For this year, 2009, the difference is: There are over 22 MAJOR tax laws. This is not counting the dozens and dozens of laws which included the basic annual changes in tax codes.
This year, 2009, there are a number of complicated tax credits, that must be understood, completely, in order to successfully take the credits.
That is not to say that the major tax software companies won't include the new tax credits, because, they will, however, your ability to understand the more complicated tax laws is the concern.
What if the IRS didn't care if you make a mistake in THIER favor? However, if you make an error in YOUR favor, you will be receiving a letter in the mail, informing you of the changes!
Again, that is not to say that the IRS won't inform you, that you have a larger refund coming. But in order to do that, they (or the computer) will take a CLOSER look at your return, before a check is mailed.
If you find an online service which has a confidential policy, (in writting) and you can verify their professional status, it sure beats, waiting at the tax office to have your taxes done!
Thursday, December 17, 2009
If I have my taxes prepared online for me, can I still e-file?
Yes. It is only past due tax returns, that cannot be e-filed.
Most online tax preparation services will e-file your tax return. I know with our service, we send the online tax client, his or her tax return in PDF format for their approval.
Once identity is established, we can than e-file the tax return, with certain confidential, information provided by the taxpayer.
Most online tax preparation services will e-file your tax return. I know with our service, we send the online tax client, his or her tax return in PDF format for their approval.
Once identity is established, we can than e-file the tax return, with certain confidential, information provided by the taxpayer.
Taxes Prepared for You, Online. Is this safe?
Yes and maybe no.
It depends on the company and their confidentiality procedure.
There are only two states who require their tax professionals to be licensed. And in one of those states, California, the tax professional has to be bonded as well.
There are certain codes and business procedures which California tax professionals must adhere to. There are stiff penalties for allowing a taxpayer's information, to be compromised.
Check out which state the tax professional is in, and what are the procedures to make sure your information is safe.
PS: The Department of Justice gives out jail time, to unscrupulous tax preparers!
It depends on the company and their confidentiality procedure.
There are only two states who require their tax professionals to be licensed. And in one of those states, California, the tax professional has to be bonded as well.
There are certain codes and business procedures which California tax professionals must adhere to. There are stiff penalties for allowing a taxpayer's information, to be compromised.
Check out which state the tax professional is in, and what are the procedures to make sure your information is safe.
PS: The Department of Justice gives out jail time, to unscrupulous tax preparers!
Monday, December 7, 2009
This Just in from the IRS: New Mileage Rates for 2010
IRS Sent this information concerning New Standard
Mileage Rates for 2010.
Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
50 cents per mile for business miles driven
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.
If you have questions, visit: irs.gov for more information
We prepare taxes, online for tax payers. No fuss, no waiting, no problem. Secure, Confidential Online Tax Service.
Mileage Rates for 2010.
Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
50 cents per mile for business miles driven
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.
If you have questions, visit: irs.gov for more information
We prepare taxes, online for tax payers. No fuss, no waiting, no problem. Secure, Confidential Online Tax Service.
Wednesday, December 2, 2009
First-Time Homebuyer Credit Extended to April 30, 2010; Some Current Homeowners Now Also Qualify
WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.
The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.
The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.
But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.
For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.
A new version of Form 5405, First-Time Homebuyer Credit, will be available in the next few weeks. A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.
A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.
Income Limits Rise
The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
New Requirements
Several new restrictions on purchases that occur after Nov. 6 go into effect with the new law:
Dependents are not eligible to claim the credit.
No credit is available if the purchase price of a home is more than $800,000.
A purchaser must be at least 18 years of age on the date of purchase.
For Members of the Military
Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.
The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.
But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.
For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.
A new version of Form 5405, First-Time Homebuyer Credit, will be available in the next few weeks. A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.
A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.
Income Limits Rise
The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
New Requirements
Several new restrictions on purchases that occur after Nov. 6 go into effect with the new law:
Dependents are not eligible to claim the credit.
No credit is available if the purchase price of a home is more than $800,000.
A purchaser must be at least 18 years of age on the date of purchase.
For Members of the Military
Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
Monday, November 23, 2009
IRS Announced, Todays That Interest Rates Beginning in Jan 1, 2010 Will Remain the Same As Last Quarter of 2009
The Internal Revenue Service today announced that interest rates for the calendar quarter beginning January 1, 2010, will remain the same as they were in the prior quarter. The rates will be:
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
For more information, visit irs.gov
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
For more information, visit irs.gov
Friday, November 6, 2009
Qualifing for an Offer in Compromise and Getting the Right Help
I refer people who have decided to file an Offer in Compromise, to our Enrolled Agent when thay live in the San Francisco Bay Area. However, when web visitors need help with OIC information, I refer them to http://www.oicadvice.com/index.html
Below is information from the above site, which provides quality information on the IRS's Offer in Compromise program.
OICs
Most OICs are based on a taxpayer's inability to pay the full amount owed to the IRS, or, alternatively, that paying the full amount will leave the taxpayer in dire financial hardship. The IRS uses extensive guidelines and standards for determining ability to pay and identifying potential hardship cases. A thorough knowledge of these guidelines and standards is absolutely essential for submitting a potentially acceptable OIC.
Below is information from the above site, which provides quality information on the IRS's Offer in Compromise program.
OICs
Most OICs are based on a taxpayer's inability to pay the full amount owed to the IRS, or, alternatively, that paying the full amount will leave the taxpayer in dire financial hardship. The IRS uses extensive guidelines and standards for determining ability to pay and identifying potential hardship cases. A thorough knowledge of these guidelines and standards is absolutely essential for submitting a potentially acceptable OIC.
Thursday, October 22, 2009
Different Types of Income Information Needed to File Past Due Returns
Need to file your past due returns?
You will need the following information:
Income
(Self/spouse: married filing joint return)
To request past due tax return income information for yourself and/or your spouse call the IRS at (866) 681-4271
You may also request income information by contacting your employer, financial institute, or any other source of income.
Common Types of Income:
Wages, Salaries, Tips, etc. - Form W-2
Certain Gambling Winnings - Form W-2G
Proceeds from Broker & Barter Exchange Transactions - Form 1099-B
Dividends & Distributions - Form 1099-DIV
Interest Income - Form 1099-INT
Miscellaneous Income, Self-employment - Form 1099-MISC
Capital Gains & Losses, Unemployment Compensation - Form 1099-G
Distributions from Pensions and Annuities - Form 1099-R
Proceeds from Real Estate Transactions - Form 1099-S
Alimony Received
Your Self-employment Income Records
If you are pushed for time, you can click on the title of this blog posting and receive online help.
You will need the following information:
Income
(Self/spouse: married filing joint return)
To request past due tax return income information for yourself and/or your spouse call the IRS at (866) 681-4271
You may also request income information by contacting your employer, financial institute, or any other source of income.
Common Types of Income:
Wages, Salaries, Tips, etc. - Form W-2
Certain Gambling Winnings - Form W-2G
Proceeds from Broker & Barter Exchange Transactions - Form 1099-B
Dividends & Distributions - Form 1099-DIV
Interest Income - Form 1099-INT
Miscellaneous Income, Self-employment - Form 1099-MISC
Capital Gains & Losses, Unemployment Compensation - Form 1099-G
Distributions from Pensions and Annuities - Form 1099-R
Proceeds from Real Estate Transactions - Form 1099-S
Alimony Received
Your Self-employment Income Records
If you are pushed for time, you can click on the title of this blog posting and receive online help.
Friday, October 9, 2009
IRS Reports the Nine Top Mistakes Tax Payers Make When Filing Past Due Returns
The IRS reported that the following errors, are the biggest mistakes that tax payers make when preparing their past due returns.
1. Incorrectly Reporting 1099-MISC Income on Your Past Due Returns
A Form 1099-MISC is used to report payments made in the course of a trade or business to another person or business who is not an employee, also referred to as self-employed. The form is required, among other things, when payments of $600 or more in non-employee compensation, medical and health care payments, or rents are paid. This form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment. Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
Self-employed individuals report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). You should also be aware of Form 1040, Schedule SE (PDF), Self-Employment Tax, which must be filed if net earnings from self-employment are $400 or more. This form is used to figure your Social Security and Medicare tax, which is based on your net self-employment income.
2. Not Reporting Capital Gains/Losses on Past Due Tax Returns
In general, if you had a capital gain or loss, including any capital gain distributions from sales of stock or bonds, you must complete Form 1040 and attach a Schedule D to your tax return. Refer to Publication 550, Investment Income and Expenses for more information.
3. Failing to File a Past Due Return for a Deceased Taxpayer
A personal representative (fiduciary) is responsible for filing certain tax returns for a person who has died, and for the decedent's estate. The personal representative may be required to file the final income tax return of the decedent and any returns not filed for preceding years, the income tax return for the estate, and the estate tax return.
The final return should have the word: "Deceased,” the decedent's name, and the date of death written across the top of the return. Generally, the person who is filing a return for a decedent and claiming a refund must file Form 1310 (PDF), Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return. However, if you are a surviving spouse filing a joint return, or a court appointed or certified personal representative filing an original return for the decedent, you do not have to file Form 1310. Personal representatives must attach to the return a copy of the court certificate showing the appointment.
4. Not Providing Correct Social Security Numbers for All Dependents
Be sure that all dependents’ Social Security numbers (SSNs) and names match their Social Security identification cards. If the SSNs do not match, we will disallow the dependents and any related credits, but you will need to call the Social Security Administration at (800) 772-1213 to correct the mistake.
5. Failing to Sign Your Past Due Tax Return
All returns must be signed. If filing jointly, both taxpayers must sign.
6. Mailing Your Past Due Tax Return to Incorrect Address
Be sure to mail your past due tax return to the IRS address on your notice. Sending your return to another address will delay the processing of your return.
7. Omitting Spouse’s Income on a Jointly Filed Past Due Return
Income from both taxpayers must be included on the return. If you need income information, please call the IRS' toll-free number at (866) 681-4271.
8. Omitting the 10 Percent Early Distribution Tax on Qualified Retirement Plans
In general, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59½ is an early distribution. In general, if you receive an early distribution (including an involuntary cash out) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10 percent tax.
9. Incorrectly Reporting Rollover Distributions
A rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan. Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early withdrawals.
1. Incorrectly Reporting 1099-MISC Income on Your Past Due Returns
A Form 1099-MISC is used to report payments made in the course of a trade or business to another person or business who is not an employee, also referred to as self-employed. The form is required, among other things, when payments of $600 or more in non-employee compensation, medical and health care payments, or rents are paid. This form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment. Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
Self-employed individuals report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). You should also be aware of Form 1040, Schedule SE (PDF), Self-Employment Tax, which must be filed if net earnings from self-employment are $400 or more. This form is used to figure your Social Security and Medicare tax, which is based on your net self-employment income.
2. Not Reporting Capital Gains/Losses on Past Due Tax Returns
In general, if you had a capital gain or loss, including any capital gain distributions from sales of stock or bonds, you must complete Form 1040 and attach a Schedule D to your tax return. Refer to Publication 550, Investment Income and Expenses for more information.
3. Failing to File a Past Due Return for a Deceased Taxpayer
A personal representative (fiduciary) is responsible for filing certain tax returns for a person who has died, and for the decedent's estate. The personal representative may be required to file the final income tax return of the decedent and any returns not filed for preceding years, the income tax return for the estate, and the estate tax return.
The final return should have the word: "Deceased,” the decedent's name, and the date of death written across the top of the return. Generally, the person who is filing a return for a decedent and claiming a refund must file Form 1310 (PDF), Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return. However, if you are a surviving spouse filing a joint return, or a court appointed or certified personal representative filing an original return for the decedent, you do not have to file Form 1310. Personal representatives must attach to the return a copy of the court certificate showing the appointment.
4. Not Providing Correct Social Security Numbers for All Dependents
Be sure that all dependents’ Social Security numbers (SSNs) and names match their Social Security identification cards. If the SSNs do not match, we will disallow the dependents and any related credits, but you will need to call the Social Security Administration at (800) 772-1213 to correct the mistake.
5. Failing to Sign Your Past Due Tax Return
All returns must be signed. If filing jointly, both taxpayers must sign.
6. Mailing Your Past Due Tax Return to Incorrect Address
Be sure to mail your past due tax return to the IRS address on your notice. Sending your return to another address will delay the processing of your return.
7. Omitting Spouse’s Income on a Jointly Filed Past Due Return
Income from both taxpayers must be included on the return. If you need income information, please call the IRS' toll-free number at (866) 681-4271.
8. Omitting the 10 Percent Early Distribution Tax on Qualified Retirement Plans
In general, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59½ is an early distribution. In general, if you receive an early distribution (including an involuntary cash out) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10 percent tax.
