate policy some time between 1 July 2008 and 31 December 2008, and then continued to be covered from 1 January to 30 June 2009.

Claiming donations to charity
As a result of the dramatic events of the past year, such as the Victorian bushfires and Queensland floods, many taxpayers made donations to fund-raising and charitable organisations.

You are able to claim a tax deduction in your 2009 tax return for any gift or donation if the organisation is a registered deductible gift recipient.

When claiming the deduction you should be sure to keep your receipt as evidence. For donations made via the web, over the phone or through a third party such as a bank or retail outlet web receipts or credit card statements are acceptable. Additionally, for any ‘bucket donations’ made during the year you are able to claim a tax deduction equal to your contribution up to without being required to produce a receipt.

The team of accountants and tax agents at The Quinn Group are able to advise you on all of the deductions and refunds that you are eligible for in your 2008-9 tax return. We will work with you to legally minimise your tax liability and get you the maximum return that you are eligible for. Contact us on 1300 QUINNS or click here to submit an online enquiry.

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