9. Incorrectly Reporting Rollover Distributions
A rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan. Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early withdrawals.
Wednesday, October 7, 2009
The IRS Reminding Tax Payers of New ARRA Tax Deductions, on State, Local & Excise Taxes for New Cars, Motor Homes or Motorcycles
WASHINGTON — With 2010 models arriving in dealer showrooms, the Internal Revenue Service reminds taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns.
Purchases made before Jan. 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).
The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.
Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.
The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
For more information, you can visit http://irs.gov and put in your keywords in the top right search box.
Purchases made before Jan. 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).
The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.
Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.
The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
For more information, you can visit http://irs.gov and put in your keywords in the top right search box.
Monday, October 5, 2009
What if I Don't Have the Money to Pay My Taxes?
You should still file your past due returns, regardless if you have the money to pay the taxes or not.
The reason to file as soon as possible, is to avoid additional penalities, for failure to file -- the IRS or your tax professional can help you with payment options.
The reason to file as soon as possible, is to avoid additional penalities, for failure to file -- the IRS or your tax professional can help you with payment options.
Thursday, October 1, 2009
There is help for tax payers who have been ill, and missed filing past due returns
If you have not filed past due tax returns, and have been ill, (taking prescribed drugs) there is help for you. It is a known fact, that some prescribed drugs can put an individual into a "fog" -- at which time, he/she may not always, remember financial details.
The first step to getting back on track and filing your past due returns, is to contact an online service that specializes in past due tax returns.
The next step is to get in writing from your doctor's office, proof of your illness. What type of illness and when did it start and how long did it last? This short statement could help to save you hundreds of dollars.
The online tax service (that's us) can help you to file your past due tax returns and request that certain penalties be lowered, without you, ever having to leave your home or your office.
As the song goes, "Your Are Not Alone" -- there are millions of Americans who miss the April 15th filing date each year, due to personal illness, serious illness in the immediate family, death in the family, lost of employment or divorce.
Taxpayers, sometimes, believe that because they don't hear from the IRS during the first year of non filed returns, that the problem, may go away on it's own. These same taxpayer, may not file for 2 or 3 more years.
Please know, that if you have reported income from a W2 or 1099-MISC, or interest reported from a savings account or even mortgage interest, sold real estate, stocks or even cashed a high dollar amount check, the IRS is aware of the transactions.
As soon as the "IRS computer" tells the "IRS human" that it couldn't find a tax return for you, the collection process begins and includes penalties and interest from the date that the return was due.
Realize, that eventually, you will hear from the IRS.
It is better if the IRS hears from you first. Even if your own family has given up on you, the IRS still considers you to be a part of the IRS tax paying family.
The first step to getting back on track and filing your past due returns, is to contact an online service that specializes in past due tax returns.
The next step is to get in writing from your doctor's office, proof of your illness. What type of illness and when did it start and how long did it last? This short statement could help to save you hundreds of dollars.
The online tax service (that's us) can help you to file your past due tax returns and request that certain penalties be lowered, without you, ever having to leave your home or your office.
As the song goes, "Your Are Not Alone" -- there are millions of Americans who miss the April 15th filing date each year, due to personal illness, serious illness in the immediate family, death in the family, lost of employment or divorce.
Taxpayers, sometimes, believe that because they don't hear from the IRS during the first year of non filed returns, that the problem, may go away on it's own. These same taxpayer, may not file for 2 or 3 more years.
Please know, that if you have reported income from a W2 or 1099-MISC, or interest reported from a savings account or even mortgage interest, sold real estate, stocks or even cashed a high dollar amount check, the IRS is aware of the transactions.
As soon as the "IRS computer" tells the "IRS human" that it couldn't find a tax return for you, the collection process begins and includes penalties and interest from the date that the return was due.
Realize, that eventually, you will hear from the IRS.
It is better if the IRS hears from you first. Even if your own family has given up on you, the IRS still considers you to be a part of the IRS tax paying family.
Monday, September 28, 2009
Tax Loopholes for Middle Income Tax Payers for Sale?
The best chance Americans have to legally keep what they earn by paying less taxes is to do what the rich do. Take advantage of legal tax loopholes that will help to not only lower your taxes, but, create opportunity as well.
Tax Loopholes for Middle Income Tax Payers for Sale?
Yes.
One such opportunity involves my “after tax season” hobby. My hobby is creating, developing, growing and selling, online web sites, for the purpose of generating a profit AND creating legal tax deductions for my clients and web visitors.
If you are looking for tax write-offs, you probably are wondering how generating a profit and tax write offs fit into the same sentence? Easy, usually, but not always, a new business will generate a loss, which is used to help lower one’s taxes, before it generates a profit.
The IRS gives you 3 years to turn a profit. And most worthy web sites, generate a profit after the first year, if not sooner.. If your small business does not turn a profit within 3 out of 5 years, the IRS may consider your project to be a hobby, rather than a “for profit business.” Form 1040, Schedule C.
I enjoy completing past due returns and even current tax returns. However, My passion is developing a tax loophole (web site) from scratch and than watching the client benefit, from the small investment.
When I sit down to create a double edge entity that not only will provide, tax write-offs, but the opportunity and potential for increased income, it just feels like magic.
Now, it’s not all happy days around here. In fact, before I could truly agree to sit down and create a product for sale to the general public, I had to domplete my research on what “really” sells online.
I remember, that day well. The search engines pointed me to sites, which told me that the top selling products online were, books, computer hardware, computer software, Videos, etc.
Well “they” lied.
And for over 5 years I believed what they said. Even after I got my certification in Internet Marketing, I still believed the lie. (My classes, nor my certification test ever mentioned the details of the truth)
Then I found out the truth, and I felt stupid.
The truth is: the top selling products online was, and still is, “adult entertainment.”
And you know what? IRS knew the truth because of the 1099 statements some of these webmasters where reporting on their tax returns. But did they tell it? No.
Now, don’t you church folks get all upset. The adult entertainment industry includes, music, videos, information on other famous adults, e-books, adult games, and many other niches, other than, the hard stuff and the massage ladies on craigslist.
But it just goes to show you, until you really do your research, you can lose a lot of money and time following the crowd. I guess that old saying is true, "If you aren't the lead dog, the view is always the same"
Tax Loopholes for Middle Income Tax Payers for Sale?
Yes.
One such opportunity involves my “after tax season” hobby. My hobby is creating, developing, growing and selling, online web sites, for the purpose of generating a profit AND creating legal tax deductions for my clients and web visitors.
If you are looking for tax write-offs, you probably are wondering how generating a profit and tax write offs fit into the same sentence? Easy, usually, but not always, a new business will generate a loss, which is used to help lower one’s taxes, before it generates a profit.
The IRS gives you 3 years to turn a profit. And most worthy web sites, generate a profit after the first year, if not sooner.. If your small business does not turn a profit within 3 out of 5 years, the IRS may consider your project to be a hobby, rather than a “for profit business.” Form 1040, Schedule C.
I enjoy completing past due returns and even current tax returns. However, My passion is developing a tax loophole (web site) from scratch and than watching the client benefit, from the small investment.
When I sit down to create a double edge entity that not only will provide, tax write-offs, but the opportunity and potential for increased income, it just feels like magic.
Now, it’s not all happy days around here. In fact, before I could truly agree to sit down and create a product for sale to the general public, I had to domplete my research on what “really” sells online.
I remember, that day well. The search engines pointed me to sites, which told me that the top selling products online were, books, computer hardware, computer software, Videos, etc.
Well “they” lied.
And for over 5 years I believed what they said. Even after I got my certification in Internet Marketing, I still believed the lie. (My classes, nor my certification test ever mentioned the details of the truth)
Then I found out the truth, and I felt stupid.
The truth is: the top selling products online was, and still is, “adult entertainment.”
And you know what? IRS knew the truth because of the 1099 statements some of these webmasters where reporting on their tax returns. But did they tell it? No.
Now, don’t you church folks get all upset. The adult entertainment industry includes, music, videos, information on other famous adults, e-books, adult games, and many other niches, other than, the hard stuff and the massage ladies on craigslist.
But it just goes to show you, until you really do your research, you can lose a lot of money and time following the crowd. I guess that old saying is true, "If you aren't the lead dog, the view is always the same"
Sunday, September 27, 2009
There are two major reasons to file your past due returns as soon as possible
If a taxpayer is due a refund because of withholding or estimated taxes paid, even if they were not legally required to file -- you must file within 3 years of the return due date to receive the refund. (If you owe back taxes - the amount of your refund will be applied)
The same rule applies if you have a legal rights to claim tax credits, such as EIC (Earned Income Credit)
Note: Taxpayers who are self-employed won't get credit towards Social Security retirement or disability benefits.
The same rule applies if you have a legal rights to claim tax credits, such as EIC (Earned Income Credit)
Note: Taxpayers who are self-employed won't get credit towards Social Security retirement or disability benefits.
Saturday, September 26, 2009
Why do I have to file all my past due returns before the IRS will consider my Installment Agreement Request?
There are two major reasons that a taxpayer must file all of his/her past due returns before the IRS will consider an Installment Agreement.
1. The IRS may owe you a refund for some of the years you did not file. And the refund can be used to offset the years that you may owe.
2. The IRS charges taxpayers a fee (around $105) to set up an Installment Agreement - so I would think you would want "all" past due taxes included in the Installment Agreement.
1. The IRS may owe you a refund for some of the years you did not file. And the refund can be used to offset the years that you may owe.
2. The IRS charges taxpayers a fee (around $105) to set up an Installment Agreement - so I would think you would want "all" past due taxes included in the Installment Agreement.
Wednesday, September 23, 2009
10.7 Million Less, Tax Returns Filed for 2008 Than in 2007 for Economic Stimulus Payments
Latest findings from the Research, Analysis, and Statistics (RAS) Weekly Tracking Report for individual income tax returns for the week ending June 26, 2009 provided a great many eyeopening statistics, compared to last filing season.
As of June 26, 2009, the IRS received about 135.4 million total individual returns, about 10.7 million returns less than the number of returns received at this time last year. This represents around 96% of the individual income tax returns we expect to receive this year.
The total number of returns received this year is well below the number filed at the comparable time last year—last year’s figures include returns filed to claim the Economic Stimulus payments.
Of the 135.4 million total individual returns, e-filed returns totaled 92.4 million (68%) while paper totaled 43 million (32%). The current e-file rate of 68% is about 8 percentage points higher than at this point in time last year. Filings last year solely to claim the Economic Stimulus payments tended more toward paper.
Total e-file volume of 92.4 million returns is over 5.1 million higher than the comparable weekly number for last year, while total paper returns (43 million) are about 15.8 million lower.
Of the total 92.4 million returns e-filed, online filings (31.7 million or over 34% of total e-filed) are up by about 5.1 million (19%) and practitioner (ERO) e-file returns (60.7 million or just under 66% of total e-file) are down by about 26,000 (about 0.04%) compared to this time last year.
The increase in returns filed on-line may reflect a decrease in the marginal cost of e-filing from a home computer.
The number of Free File (Consortium) returns received so far is around 3 million returns, compared to about 4.7 million returns this time last year—about a 37% decrease, perhaps reflecting increased availability and marketing of free and low cost online tax preparation outside of the IRS Free File program. There will be one more such report—an end of the year wrap-up in December.
Publishers Notes: If you are one of the 10.7 people who have not filed taxes for 2008, there are two things you should know.
1. The IRS knows that you did not file for 2008
2. We can help you with the unfiled tax return, within a matter of days.
As of June 26, 2009, the IRS received about 135.4 million total individual returns, about 10.7 million returns less than the number of returns received at this time last year. This represents around 96% of the individual income tax returns we expect to receive this year.
The total number of returns received this year is well below the number filed at the comparable time last year—last year’s figures include returns filed to claim the Economic Stimulus payments.
Of the 135.4 million total individual returns, e-filed returns totaled 92.4 million (68%) while paper totaled 43 million (32%). The current e-file rate of 68% is about 8 percentage points higher than at this point in time last year. Filings last year solely to claim the Economic Stimulus payments tended more toward paper.
Total e-file volume of 92.4 million returns is over 5.1 million higher than the comparable weekly number for last year, while total paper returns (43 million) are about 15.8 million lower.
Of the total 92.4 million returns e-filed, online filings (31.7 million or over 34% of total e-filed) are up by about 5.1 million (19%) and practitioner (ERO) e-file returns (60.7 million or just under 66% of total e-file) are down by about 26,000 (about 0.04%) compared to this time last year.
The increase in returns filed on-line may reflect a decrease in the marginal cost of e-filing from a home computer.
The number of Free File (Consortium) returns received so far is around 3 million returns, compared to about 4.7 million returns this time last year—about a 37% decrease, perhaps reflecting increased availability and marketing of free and low cost online tax preparation outside of the IRS Free File program. There will be one more such report—an end of the year wrap-up in December.
Publishers Notes: If you are one of the 10.7 people who have not filed taxes for 2008, there are two things you should know.
1. The IRS knows that you did not file for 2008
2. We can help you with the unfiled tax return, within a matter of days.
Monday, September 21, 2009
$8000 - Tax Credit for New Home Buyers Set to Expire Dec 1, 2009
Directly from the IRS: 09/21/2009
New Home Buyers must complete their firs-time home purchases before Dec. 1 to qualify for the special first-time homebuyer credit.
The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far. The credit of up to $8,000 is generally available to homebuyers with qualifying income levels who have never owned a home or have not owned one in the past three years.
New Home Buyers must complete their firs-time home purchases before Dec. 1 to qualify for the special first-time homebuyer credit.
The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far. The credit of up to $8,000 is generally available to homebuyers with qualifying income levels who have never owned a home or have not owned one in the past three years.
Good New, IRS Extends Deadline for Disclosing Hidden Offshore Accounts to October 15, 2009
IR-2009-84, Sept. 21, 2009
WASHINGTON ─ The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts. These taxpayers now have until Oct. 15, 2009.
Under special provisions issued in March, taxpayers with these hidden accounts originally had until Sept. 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.
IRS officials decided to extend this deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it.
The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.
The IRS also announced that there will be no further extensions.
WASHINGTON ─ The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts. These taxpayers now have until Oct. 15, 2009.
Under special provisions issued in March, taxpayers with these hidden accounts originally had until Sept. 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.
IRS officials decided to extend this deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it.
The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.
The IRS also announced that there will be no further extensions.
Sunday, September 20, 2009
The IRS's 30-day Letter, Proposed Individual Tax Assessment
The Proposed Individual Tax Assessment is also known as a 30-day letter.
This letter notifies you that the IRS has NO record of receiving your Form 1040 Tax Return.
The purpose of the proposed tax assessment, including penalties and interest based on income reported to us by your employers, banks, etc.
The letter also states that within 30 days, you must submit one of the following:
1. Your Form 1040 completed and signed, including all schedules and forms with cover letter
2. The Consent to Assessment and Collection form, signed and dated
3. A statement explaining why you believe you are not required to file, or information you would like us to consider.
If you received a 30 day, Proposed Tax Assessment Letter, you might want to contact a tax professional. They, or us, if you choose, can contact the IRS and ask for an extension of time to file or commit to having your return completed by a certain date. The IRS would also fax / mail the necessary documents to complete your tax return.
This letter notifies you that the IRS has NO record of receiving your Form 1040 Tax Return.
The purpose of the proposed tax assessment, including penalties and interest based on income reported to us by your employers, banks, etc.
The letter also states that within 30 days, you must submit one of the following:
1. Your Form 1040 completed and signed, including all schedules and forms with cover letter
2. The Consent to Assessment and Collection form, signed and dated
3. A statement explaining why you believe you are not required to file, or information you would like us to consider.
If you received a 30 day, Proposed Tax Assessment Letter, you might want to contact a tax professional. They, or us, if you choose, can contact the IRS and ask for an extension of time to file or commit to having your return completed by a certain date. The IRS would also fax / mail the necessary documents to complete your tax return.
Friday, September 18, 2009
1099 Information on Past Due Returns, Causes the IRS to Take a Closer Look
The IRS reported on it's web site that taxpayers continue to file past due returns with incorrect 1099-MISC on the return.
A Form 1099-MISC is used to report payments made to a person/business from a trade or business for services or work performed.
The 1099-MISC form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment. Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
When a taxpayer files his/her past due returns, without the 1099-MISC income, it will create an audit. Usually it will only be a paper audit, however, it can become much more than that.
It is important to include ALL necessary information on past due returns, so as not to bring more attention than is necessary to the fact that you are filing late.
You can contact the IRS and ask for a copy of your income for the years that you must file, or you can hire an online tax service, such as ourselves, to file a past due return. (affordable fee based service)
A Form 1099-MISC is used to report payments made to a person/business from a trade or business for services or work performed.
The 1099-MISC form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment. Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
When a taxpayer files his/her past due returns, without the 1099-MISC income, it will create an audit. Usually it will only be a paper audit, however, it can become much more than that.
It is important to include ALL necessary information on past due returns, so as not to bring more attention than is necessary to the fact that you are filing late.
You can contact the IRS and ask for a copy of your income for the years that you must file, or you can hire an online tax service, such as ourselves, to file a past due return. (affordable fee based service)
Wednesday, September 16, 2009
Tax Loophole Magic
Tax Loophole is defined as an exploitation of a tax law which can lower taxes owed by the tax payer.
Purchasing a home can be defined as taking advantage of one of the most popular tax loopholes available to tax payers.
However, there can be some real benefits to taking advantage of, far less expensive tax loopholes, and benefiting greatly in tax write-offs.
Example:
Client contracted with a freelancer to build a one of a kind, search engine optimized, keyword, niche web site. The site was only 4 pages and the initial investment was less than $200.00.
Yet the write-offs, attached to this small home based business were enormous compared to the investment.
The taxpayer was able to write off a portion of the cost of maintaining his home, because of the home office deduction. However, because the first year business generated a loss, rather than a profit, he was not able to use the home office deduction. But ...., he can carry it over to next year’s return.
What the tax payer was able to establish as acceptable write-offs, were: Cost for monthly Internet Service Provider $370. Cost of basic online marketing $380. Cost for professional web hosting w/cpanel, $120.00. Cost of e-Mail marketing services $240. Cost for logo design $90. Cost for misc. online services, such as form submission services. $120. etc.
Including, depreciation for new laptop $1800 write-off, (179). Depreciation for printer $299 (179) not to mention the office supplies, postage, business cards, advertising, off line, training (in Las Vegas), software, travel for business, meals while traveling, accommodations while traveling, all legal tax write-offs for his new home business.
And don’t forget the office furniture, desk chair, lamp and bookshelves, which can be depreciated over time or used as a one time, depreciation (179)
By the time we finished adding the taxpayers annual expenses, including his second phone line and his cell phone, which was used for business, the taxpayer had $10,000 worth of expenses, with very little income for the first year.
Did this lower the taxpayer’s tax liability, as compared to the previous year? Yes.
And the taxpayers understands that he can only file a loss for 3 out of 5 years, before the IRS may ask questions as to, weather the project is a hobby or for profit business?
The moral of this story: Tax Loopholes don’t always come in fancy slick folders from high priced financial institutions. Some of the best tax loopholes in the county are right in front of you, every day.
Another client’s tax story is similar to the one above, accept, she did not have the extra cash flow for furniture, decorations, office supplies, etc.
She paid for the SEO web site and the web hosting and started “being” in business. (drop shipping) She made a profit the first year, and is now purchasing a new computer, printer, office furniture, etc.
In my book, when you can take less than $200., and start a business, that not only provides you with income, but legal tax write-offs as well, that goes into the category of tax loophole magic. The magic, is; the small investment, provides both tax write-offs, and income (or income potential,) all at the same time.
If you have owed taxes for the past couple years, you would understand the power of the above situations. Making a sincere effort, to be a valid, for profit business is the key to keeping the IRS happy.
And how does the IRS know if you are making a sincere effort to be profitable? They can tell by reviewing your expenses.
For more information on tax write-offs for web site owners, visit: http://websitetaxwriteoffs.com
Purchasing a home can be defined as taking advantage of one of the most popular tax loopholes available to tax payers.
However, there can be some real benefits to taking advantage of, far less expensive tax loopholes, and benefiting greatly in tax write-offs.
Example:
Client contracted with a freelancer to build a one of a kind, search engine optimized, keyword, niche web site. The site was only 4 pages and the initial investment was less than $200.00.
Yet the write-offs, attached to this small home based business were enormous compared to the investment.
The taxpayer was able to write off a portion of the cost of maintaining his home, because of the home office deduction. However, because the first year business generated a loss, rather than a profit, he was not able to use the home office deduction. But ...., he can carry it over to next year’s return.
What the tax payer was able to establish as acceptable write-offs, were: Cost for monthly Internet Service Provider $370. Cost of basic online marketing $380. Cost for professional web hosting w/cpanel, $120.00. Cost of e-Mail marketing services $240. Cost for logo design $90. Cost for misc. online services, such as form submission services. $120. etc.
Including, depreciation for new laptop $1800 write-off, (179). Depreciation for printer $299 (179) not to mention the office supplies, postage, business cards, advertising, off line, training (in Las Vegas), software, travel for business, meals while traveling, accommodations while traveling, all legal tax write-offs for his new home business.
And don’t forget the office furniture, desk chair, lamp and bookshelves, which can be depreciated over time or used as a one time, depreciation (179)
By the time we finished adding the taxpayers annual expenses, including his second phone line and his cell phone, which was used for business, the taxpayer had $10,000 worth of expenses, with very little income for the first year.
Did this lower the taxpayer’s tax liability, as compared to the previous year? Yes.
And the taxpayers understands that he can only file a loss for 3 out of 5 years, before the IRS may ask questions as to, weather the project is a hobby or for profit business?
The moral of this story: Tax Loopholes don’t always come in fancy slick folders from high priced financial institutions. Some of the best tax loopholes in the county are right in front of you, every day.
Another client’s tax story is similar to the one above, accept, she did not have the extra cash flow for furniture, decorations, office supplies, etc.
She paid for the SEO web site and the web hosting and started “being” in business. (drop shipping) She made a profit the first year, and is now purchasing a new computer, printer, office furniture, etc.
In my book, when you can take less than $200., and start a business, that not only provides you with income, but legal tax write-offs as well, that goes into the category of tax loophole magic. The magic, is; the small investment, provides both tax write-offs, and income (or income potential,) all at the same time.
If you have owed taxes for the past couple years, you would understand the power of the above situations. Making a sincere effort, to be a valid, for profit business is the key to keeping the IRS happy.
And how does the IRS know if you are making a sincere effort to be profitable? They can tell by reviewing your expenses.
For more information on tax write-offs for web site owners, visit: http://websitetaxwriteoffs.com
Monday, September 14, 2009
How to Set Up an Installment Agreement With the IRS
How to Set Up an Installment Agreement:
If you owe:
$25,000 or less in total taxes, penalties, and interest can use the Online Payment Agreement (OPA) or call the number on the bill or notice (have the bill or notice available, along with the social security number). A fill-in Request for Installment Agreement, Form 9465 (PDF), is available online that can be mailed to the address on the bill.
Note: If you recently filed your income tax return and owe but have NOT yet received a bill from the IRS, you can use the Online Payment Agreement to establish an installment agreement on current year returns. To determine the information needed to establish a pre-assessed installment agreement, refer to What Information Do I Need to Use OPA?
If you owe more than $25,000 in total taxes, penalties, and interest may still qualify for an installment agreement, but a Collection Information Statement, Form 433F (PDF) may need to be completed. Call the number on the bill or mail the Request for Installment Agreement, Form 9465 (PDF) and Form 433F (PDF) to the address on the bill.
You will receive a written notification telling you whether your terms for an installment agreement have been accepted or if they need to be modified.
You must have filed "all" of your past due returns in order to qualify for an Installment Agreement.
If you owe:
$25,000 or less in total taxes, penalties, and interest can use the Online Payment Agreement (OPA) or call the number on the bill or notice (have the bill or notice available, along with the social security number). A fill-in Request for Installment Agreement, Form 9465 (PDF), is available online that can be mailed to the address on the bill.
Note: If you recently filed your income tax return and owe but have NOT yet received a bill from the IRS, you can use the Online Payment Agreement to establish an installment agreement on current year returns. To determine the information needed to establish a pre-assessed installment agreement, refer to What Information Do I Need to Use OPA?
If you owe more than $25,000 in total taxes, penalties, and interest may still qualify for an installment agreement, but a Collection Information Statement, Form 433F (PDF) may need to be completed. Call the number on the bill or mail the Request for Installment Agreement, Form 9465 (PDF) and Form 433F (PDF) to the address on the bill.
You will receive a written notification telling you whether your terms for an installment agreement have been accepted or if they need to be modified.
You must have filed "all" of your past due returns in order to qualify for an Installment Agreement.
New $2,500 College Credit Available (September 9, 2009)
WASHINGTON — In support of the Administration's efforts to promote access to and the affordability of college education, the Internal Revenue Service today launched a new Web section highlighting various tax breaks and 529 plan changes designed to help parents and students pay for college.
The new Tax Benefits for Education section on IRS.gov includes tips for taking advantage of long-standing education deductions and credits. The “one-stop” location for higher education information includes a special section highlighting 529 plans and frequently asked questions. The Web section also features two key changes that will be in effect during 2009 and 2010 that were included in the American Recovery and Reinvestment Act (ARRA), enacted earlier this year.
One change allows families saving for college to use popular 529 plans to pay for a student’s computer-related technology needs. Under the other change, more parents and students will be able to use a federal education credit to pay part of the cost of college using the new American opportunity credit.
“With many families struggling to afford college, we want every eligible taxpayer to know about their options and take advantage of all the tax breaks they can,” said IRS Commissioner Doug Shulman. “529 plans have become a very attractive way to save for college, and our Web section is designed to help people get information about these plans. In addition, the new American opportunity credit can help many parents and students pay part of the cost of the first four years of college.”
Here are further details on the expanded 529 plans and the new American opportunity credit.
529 Plans Expanded
Tax-free college savings plans and prepaid tuition programs can be used to buy computer equipment and services for an eligible student during 2009 and 2010. These 529 plans — qualified tuition programs authorized under section 529 of the Internal Revenue Code — have, in recent years, grown as a way for parents and other family members to save for a child’s college education. Though contributions to 529 plans are not deductible, there is also no income limit for contributors.
529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books, supplies, equipment and special needs services. For someone who is at least a half-time student, room and board also qualify.
For 2009 and 2010, the ARRA change adds to this list expenses for computer technology and equipment or Internet access and related services to be used by the student while enrolled at an eligible educational institution. Software designed for sports, games or hobbies does not qualify, unless it is predominantly educational in nature. In general, expenses for computer technology are not qualified expenses for the American opportunity credit, Hope credit, lifetime learning credit or tuition and fees deduction.
States sponsor 529 plans that allow taxpayers to either prepay or contribute to an account for paying a student's qualified higher education expenses. Similarly, colleges and groups of colleges sponsor 529 plans that allow them to prepay a student's qualified education expenses. More information about these plans can be found on the new Web page on IRS.gov and in Publication 970, Tax Benefits for Education.
American Opportunity Credit Helps Pay for the First Four Years of College
The American opportunity credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
The American opportunity credit, in many cases, offers greater tax savings than existing education tax breaks. Here are some key features of the credit:
Tuition, related fees, books and other required course materials generally qualify. In the past, books usually were not eligible for education-related credits and deductions.
The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
The full credit is available for taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less (for married couples filing a joint return, the limit is $160,000 or less). The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student. Existing education-related credits and deductions do not provide a benefit to people who owe no tax. The refundable portion of the credit is not available to any student whose investment income is taxed at the parent’s rate, commonly referred to as the kiddie tax. See Publication 929, Tax Rules for Children and Dependents, for details.
Eligible parents and students can get the benefit of this credit during the year by having less tax taken out of their paychecks. They can do this by filling out a new Form W-4, claiming additional withholding allowances, and giving it to their employer. For details, use the withholding calculator on IRS.gov or see Publication 919, How Do I Adjust My Tax Withholding?
Though most taxpayers who pay for post-secondary education will qualify for the American opportunity credit, some will not. The limitations include a married person filing a separate return, regardless of income, joint filers whose MAGI is $180,000 or more and, finally, single taxpayers, heads of household and some widows and widowers whose MAGI is $90,000 or more.
There are some post-secondary education expenses that do not qualify for the American opportunity credit. They include expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college. That’s because the credit is only allowed for the first four years of post-secondary education.
Graduate students still qualify for the lifetime learning credit and the tuition and fees deduction. For details on these and other education-related tax benefits, see Pub. 970.
IRS forms and publications can be viewed or downloaded from this Web site, IRS.gov, or obtained, without charge, by calling toll-free 1-800-TAX-FORM (829-3676)
The new Tax Benefits for Education section on IRS.gov includes tips for taking advantage of long-standing education deductions and credits. The “one-stop” location for higher education information includes a special section highlighting 529 plans and frequently asked questions. The Web section also features two key changes that will be in effect during 2009 and 2010 that were included in the American Recovery and Reinvestment Act (ARRA), enacted earlier this year.
One change allows families saving for college to use popular 529 plans to pay for a student’s computer-related technology needs. Under the other change, more parents and students will be able to use a federal education credit to pay part of the cost of college using the new American opportunity credit.
“With many families struggling to afford college, we want every eligible taxpayer to know about their options and take advantage of all the tax breaks they can,” said IRS Commissioner Doug Shulman. “529 plans have become a very attractive way to save for college, and our Web section is designed to help people get information about these plans. In addition, the new American opportunity credit can help many parents and students pay part of the cost of the first four years of college.”
Here are further details on the expanded 529 plans and the new American opportunity credit.
529 Plans Expanded
Tax-free college savings plans and prepaid tuition programs can be used to buy computer equipment and services for an eligible student during 2009 and 2010. These 529 plans — qualified tuition programs authorized under section 529 of the Internal Revenue Code — have, in recent years, grown as a way for parents and other family members to save for a child’s college education. Though contributions to 529 plans are not deductible, there is also no income limit for contributors.
529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books, supplies, equipment and special needs services. For someone who is at least a half-time student, room and board also qualify.
For 2009 and 2010, the ARRA change adds to this list expenses for computer technology and equipment or Internet access and related services to be used by the student while enrolled at an eligible educational institution. Software designed for sports, games or hobbies does not qualify, unless it is predominantly educational in nature. In general, expenses for computer technology are not qualified expenses for the American opportunity credit, Hope credit, lifetime learning credit or tuition and fees deduction.
States sponsor 529 plans that allow taxpayers to either prepay or contribute to an account for paying a student's qualified higher education expenses. Similarly, colleges and groups of colleges sponsor 529 plans that allow them to prepay a student's qualified education expenses. More information about these plans can be found on the new Web page on IRS.gov and in Publication 970, Tax Benefits for Education.
American Opportunity Credit Helps Pay for the First Four Years of College
The American opportunity credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
The American opportunity credit, in many cases, offers greater tax savings than existing education tax breaks. Here are some key features of the credit:
Tuition, related fees, books and other required course materials generally qualify. In the past, books usually were not eligible for education-related credits and deductions.
The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
The full credit is available for taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less (for married couples filing a joint return, the limit is $160,000 or less). The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student. Existing education-related credits and deductions do not provide a benefit to people who owe no tax. The refundable portion of the credit is not available to any student whose investment income is taxed at the parent’s rate, commonly referred to as the kiddie tax. See Publication 929, Tax Rules for Children and Dependents, for details.
Eligible parents and students can get the benefit of this credit during the year by having less tax taken out of their paychecks. They can do this by filling out a new Form W-4, claiming additional withholding allowances, and giving it to their employer. For details, use the withholding calculator on IRS.gov or see Publication 919, How Do I Adjust My Tax Withholding?
Though most taxpayers who pay for post-secondary education will qualify for the American opportunity credit, some will not. The limitations include a married person filing a separate return, regardless of income, joint filers whose MAGI is $180,000 or more and, finally, single taxpayers, heads of household and some widows and widowers whose MAGI is $90,000 or more.
There are some post-secondary education expenses that do not qualify for the American opportunity credit. They include expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college. That’s because the credit is only allowed for the first four years of post-secondary education.
Graduate students still qualify for the lifetime learning credit and the tuition and fees deduction. For details on these and other education-related tax benefits, see Pub. 970.
IRS forms and publications can be viewed or downloaded from this Web site, IRS.gov, or obtained, without charge, by calling toll-free 1-800-TAX-FORM (829-3676)
IRS Announced the Final Forum on Tax Return Preparer Standards
The Internal Revenue Service today announced the third and final public forum on tax return preparer standards will be held on Wednesday, Sept. 30, in Chicago. It will feature two panels of representatives from the software and unenrolled preparer industries and be moderated by IRS Commissioner Doug Shulman. Shulman announced a review of paid preparers on June 4 to produce a comprehensive set of recommendations by the end of this year to boost taxpayer compliance and strengthen industry standards.
The forum will convene at 10 a.m. CT in the J.R. Thompson Center at 100 W. Randolph St., Chicago, IL 60601, in the lower level auditorium. Anyone interested in attending should confirm attendance by sending an e-mail message to CL.NPL.Communications@irs.gov
The forum will convene at 10 a.m. CT in the J.R. Thompson Center at 100 W. Randolph St., Chicago, IL 60601, in the lower level auditorium. Anyone interested in attending should confirm attendance by sending an e-mail message to CL.NPL.Communications@irs.gov
Thursday, September 10, 2009
Does it cost to set up and IRS Installment Agreement?
Yes.
The IRS charges taxpayers a fee to set up an Installment Agreement. The fee for new Installment Agreements is $105 (this could change) and $52 for agreements where payments are deducted directly from the taxpayers bank account. Taxpayers with extremely low incomes, can apply to pay a lower fee.
Visit www.irs.gov for updated tax codes.
Before you can request an IRS Installment Agreement, you must file all past due tax returns.
It is more cost effective, to have a Tax Preparer or Tax Accountant to complete your past due returns. You can then employ a Tax Attorney or Enrolled Agent to file a bankruptcy or Offer in Compromise.
The IRS charges taxpayers a fee to set up an Installment Agreement. The fee for new Installment Agreements is $105 (this could change) and $52 for agreements where payments are deducted directly from the taxpayers bank account. Taxpayers with extremely low incomes, can apply to pay a lower fee.
Visit www.irs.gov for updated tax codes.
Before you can request an IRS Installment Agreement, you must file all past due tax returns.
It is more cost effective, to have a Tax Preparer or Tax Accountant to complete your past due returns. You can then employ a Tax Attorney or Enrolled Agent to file a bankruptcy or Offer in Compromise.
How Long Does the IRS Have to Collect Taxes Owed?
In general, the IRS has ten years to collect on back taxes. However, there are a number of ways the ten year period might be extended.
1. The ten (10) year period doesn't start until after you have filed your tax return and the IRS accesses the tax against you.
2. The IRS can extend the 10 years by pulling some of its legal string, such as suing you in federal cour. (We are told this usually only happens if you owe the IRS millions)
3. If you take certain actions concerning past due taxes owed, such as filing an Offer in Compromise, file for bankruptcy, or sign 'something' from the IRS's Collections department, the ten year period can be extended.
The different rules are complex and you should seek out a Tax Professional for more information. The above information serves only as a summary. To learn more visit, www.irs.gov and put your keywords into the search box.
If you are experiencing problems because of past due returns, we provide an online, confidential, back tax service. There is no need to take off from work or to sit in some one's office. We do everything online, via email, fax and the United States Post Office. http://taxeswilltravel/pdr.htm
1. The ten (10) year period doesn't start until after you have filed your tax return and the IRS accesses the tax against you.
2. The IRS can extend the 10 years by pulling some of its legal string, such as suing you in federal cour. (We are told this usually only happens if you owe the IRS millions)
3. If you take certain actions concerning past due taxes owed, such as filing an Offer in Compromise, file for bankruptcy, or sign 'something' from the IRS's Collections department, the ten year period can be extended.
The different rules are complex and you should seek out a Tax Professional for more information. The above information serves only as a summary. To learn more visit, www.irs.gov and put your keywords into the search box.
If you are experiencing problems because of past due returns, we provide an online, confidential, back tax service. There is no need to take off from work or to sit in some one's office. We do everything online, via email, fax and the United States Post Office. http://taxeswilltravel/pdr.htm
Wednesday, September 9, 2009
The IRS sent me a CP2000, which said I didn't file 1099 income for $1300. My client neveer sent me a 1099, how did IRS come up with this amount?
Taxpayers must always remember that employers, financial institutions, and clients file information returns to the IRS in order to substantiate their own tax deductions.
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after original return due date.
If the IRS computer does not find that amount on your tax return, it is an "automated underreported" amount.
Where you paid $1300 for work that you completed for your client?
It is best to return to the tax professional who prepared your tax return and explain the facts. If you prepared your own tax return, find an experienced tax professional to make sure the situation is handled correctly.
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after original return due date.
If the IRS computer does not find that amount on your tax return, it is an "automated underreported" amount.
Where you paid $1300 for work that you completed for your client?
It is best to return to the tax professional who prepared your tax return and explain the facts. If you prepared your own tax return, find an experienced tax professional to make sure the situation is handled correctly.
Monday, September 7, 2009
New Tax Law, 2009 Earned Income Credit
Credit percentage increases from 40% to 45% for families with 3 or more children (maximum credit is now $5,657.
Addition to the phase-out amount for married taxpayers filing jointly increases from $3,120 to $5,000
Also more people will qualify for the Child Tax Credit in 2009. The earned income threshold generally needed to qualify for the additional child tax credit decreased from $8,500 to $3,000. As a result more people will qualify. This particular tax law applies for 2009 and 2010.
To view actual tax codes, visit: irs.gov
Addition to the phase-out amount for married taxpayers filing jointly increases from $3,120 to $5,000
Also more people will qualify for the Child Tax Credit in 2009. The earned income threshold generally needed to qualify for the additional child tax credit decreased from $8,500 to $3,000. As a result more people will qualify. This particular tax law applies for 2009 and 2010.
To view actual tax codes, visit: irs.gov
Wednesday, September 2, 2009
Are My Expenses to Look for a Job Tax Deductible?
Yes, in some cases. According to the IRS's Summertime Tax Tips (2009), the determining factor is, the expenses must be spent on a job search in your "current occupation" Expenses derived from looking for a job in a "new occupation" are not tax deductible.
Expenses for preparing and mailing copies of your resume are tax deductible, if you are seeking a position in your "current occupation"
If you travel to look for a job in your "current occupation" these expenses are usually deductible.
I noticed that your email came from an educational facility.
If you are looking for a job for the first time or after a long period of not being employed, your job search expenses are not deductible under these circumstances.
Expenses for preparing and mailing copies of your resume are tax deductible, if you are seeking a position in your "current occupation"
If you travel to look for a job in your "current occupation" these expenses are usually deductible.
I noticed that your email came from an educational facility.
If you are looking for a job for the first time or after a long period of not being employed, your job search expenses are not deductible under these circumstances.
Monday, August 31, 2009
The IRS Reported Sole Proprietorships Income $280.6 Billion in 2007
The Statistics of Income (SOI)reported the following information - 08/25/2009: www.irs.gov
About 23.1 million individual income tax returns reported nonfarm sole proprietorship activity, a 4.7 percent increase since tax year 2006. Reported profits for these sole proprietorships were $280.6 billion in 2007.
Individual Noncash Contributions:For tax year 2006, 24.7 million individual income taxpayers itemized $52.6 billion in deductions for noncash charitable contributions.
Of these taxpayers, 6.2 million reported $46.8 billion in deductions for charitable contributions in excess of $500, as shown on Form 8283, Noncash Charitable Contributions.
Though filers of this form declined by 5.9 percent between tax years 2005 and 2006, the amount of charitable contributions increased 14.1 percent, from $41.1 billion in tax year 2005
S Corporations: The number of S corporations increased 5.1 percent to 3.9 million for tax year 2006, so that S corporations represent nearly two-thirds of all U.S. corporations. The number of shareholders in S corporations also increased 5.1 percent to 6.7 million. Total net income (less deficit) increased 7.0 percent to $386.2 billion.
Foreign-Controlled Domestic Corporations: The number of U.S.income tax returns filed by foreign-controlled domestic corporations (FCDCs) increased by 3.4 percent for tax year 2006, to about 63,950. FCDCs accounted for 1.1 percent of all corporation income returns filed. FCDC assets totaled $9.7 trillion, a 5.7 percent increase from the previous year, while assets for all corporations totaled $73.1 trillion, a 10.0 percent increase.
Corporate Foreign Tax Credit:For tax year 2005, about 5,840 U.S.corporations claimed more than $84 billion in foreign tax credits, reducing their U.S. tax on worldwide income by 30.3 percent, from $278.2 billion to $194 billion.
Sales of Capital Assets:Data from a five-year study of individual income tax returns (tax years 1999-2003) show that taxpayers realized the highest net capital gains in 2000.Net gains less losses peaked at $574.1 billion in that year, with capital gains of $929.8 billion and losses of $355.7 billion.The lowest amount of net capital gains reported for the 5 tax years examined was $131.9 billion, reported in 2002.
About 23.1 million individual income tax returns reported nonfarm sole proprietorship activity, a 4.7 percent increase since tax year 2006. Reported profits for these sole proprietorships were $280.6 billion in 2007.
Individual Noncash Contributions:For tax year 2006, 24.7 million individual income taxpayers itemized $52.6 billion in deductions for noncash charitable contributions.
Of these taxpayers, 6.2 million reported $46.8 billion in deductions for charitable contributions in excess of $500, as shown on Form 8283, Noncash Charitable Contributions.
Though filers of this form declined by 5.9 percent between tax years 2005 and 2006, the amount of charitable contributions increased 14.1 percent, from $41.1 billion in tax year 2005
S Corporations: The number of S corporations increased 5.1 percent to 3.9 million for tax year 2006, so that S corporations represent nearly two-thirds of all U.S. corporations. The number of shareholders in S corporations also increased 5.1 percent to 6.7 million. Total net income (less deficit) increased 7.0 percent to $386.2 billion.
Foreign-Controlled Domestic Corporations: The number of U.S.income tax returns filed by foreign-controlled domestic corporations (FCDCs) increased by 3.4 percent for tax year 2006, to about 63,950. FCDCs accounted for 1.1 percent of all corporation income returns filed. FCDC assets totaled $9.7 trillion, a 5.7 percent increase from the previous year, while assets for all corporations totaled $73.1 trillion, a 10.0 percent increase.
Corporate Foreign Tax Credit:For tax year 2005, about 5,840 U.S.corporations claimed more than $84 billion in foreign tax credits, reducing their U.S. tax on worldwide income by 30.3 percent, from $278.2 billion to $194 billion.
Sales of Capital Assets:Data from a five-year study of individual income tax returns (tax years 1999-2003) show that taxpayers realized the highest net capital gains in 2000.Net gains less losses peaked at $574.1 billion in that year, with capital gains of $929.8 billion and losses of $355.7 billion.The lowest amount of net capital gains reported for the 5 tax years examined was $131.9 billion, reported in 2002.
Thursday, August 27, 2009
5 Major Steps to Avoid your Chances of Being Audited
1. Make sure there are no mathematical errors in your tax return. Check your W2s and 1099s with the income you have placeed onto the 1040.
If there is an error in the tax return, the IRS (computer) will write you a letter explaining the changes. The chances of an IRS human getting involved is high. So check the math.
2. Report ALL income. If you receive a 1099, or not, report the income. Taxpayers who did not report the income, and the client later turned in a 1099 because of their own tax problems, is a story heard too often by the IRS.
Plus, it gets your file sent to the under reporting unit - and that could be the beginning of a very bad experience, depending on the circumstances and amount of the under reported income.
3. Don’t cheat, especially if you are self-employed. The IRS is aware of how taxpayers cheat and often times place the information onto the IRS web site.
There is a entire section on the IRS web site, about how offshore account holders cheat and how the IRS catches them.
4. Don’t get hobby losses confused with business losses. You only have 3 out of 5 years to claim a lost on a business. Your business actions, receipts and expenses usually will expose a taxpayer as operating a hobby, or, a for profit small business.
5. Do not take the word of an unknown tax professional when it comes to tax loopholes. Once you sign the return, regardless of who told you what, you are 100% responsible for what is on your tax return. Don’t believe me? Ask Wesley Snipes!
Note: Past due returns that reduce a taxpayers tax liability by large amounts, I am sure, are fair game for audits. That is one of the reasons, you may want to employ an experienced tax professional to complete your past due returns.
It is not hard to reduce the tax amount owed when re-doing a “Substitute Return” that the IRS prepared because a taxpayer failed to file. The IRS does NOT make any effort to deduct additional deductions that you might be entitled to.
If there is an error in the tax return, the IRS (computer) will write you a letter explaining the changes. The chances of an IRS human getting involved is high. So check the math.
2. Report ALL income. If you receive a 1099, or not, report the income. Taxpayers who did not report the income, and the client later turned in a 1099 because of their own tax problems, is a story heard too often by the IRS.
Plus, it gets your file sent to the under reporting unit - and that could be the beginning of a very bad experience, depending on the circumstances and amount of the under reported income.
3. Don’t cheat, especially if you are self-employed. The IRS is aware of how taxpayers cheat and often times place the information onto the IRS web site.
There is a entire section on the IRS web site, about how offshore account holders cheat and how the IRS catches them.
4. Don’t get hobby losses confused with business losses. You only have 3 out of 5 years to claim a lost on a business. Your business actions, receipts and expenses usually will expose a taxpayer as operating a hobby, or, a for profit small business.
5. Do not take the word of an unknown tax professional when it comes to tax loopholes. Once you sign the return, regardless of who told you what, you are 100% responsible for what is on your tax return. Don’t believe me? Ask Wesley Snipes!
Note: Past due returns that reduce a taxpayers tax liability by large amounts, I am sure, are fair game for audits. That is one of the reasons, you may want to employ an experienced tax professional to complete your past due returns.
It is not hard to reduce the tax amount owed when re-doing a “Substitute Return” that the IRS prepared because a taxpayer failed to file. The IRS does NOT make any effort to deduct additional deductions that you might be entitled to.
What if I still owe taxes, after you complete my past due returns?
What if I owe taxes after you complete my past due returns?
Below are facts that can help you, should your past due returns include, an amount owed to the IRS.
If you owe, once your past due returns are completed, and some of you will, you will have several options.
1. You can request that we prepare a "Request for an Installment Agreement" and if accepted by the IRS, you can pay your tax bill, monthly, including penalties and interest over 60 months (5 years)
2. Or, you can hire a Tax Attorney or Enrolled Agent to file an Offer in Compromise. This is where you offer the IRS pennies on the dollar, of what you owe, and if accept, you pay the amount you agreed upon and your tax bill is wiped clean.
The OIC - Offer in Compromise is based upon a formula. If your financial situation fits into the formula, there is a good chance the IRS will accept your offer.
A Tax Attorney or an Enrolled Agent, usually will charge you between $2500 to $5000 to file an Offer in Compromise. Tax Accountants or Tax Preparers are not allowed to file OICs for taxpayers.
You may want to sit down and read the new, OIC Form 656 very carefully before you do anything. (If you can read and following instructions, you will have a better understanding of the OIC process)
3. The third most popular option is to file Bankruptcy.
Not all of the past due returns show an amount owed. Many of the returns have a refund. Refund checks are only mailed to taxpayers, IF, the file the past due returns within 3 years from the date the tax return was do.
Below are facts that can help you, should your past due returns include, an amount owed to the IRS.
If you owe, once your past due returns are completed, and some of you will, you will have several options.
1. You can request that we prepare a "Request for an Installment Agreement" and if accepted by the IRS, you can pay your tax bill, monthly, including penalties and interest over 60 months (5 years)
2. Or, you can hire a Tax Attorney or Enrolled Agent to file an Offer in Compromise. This is where you offer the IRS pennies on the dollar, of what you owe, and if accept, you pay the amount you agreed upon and your tax bill is wiped clean.
The OIC - Offer in Compromise is based upon a formula. If your financial situation fits into the formula, there is a good chance the IRS will accept your offer.
A Tax Attorney or an Enrolled Agent, usually will charge you between $2500 to $5000 to file an Offer in Compromise. Tax Accountants or Tax Preparers are not allowed to file OICs for taxpayers.
You may want to sit down and read the new, OIC Form 656 very carefully before you do anything. (If you can read and following instructions, you will have a better understanding of the OIC process)
3. The third most popular option is to file Bankruptcy.
Not all of the past due returns show an amount owed. Many of the returns have a refund. Refund checks are only mailed to taxpayers, IF, the file the past due returns within 3 years from the date the tax return was do.
Wednesday, August 26, 2009
Tax Client Received a CP 2000 Because of IRA Distributions Used to Purchase First Time Home
Issue: Tax client received $30,000 in IRA distributions to purchase first home.
$30,000 included as income on line 16b of 2007 tax return. Client was taxed on the $30K. However, there was no way to inform the IRS that the total distribution was being used to purchase first home.
Problem: The IRS sent a CP 2000 - requesting that the client pay the 10% penalty on the $30,000 IRA early distribution.
Taxpayer Responce: Money was used to pay down payment for first home.
IRS Response: Only the first $10,000 in 2007, can avoid penalty for first time home purchase, the balance has a 10% penalty.
You can use Form 5329 - Additional Taxes on Qualified Plans OMB (Including IRAs) and Other Tax-Favored Accounts to report the exception to the 10% penalty if you are not yet 59 1/2
$30,000 included as income on line 16b of 2007 tax return. Client was taxed on the $30K. However, there was no way to inform the IRS that the total distribution was being used to purchase first home.
Problem: The IRS sent a CP 2000 - requesting that the client pay the 10% penalty on the $30,000 IRA early distribution.
Taxpayer Responce: Money was used to pay down payment for first home.
IRS Response: Only the first $10,000 in 2007, can avoid penalty for first time home purchase, the balance has a 10% penalty.
You can use Form 5329 - Additional Taxes on Qualified Plans OMB (Including IRAs) and Other Tax-Favored Accounts to report the exception to the 10% penalty if you are not yet 59 1/2
Tuesday, August 25, 2009
Is It a Crime Not to File Back Taxes?
Yes. And can be punishable with a 5 figure fine and Federal prison time.
There is a thin line between tax evasion and unfilled tax returns.
Fortunately, the IRS, usually won’t send a taxpayer to jail for unfilled tax returns, however, it would be a good idea to always remember, that “they” can and in some cases, they have. Can you say Ronald Isley or Wesley Snipes?
You can depend on the IRS to provide you with a much needed vacation (behind bars) to help you return to reality and realize, that there are some agencies within the Federal Government who “do” exactly what they promise.
And if you read the Department of Justice’s logs, you will see that the IRS sends more than famous people on extended vacation!
Not to frighten you, just file the past due returns, there are options if you can’t pay the taxes owed.
Personal Note: The IRS practices equal opportunity, they don’t care what color you are, who your mother was, what you do for a living, or how much education you have. They don’t care if your ancestors came to America on a slave ship of with the Pilgrims, their response to unfilled tax returns is the same.
There is a thin line between tax evasion and unfilled tax returns.
Fortunately, the IRS, usually won’t send a taxpayer to jail for unfilled tax returns, however, it would be a good idea to always remember, that “they” can and in some cases, they have. Can you say Ronald Isley or Wesley Snipes?
You can depend on the IRS to provide you with a much needed vacation (behind bars) to help you return to reality and realize, that there are some agencies within the Federal Government who “do” exactly what they promise.
And if you read the Department of Justice’s logs, you will see that the IRS sends more than famous people on extended vacation!
Not to frighten you, just file the past due returns, there are options if you can’t pay the taxes owed.
Personal Note: The IRS practices equal opportunity, they don’t care what color you are, who your mother was, what you do for a living, or how much education you have. They don’t care if your ancestors came to America on a slave ship of with the Pilgrims, their response to unfilled tax returns is the same.
Monday, August 24, 2009
More Form 1040X Returns Are Being File, Processing Time Will Take Longer
Form 1040X Processing Time Extended
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Because of higher than expected inventory levels of Form 1040X, Amended U.S. Individual Income Tax Return, the processing time frame is temporarily extended to 12-16 weeks instead of the normal 8-12 weeks. It is not necessary to contact the IRS regarding the status of a return; returns are being processed as quickly as possible.
More, Taxpayers who may have "remember" foreign bank accounts or filed their own taxes are filing 1040X - Amended Returns to make sure their tax returns are true and correct.
________________________________________________
Note: The new administration has unleashed the IRS to "find" unreported income. Intelligent taxpayers understand this and are filing 1040Xs in record numbers.
If you have income that you "forgot" to bring to the IRS's attention, now would be a good time to read the blog posting before this one. You know, the one about the IRS having a new agreement with the USB.
You know, the posting about how "the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts"
If you can not pay the taxes, contact a Tax Attorney or Enroll Agent. It is way better to be as honest as you can with the IRS, and then work out a way to make the payments, than it is for the IRS to find out about the offshore bank accounts on their own.
--------------------------------------------------------------------------------
Because of higher than expected inventory levels of Form 1040X, Amended U.S. Individual Income Tax Return, the processing time frame is temporarily extended to 12-16 weeks instead of the normal 8-12 weeks. It is not necessary to contact the IRS regarding the status of a return; returns are being processed as quickly as possible.
More, Taxpayers who may have "remember" foreign bank accounts or filed their own taxes are filing 1040X - Amended Returns to make sure their tax returns are true and correct.
________________________________________________
Note: The new administration has unleashed the IRS to "find" unreported income. Intelligent taxpayers understand this and are filing 1040Xs in record numbers.
If you have income that you "forgot" to bring to the IRS's attention, now would be a good time to read the blog posting before this one. You know, the one about the IRS having a new agreement with the USB.
You know, the posting about how "the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts"
If you can not pay the taxes, contact a Tax Attorney or Enroll Agent. It is way better to be as honest as you can with the IRS, and then work out a way to make the payments, than it is for the IRS to find out about the offshore bank accounts on their own.
IRS Will Now Get More Infomation on Taxpayers Who Have Swiss Bank Accounts
The IRS Press Announcement came out on August 19, 2009. The party is over, Swiss Bank Account Holders should be concerned, especially if they have not filed past due tax returns or "forgot" to include income in foreigh bank accounts.
IRS to Receive Unprecedented Amount of Information in UBS Agreement
IR-2009-75, Aug. 19, 2009
WASHINGTON — The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.
As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.
In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
IRS to Receive Unprecedented Amount of Information in UBS Agreement
IR-2009-75, Aug. 19, 2009
WASHINGTON — The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.
As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.
In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
Wednesday, August 19, 2009
The Making Work Pay Credit for 2009, 2010 is a Refundable Credit
The Making Work Pay Credit is a refundable credit in 2009 and 2010, that can be applied if self-employed.
Maximum credit is $400 ($800 if married filing jointly)
Credit limited to 6.2% of earned income. You can be an employee or self-employed to qualify.
The phased out over modified AGI range of $75,000-$95,000 ($150,000-$190,000 if married filing jointly)
For clarification of these new tax laws, visit: irs.gov -- keywords: making work pay credit
Maximum credit is $400 ($800 if married filing jointly)
Credit limited to 6.2% of earned income. You can be an employee or self-employed to qualify.
The phased out over modified AGI range of $75,000-$95,000 ($150,000-$190,000 if married filing jointly)
For clarification of these new tax laws, visit: irs.gov -- keywords: making work pay credit
Tuesday, August 18, 2009
2009 New Tax Law on Qualified Tuition Programs
During 2009 and 2010, qualified education expenses for qualified tuition programs (section 529) will include certain purchases of computer technology, equipment, or Internet access and related service.
Items purchased must be used by beneficiary and beneficiary's family during years beneficiary is enrolled at an eligible educational institution.
It excludes expenses for computer software designed for sports, games, or hobbies unless predominantly education in nature.
For details on this new tax law, visit; irs.gov -- keywords: new tax law tuition
Items purchased must be used by beneficiary and beneficiary's family during years beneficiary is enrolled at an eligible educational institution.
It excludes expenses for computer software designed for sports, games, or hobbies unless predominantly education in nature.
For details on this new tax law, visit; irs.gov -- keywords: new tax law tuition
Monday, August 17, 2009
The IRS Announced the Interest Rates Remain the Same for the 4th Quarter 2009
IR-2009-73, Aug. 14, 2009
WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning Oct. 1, 2009, will remain the same. The rates will be:
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate during July 2009 to take effect Aug. 1, 2009, based on daily compounding.
For more information, visit: irs.gov - keywords: interest rates 2009
WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning Oct. 1, 2009, will remain the same. The rates will be:
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate during July 2009 to take effect Aug. 1, 2009, based on daily compounding.
For more information, visit: irs.gov - keywords: interest rates 2009
Tuesday, August 11, 2009
I work for an escort service, they gave me a 1099, what do I tell IRS about my occupation and the $10K I paid for security?
You tell the IRS the truth.
In the occupation section of the 1040, you can put "Entertainment"
The cost of the security is tax deductible, as is all other business expenses.
Remember that Al Capone didn't get busted for his crimes on the street, it was his dealings with the IRS that got him. Being honest with the IRS is the correct thing to do. If you return was flagged for review, it would not be hard to tell what you do and why there might be a $10,000 deduction for security on your Schedule C. As long as you have documentation that you paid the security company, no problem.
Also, did you 1099 your security company?
What is important, is: The IRS receives copies of the 1099s and the IRS is aware of your annual earnings. Filing the past due returns ASAP would be in your best interest. Also, the IRS might be concerned with the amount of tips you earned for any given year.
For clarification of tax codes on 1099s and business expenses, visit irs.gov - keywords: instructions schedule c
In the occupation section of the 1040, you can put "Entertainment"
The cost of the security is tax deductible, as is all other business expenses.
Remember that Al Capone didn't get busted for his crimes on the street, it was his dealings with the IRS that got him. Being honest with the IRS is the correct thing to do. If you return was flagged for review, it would not be hard to tell what you do and why there might be a $10,000 deduction for security on your Schedule C. As long as you have documentation that you paid the security company, no problem.
Also, did you 1099 your security company?
What is important, is: The IRS receives copies of the 1099s and the IRS is aware of your annual earnings. Filing the past due returns ASAP would be in your best interest. Also, the IRS might be concerned with the amount of tips you earned for any given year.
For clarification of tax codes on 1099s and business expenses, visit irs.gov - keywords: instructions schedule c
Monday, August 10, 2009
Just Released; IRS Warns Taxypayers of New Identity Theft Scams
WASHINGTON — The Internal Revenue Service reminds consumers to avoid identity theft scams that use the IRS name, logo or Web site in an attempt to convince taxpayers that the scam is a genuine communication from the IRS. Scammers may use other federal agency names, such as the U.S. Department of the Treasury.
In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.
The scams may take place through e-mail, fax or phone. When they take place via e-mail, they are called “phishing” scams.
The IRS does not discuss tax account matters with taxpayers by e-mail.
The IRS urges consumers to avoid falling for the following recent schemes:
visit: http://www.irs.gov/newsroom/article/0,,id=211669,00.html
In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.
The scams may take place through e-mail, fax or phone. When they take place via e-mail, they are called “phishing” scams.
The IRS does not discuss tax account matters with taxpayers by e-mail.
The IRS urges consumers to avoid falling for the following recent schemes:
visit: http://www.irs.gov/newsroom/article/0,,id=211669,00.html
Sunday, August 9, 2009
New 2009 Child Tax Credit Law - More People Will Qualify
The earned income level needed to qualify for "additional child tax credit" decreases from $8,500 to $3000. Now more people will be able to qualify.
The lower income lever applies in 2009 and 2010.
For more details and clarification, visit: irs.gov -- keyword: child tax credit
The lower income lever applies in 2009 and 2010.
For more details and clarification, visit: irs.gov -- keyword: child tax credit
Saturday, August 8, 2009
Important Changes to the Alternative Minimum Tax - AMT for 2009
Exemption amount increases for 2009 to $46,700 if single or head of household, $70,950 if married filing jointly or surviving spouse and $35,475 if married filing separately.
Tax-exempt interest on private activity tax-exempt bonds issued in 2009 and 2010 in not included in ATM taxable income.
The Alternative Minimum Tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. It was designed to tax individuals who have a high income, yet were able to write-off most of the income with certain deductions.
Now the tax is targeting more and more middle income Americans.
To find out if you may have to pay AMT for 2009, visit, irs.gov -- keywords: amt, assistant (use the IRS calculator to determine if you may be exposed to the Alternative Minimum Tax
This is not a tax you want to be caught off guard with. Once it set in, deductions, regardless of how much, usually won't change your tax liability.
Tax-exempt interest on private activity tax-exempt bonds issued in 2009 and 2010 in not included in ATM taxable income.
The Alternative Minimum Tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. It was designed to tax individuals who have a high income, yet were able to write-off most of the income with certain deductions.
Now the tax is targeting more and more middle income Americans.
To find out if you may have to pay AMT for 2009, visit, irs.gov -- keywords: amt, assistant (use the IRS calculator to determine if you may be exposed to the Alternative Minimum Tax
This is not a tax you want to be caught off guard with. Once it set in, deductions, regardless of how much, usually won't change your tax liability.
Friday, August 7, 2009
My ex-husband is just now filing his tax returns for back years and wants to claim the child support as alimony. He ask for my social security number
Can you say attorney?
If not, understand that child support is NOT alimony.
I am not an attorney and can not provide legal advise. Contact an attorney or visit the irs.gov web site; keyword: alimony,child support
If not, understand that child support is NOT alimony.
I am not an attorney and can not provide legal advise. Contact an attorney or visit the irs.gov web site; keyword: alimony,child support
Thursday, August 6, 2009
I am a web site owner. My tax preparer filed my 1099 on a Schedule C-EZ, why not a regular Schedule C?
You are correct to ask questions about the selection of forms your preparer used. The Schedule C-EZ is a short version of Schedule C and has in Part II, Line 2 a place for "Total Expenses"
Being a web site owner you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following deductions:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or to upgraded your site.
Monthly fees for email communications
Cost of graphics, banners, etc
Monthly Online services
Mileage to and from the store for office supplies, additional business miles
All office supplies used for business
High speed Internet connection
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliates? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
If you need help with your bookkeeping and or tax preparation, let us know, we can help you.
Being a web site owner you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following deductions:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or to upgraded your site.
Monthly fees for email communications
Cost of graphics, banners, etc
Monthly Online services
Mileage to and from the store for office supplies, additional business miles
All office supplies used for business
High speed Internet connection
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliates? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
If you need help with your bookkeeping and or tax preparation, let us know, we can help you.
The IRS sent me a CP-2000, which said I didn’t file 1099 income for $1300. I never got a 1099 from the client. How did the IRS come up with this amo
Taxpayers must always remember that employers, banks, brokers, clients, etc, file informational returns to the IRS in order to substantiate their own tax deductions.
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after the original return due date.
Call the IRS, if you don’t know already, which of your clients turned in the 1099 income. If you received the income, check with your tax professional before signing and returning to the IRS.
If you did not complete work for the client and never received the $1300 – contact the client and ask for clarification and that the information be corrected with the IRS
For further clarification visit the irs.gov website: keyword: cp 2000
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after the original return due date.
Call the IRS, if you don’t know already, which of your clients turned in the 1099 income. If you received the income, check with your tax professional before signing and returning to the IRS.
If you did not complete work for the client and never received the $1300 – contact the client and ask for clarification and that the information be corrected with the IRS
For further clarification visit the irs.gov website: keyword: cp 2000
Tuesday, August 4, 2009
Americans Have Until Sept 23, 2009 to Come Clean with Offshore Bank Accounts, to Avoid Possible Criminal Prosecution
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
For clarification of the rules, contacting a Tax Attorney or Enrolled Agent would be in you best interest. You can also research the IRS web site at irs.gov - keyword: offshore accounts
The IRS has gone so far as to list out the different ways, taxpayers get caught when hiding offshore accounts.
If you have not filed past due returns which includes monies in a foreign account, you can contact a CPA or a Tax Accountant that is registered with the IRS.
For clarification of the rules, contacting a Tax Attorney or Enrolled Agent would be in you best interest. You can also research the IRS web site at irs.gov - keyword: offshore accounts
The IRS has gone so far as to list out the different ways, taxpayers get caught when hiding offshore accounts.
If you have not filed past due returns which includes monies in a foreign account, you can contact a CPA or a Tax Accountant that is registered with the IRS.
Monday, August 3, 2009
Man Hid $8 Million in a Swiss Bank Account, the IRS and the Department of Justice Were Not Impressed
FOR IMMEDIATE RELEASETUESDAY, JULY 28, 2009WWW.USDOJ.GOV
TAX(202) 514-2007TDD (202) 514-1888
UBS CLIENT PLEADS GUILTY TO FILING FALSE TAX RETURN, HID $8 MILLION IN SECRET SWISS BANK ACCOUNTS
New York Toy Manufacturer Representative Used Nominee Entities, Offshore Credit Cards, Sham Loans
WASHINGTON – Jeffrey P. Chernick, of Stanfordville, N.Y., pleaded guilty today to charges of filing a false tax return, the Justice Department and Internal Revenue Service (IRS) announced. Chernick, who owns a corporation which represents toy manufacturers in China and Hong Kong, appeared today before Judge James I. Cohn in Ft. Lauderdale, Fla., and accepted responsibility for concealing more than $8 million in Swiss bank accounts.
According to court documents and statements made in court, on or about Oct. 14, 2008, Chernick electronically filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which failed to report that he had an interest in or a signature authority over a financial account at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on the UBS account. The UBS account was opened in the name of Simba International Ltd., a nominee Hong Kong corporation
According to court documents, beginning in the mid-1970’s, the defendant set up a Hong Kong corporation and opened offshore bank accounts in order to conceal from the IRS commissions paid to the defendant for toy sales. In total, Chernick was the beneficial owner of approximately $8 million in offshore assets which were maintained in accounts in the name of nominee entities, including Simba, at UBS and other Swiss banks.
According to court documents, in 2000, UBS entered into an agreement to begin providing the IRS with certain information relating to accounts in which the beneficial owner was a U.S. citizen. Around the same time, one of Chernick’s Swiss bankers left UBS for a smaller, less known Swiss bank. This banker told Chernick he had left UBS, in part, because the smaller bank would not be subject to Washington’s scrutiny and could not be pressured by the U.S. government to disclose certain information to American authorities. Following this banker’s advice, Chernick agreed to invest some of his assets with the smaller Swiss bank.
According to court documents, from 2002 through 2008, Chernick discussed his offshore accounts with this former UBS banker and other Swiss financial service providers. These meetings took place in the United States at various locations, including hotels in New York City.
During these meetings, Chernick, the Swiss bankers and Swiss financial service providers would discuss Chernick’s investments held in his offshore accounts, as well as the payment of fees for banking services rendered by Hong Kong and Swiss financial service providers.
In July 2008, despite Chernick’s concerns about the ongoing investigation into the activities of UBS, a Swiss financial service provider convinced Chernick not to disclose his offshore accounts, not to file amended returns, and not to pay to the IRS any additional taxes that were due and owing.
According to court documents, in order to have access to the millions of dollars Chernick concealed offshore, he utilized credit cards linked to his offshore Swiss bank accounts which he used to make large purchases while traveling abroad. Additionally, with the assistance of Swiss bankers and other financial service providers, Chernick set up a sham $700,000 loan between Simba and a second Hong Kong entity in order to repatriate funds into the United States to purchase property adjacent to his home in New York.
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
Judge Cohn scheduled sentencing for Oct. 30, 2009. Chernick faces a maximum sentence of three years in prison.
“As the investigation into offshore tax evasion continues, the United States will continue to vigorously pursue new leads and evidence as they are uncovered,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. “Those who enable and commit tax evasion risk substantial monetary penalties and incarceration.”
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted helping U.S. taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.
“This is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who shirk their tax responsibilities. Today’s action is also part of a much larger and coordinated effort by the Administration to aggressively find and crack down on tax evaders hiding their wealth overseas. For those still hiding in this shadowy world, it is time to come in and get right with your government or face stiff criminal and financial penalties,” said IRS Commissioner Doug Shulman.
In June 2009, UBS client Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale yacht broker, pleaded guilty to filing a false tax return.
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
TAX(202) 514-2007TDD (202) 514-1888
UBS CLIENT PLEADS GUILTY TO FILING FALSE TAX RETURN, HID $8 MILLION IN SECRET SWISS BANK ACCOUNTS
New York Toy Manufacturer Representative Used Nominee Entities, Offshore Credit Cards, Sham Loans
WASHINGTON – Jeffrey P. Chernick, of Stanfordville, N.Y., pleaded guilty today to charges of filing a false tax return, the Justice Department and Internal Revenue Service (IRS) announced. Chernick, who owns a corporation which represents toy manufacturers in China and Hong Kong, appeared today before Judge James I. Cohn in Ft. Lauderdale, Fla., and accepted responsibility for concealing more than $8 million in Swiss bank accounts.
According to court documents and statements made in court, on or about Oct. 14, 2008, Chernick electronically filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which failed to report that he had an interest in or a signature authority over a financial account at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on the UBS account. The UBS account was opened in the name of Simba International Ltd., a nominee Hong Kong corporation
According to court documents, beginning in the mid-1970’s, the defendant set up a Hong Kong corporation and opened offshore bank accounts in order to conceal from the IRS commissions paid to the defendant for toy sales. In total, Chernick was the beneficial owner of approximately $8 million in offshore assets which were maintained in accounts in the name of nominee entities, including Simba, at UBS and other Swiss banks.
According to court documents, in 2000, UBS entered into an agreement to begin providing the IRS with certain information relating to accounts in which the beneficial owner was a U.S. citizen. Around the same time, one of Chernick’s Swiss bankers left UBS for a smaller, less known Swiss bank. This banker told Chernick he had left UBS, in part, because the smaller bank would not be subject to Washington’s scrutiny and could not be pressured by the U.S. government to disclose certain information to American authorities. Following this banker’s advice, Chernick agreed to invest some of his assets with the smaller Swiss bank.
According to court documents, from 2002 through 2008, Chernick discussed his offshore accounts with this former UBS banker and other Swiss financial service providers. These meetings took place in the United States at various locations, including hotels in New York City.
During these meetings, Chernick, the Swiss bankers and Swiss financial service providers would discuss Chernick’s investments held in his offshore accounts, as well as the payment of fees for banking services rendered by Hong Kong and Swiss financial service providers.
In July 2008, despite Chernick’s concerns about the ongoing investigation into the activities of UBS, a Swiss financial service provider convinced Chernick not to disclose his offshore accounts, not to file amended returns, and not to pay to the IRS any additional taxes that were due and owing.
According to court documents, in order to have access to the millions of dollars Chernick concealed offshore, he utilized credit cards linked to his offshore Swiss bank accounts which he used to make large purchases while traveling abroad. Additionally, with the assistance of Swiss bankers and other financial service providers, Chernick set up a sham $700,000 loan between Simba and a second Hong Kong entity in order to repatriate funds into the United States to purchase property adjacent to his home in New York.
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
Judge Cohn scheduled sentencing for Oct. 30, 2009. Chernick faces a maximum sentence of three years in prison.
“As the investigation into offshore tax evasion continues, the United States will continue to vigorously pursue new leads and evidence as they are uncovered,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. “Those who enable and commit tax evasion risk substantial monetary penalties and incarceration.”
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted helping U.S. taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.
“This is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who shirk their tax responsibilities. Today’s action is also part of a much larger and coordinated effort by the Administration to aggressively find and crack down on tax evaders hiding their wealth overseas. For those still hiding in this shadowy world, it is time to come in and get right with your government or face stiff criminal and financial penalties,” said IRS Commissioner Doug Shulman.
In June 2009, UBS client Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale yacht broker, pleaded guilty to filing a false tax return.
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
Sunday, August 2, 2009
I just go married and my husband owes back taxes, should I file separetely?
Usually couples pay more taxes when they file separate returns, however, in your case, it may be worth it.
There are restrictions when a couple files separately, such as you can't take the earned income credit, you may have a lower Child Tax Credit, then if you filed jointly and your capital loss limit is cut in half. There are additional restrictions involving higher education expenses and adoption expenses.
Visit www.irs.gov for a complete list of restrictions and clarification of the tax code -
keyword: married filing separate
There are restrictions when a couple files separately, such as you can't take the earned income credit, you may have a lower Child Tax Credit, then if you filed jointly and your capital loss limit is cut in half. There are additional restrictions involving higher education expenses and adoption expenses.
Visit www.irs.gov for a complete list of restrictions and clarification of the tax code -
keyword: married filing separate
What is Depreciation?
Depreciation is a mathematical calculated, annual deduction that the IRS allows for the wear and tear of business property - which includes income producing property and equipment used for business, that has a useful life of more than one year.
Depreciation is based on cost, use and category and is used to decrease a taxpayer's tax liability.
It would take 3 or 4 blog pages to fully describe depreciation. You can view the tax codes on depreciation at www.irs.gov - keyword: depreciation
Depreciation is based on cost, use and category and is used to decrease a taxpayer's tax liability.
It would take 3 or 4 blog pages to fully describe depreciation. You can view the tax codes on depreciation at www.irs.gov - keyword: depreciation
Saturday, August 1, 2009
I received a CP 2000 from the IRS, What should I do?
The IRS sends a CP 2000 to taxpayers when they are proposing a “change” to their filed tax return, usually because information on the return, does not match the information that was reported to the IRS by employers, banks, mortgage interest, 1099s, 1099-G (Gambling Winnings) etc
The CP 2000 can look intimidating, around 10 pages, however, if you take a deep breath and read each page, slowly, you will see that the notice is reporting each item that you reported and the differences, in what was reported.
It is best, to contact your tax professional. If you prepared your own taxes, it may be a good idea to speak with a tax professional before signing and returning a CP 2000.
Recommended: Visit www.irs.gov and use keywords: CP 2000 - The IRS instructions will explain each page and line of the CP 2000
The CP 2000 can look intimidating, around 10 pages, however, if you take a deep breath and read each page, slowly, you will see that the notice is reporting each item that you reported and the differences, in what was reported.
It is best, to contact your tax professional. If you prepared your own taxes, it may be a good idea to speak with a tax professional before signing and returning a CP 2000.
Recommended: Visit www.irs.gov and use keywords: CP 2000 - The IRS instructions will explain each page and line of the CP 2000
Friday, July 31, 2009
Monday, July 27, 2009
Tax Return Preparer Review in Washing DC - July 30, 2009,
Check this page for updates about the Tax Return Preparer Review.
News:
Have you RSVP'ed for the July 30 Public Forum in Washington, DC? Email cl.npl.communications@irs.gov if you can attend!
Logistics for the Tax Return Preparer Review Public Forum: July 30, 2009
Location: Ronald Reagan Building and International Trade Center Amphitheater, Washington, DC
**The public forum will begin promptly at 9:00 AM. Please note that the Ronald Reagan Building requires a photo I.D. for entrance. The amphitheater is located on the concourse level. Please see the Ronald Reagan Building website for further information.
Notes: We are hoping that all this talk won't affect California tax preparers. We are tested each year, due to the dozens and dozens of new tax laws that take effect each year. We have to be bonded and adhere to strict policies.
The problem seems to be, that the majority of states do NOT require their tax preparers to be licensed or registered and as a result, many preparers are completing tax returns incorrectly.
It also appears that the IRS may be deciding to take on the burden of making sure tax preparers are qualified.
News:
Have you RSVP'ed for the July 30 Public Forum in Washington, DC? Email cl.npl.communications@irs.gov if you can attend!
Logistics for the Tax Return Preparer Review Public Forum: July 30, 2009
Location: Ronald Reagan Building and International Trade Center Amphitheater, Washington, DC
**The public forum will begin promptly at 9:00 AM. Please note that the Ronald Reagan Building requires a photo I.D. for entrance. The amphitheater is located on the concourse level. Please see the Ronald Reagan Building website for further information.
Notes: We are hoping that all this talk won't affect California tax preparers. We are tested each year, due to the dozens and dozens of new tax laws that take effect each year. We have to be bonded and adhere to strict policies.
The problem seems to be, that the majority of states do NOT require their tax preparers to be licensed or registered and as a result, many preparers are completing tax returns incorrectly.
It also appears that the IRS may be deciding to take on the burden of making sure tax preparers are qualified.
Sunday, July 26, 2009
What is a CP-515 and CP-518?
If you received these Letters of Communications from the IRS, it clearly states what each of the Notices represent.
CP-515 and CP-518 are a part of the IRS's CP series of forms sent to taxpayers to inform you of different actions and request.
The CP 515 deals directly with "request for your tax return" and CP-518 is sent when taxpayers don't respond to CP-515 and explains that you have committed a crime by not filing your past due tax return.
If what you really want to know, is how serious these notices are? They are VERY serious and you can contact the IRS at 1 800 829-4477 or contact a tax professional as soon as possible.
CP-515 and CP-518 are a part of the IRS's CP series of forms sent to taxpayers to inform you of different actions and request.
The CP 515 deals directly with "request for your tax return" and CP-518 is sent when taxpayers don't respond to CP-515 and explains that you have committed a crime by not filing your past due tax return.
If what you really want to know, is how serious these notices are? They are VERY serious and you can contact the IRS at 1 800 829-4477 or contact a tax professional as soon as possible.
I read in one of your articles that a person could go to prison for failure to file a TD F90-22.1, is this really true?
Yes.
TD F 90-22.1 - Report of Foreign Ban and Financial Accounts must be filed by June 30th of each year, if you have over a certain amount in foreign bank accounts or financial institutions. ($10,000)
Failure to file a required T DF 90-22.1 is a felony, punishable by a 5 year prison term. This form generates from Schedule B, Line 7a.
I am not sure why you asked this question, however, if your past due returns include this area of reporting, I strongly suggest that you contact a Tax Attorney or call the IRS, immediately.
You can find more information at http://www.irs.gov/ - keywords: instructions, schedule b
TD F 90-22.1 - Report of Foreign Ban and Financial Accounts must be filed by June 30th of each year, if you have over a certain amount in foreign bank accounts or financial institutions. ($10,000)
Failure to file a required T DF 90-22.1 is a felony, punishable by a 5 year prison term. This form generates from Schedule B, Line 7a.
I am not sure why you asked this question, however, if your past due returns include this area of reporting, I strongly suggest that you contact a Tax Attorney or call the IRS, immediately.
You can find more information at http://www.irs.gov/ - keywords: instructions, schedule b
Friday, July 24, 2009
I am a website owner, my tax preparer filed my 1099 income on a Schedule C-EZ, why not a regular Schedule C?
You are correct to ask questions about the selection of forms your preparer used. The Schedule C-EZ is a short version of Schedule C and has, in Part II, Line 2, a place for Total Expenses.
Being a web site owner, you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following expenses or deductions
as a web site owner:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or upgraded your site.
Monthly fees for email communications
Cost of graphics
Monthly Online services
Mileage to and from the store for office supplies
All office supplies
High speed Internet connection cost
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliate? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
This seems a little much to put on a Schedule C -EZ - perhaps you might want to keep better records for next year, so that you can take advantage of expenses.
If you need help with your bookkeeping and or tax preparation, let us know, perhaps we can work something out.
Being a web site owner, you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following expenses or deductions
as a web site owner:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or upgraded your site.
Monthly fees for email communications
Cost of graphics
Monthly Online services
Mileage to and from the store for office supplies
All office supplies
High speed Internet connection cost
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliate? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
This seems a little much to put on a Schedule C -EZ - perhaps you might want to keep better records for next year, so that you can take advantage of expenses.
If you need help with your bookkeeping and or tax preparation, let us know, perhaps we can work something out.
Thursday, July 23, 2009
New Tax Law Concerning Unemployment Compensation
The first $2,400 of unemployment compensation is excluded from income in 2009.
A Loan company sent me a 1099-C , do I have to file this on my tax return?
Yes.
Gross income includes income from discharge of indebtedness. It goes on 1040 under "other income"
Lenders have also filed the 1099-C with the IRS, so if you forgot to include it on your tax return, the IRS will contact you later with a recalculation of your tax return.
Gross income includes income from discharge of indebtedness. It goes on 1040 under "other income"
Lenders have also filed the 1099-C with the IRS, so if you forgot to include it on your tax return, the IRS will contact you later with a recalculation of your tax return.
What is a SFR? Should I accept it?
A SFR is the IRS's nickname for "Substitute for Return"
When a taxpayer fails to respond to the IRS's communications, or file his/her past due returns, the IRS uses information they have received from your employers and lending institutions, to estimate your tax liability, then files the SFR (Substitute for Return) as your legal tax return; so they can start the collection process.
Before the IRS prepares a Substitute Return for a taxpayer, they send out a letter called "Notice of Proposed Assessment"
The only way to undo a SFR is for a taxpayer to file his/her own tax return.
It should be noted, that when the IRS prepares an SFR (Substitute for Return) for you, they do NOT include tax deductions or credits that you may qualify for.
Not sure how you hear about the SFR, however, if you need to file your own past due returns, which is strongly suggested, then we can help you with past due returns. http://taxeswilltravel.com/pdr.htm
When a taxpayer fails to respond to the IRS's communications, or file his/her past due returns, the IRS uses information they have received from your employers and lending institutions, to estimate your tax liability, then files the SFR (Substitute for Return) as your legal tax return; so they can start the collection process.
Before the IRS prepares a Substitute Return for a taxpayer, they send out a letter called "Notice of Proposed Assessment"
The only way to undo a SFR is for a taxpayer to file his/her own tax return.
It should be noted, that when the IRS prepares an SFR (Substitute for Return) for you, they do NOT include tax deductions or credits that you may qualify for.
Not sure how you hear about the SFR, however, if you need to file your own past due returns, which is strongly suggested, then we can help you with past due returns. http://taxeswilltravel.com/pdr.htm
Wednesday, July 22, 2009
I haven't filed my tax returns in 6 years, the IRS has said nothing, should I call them?
Yes.
Or you can hire a tax professional to call for you. There is a thin line between tax evasion and none-filed tax returns.
Are you employed or self-employed? Were federal taxes withheld from your paycheck? How many dependents do you have? Have you moved 2 or 3 times since you filed your last tax return?
These are all questions that might explain why the IRS has NOT contacted you.
There is a good chance that the IRS owes you. If they didn't, you would have heard from them by now.
File the past due tax returns ASAP.
If you need help contact us through http://taxeswilltravel.com/pdr.htm
Or you can hire a tax professional to call for you. There is a thin line between tax evasion and none-filed tax returns.
Are you employed or self-employed? Were federal taxes withheld from your paycheck? How many dependents do you have? Have you moved 2 or 3 times since you filed your last tax return?
These are all questions that might explain why the IRS has NOT contacted you.
There is a good chance that the IRS owes you. If they didn't, you would have heard from them by now.
File the past due tax returns ASAP.
If you need help contact us through http://taxeswilltravel.com/pdr.htm
Monday, July 20, 2009
I lost my W2, can you help me get a copy?
Taxpayers can call the IRS directly and ask that W2 or 1099 information and any other information reported - be mailed to them.
However, you will need to contact your state tax agency to secure the state withholding amount, if any.
Taxpayers who would rather not speak to the IRS directly, can seek the help of an online tax resolution service for past due returns, such as http://taxeswilltravel.com/pdr.htm
For clarification of tax codes, visit irs.gov
However, you will need to contact your state tax agency to secure the state withholding amount, if any.
Taxpayers who would rather not speak to the IRS directly, can seek the help of an online tax resolution service for past due returns, such as http://taxeswilltravel.com/pdr.htm
For clarification of tax codes, visit irs.gov
Saturday, July 18, 2009
I put my 401K into my savings account and when the tax software asked me if I rolled my 401K over, I replyed, yes. Was this correct?
No.
Contact a financial planner ASAP, and hope the IRS does NOT ask questions.
Contact a financial planner ASAP, and hope the IRS does NOT ask questions.
Friday, July 17, 2009
My husband passed away, can I still qualify for $500,000 exclusion on the sale of my house?
Question: I just sold my home in May of this year. My husband passed away in November of last year. Can I still qualify for the $500,000 exclusion of gain?
Answer: The surviving spouse qualifies for the $500,000 exclusion of gain, if:
1) unmarried at the time of sale, 2) sale occurs within 2 years after date of death, 3) time, use and frequency requirements were met before your husband passed aw
For clarification of tax laws, visit irs.gov
Answer: The surviving spouse qualifies for the $500,000 exclusion of gain, if:
1) unmarried at the time of sale, 2) sale occurs within 2 years after date of death, 3) time, use and frequency requirements were met before your husband passed aw
For clarification of tax laws, visit irs.gov
Thursday, July 16, 2009
Will filing bankruptcy stop the IRS from levying my bank account?
Filing a Bankruptcy petition puts an immediate STOP to ALL IRS collection actions. This does not mean that your tax liability will be wiped out, however, it does mean that the IRS won't have access to your assets without going through the US Bankruptcy court.
You will need to filed all past due tax returns before filing bankruptcy.
Please contact a bankruptcy attorney for more information.
You will need to filed all past due tax returns before filing bankruptcy.
Please contact a bankruptcy attorney for more information.
I am on disability and I rent rooms in my home - one of the tenants told the IRS that she paid me $500 a month for 2 years, what should I do?
I am thinking that you did not include the rental income on your tax returns for the 2 year period or that you didn't even file returns, because this is a "file your past due tax return" email question?
If you didn't include or file a return for the years in questions, now would be the time to do so. If you did file a return and forgot to include the rental income - file a 1040-X (Amended Return) ASAP.
If you provided more services other then rental of the room, such as laundry, meals, etc, then you would put the income on a Schedule C. Profit and Loss from Business
If you only rented the room with no services included - then you would include the income on a Schedule E - Supplemental Income and Loss OMB No. 1545-0074
(Form 1040) (From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)
If you have never filed either of these forms, you may want to think about an experienced tax professional. Especially if you rented more than one room at a time. You will need to divide out the utility cost, insurance and a number of other expenses to arrive at a more correct tax return.
for exact clarification of tax codes, visit irs.gov
We are available to prepare past due tax returns that include Schedule C or Schedule E.
If you didn't include or file a return for the years in questions, now would be the time to do so. If you did file a return and forgot to include the rental income - file a 1040-X (Amended Return) ASAP.
If you provided more services other then rental of the room, such as laundry, meals, etc, then you would put the income on a Schedule C. Profit and Loss from Business
If you only rented the room with no services included - then you would include the income on a Schedule E - Supplemental Income and Loss OMB No. 1545-0074
(Form 1040) (From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)
If you have never filed either of these forms, you may want to think about an experienced tax professional. Especially if you rented more than one room at a time. You will need to divide out the utility cost, insurance and a number of other expenses to arrive at a more correct tax return.
for exact clarification of tax codes, visit irs.gov
We are available to prepare past due tax returns that include Schedule C or Schedule E.
Wednesday, July 15, 2009
International Taxes, I receive income outside the US, where can I get more information on my filing requirements?
You can call International customer Services at 215 516-2000, Monday through Friday from 6am to 11pm EST.
You can also visit the irs.gov site and put in the keyword: international
Publications that will help you with International Tax issues are 54, 514,901, 4588 and 4732.
You can also visit the irs.gov site and put in the keyword: international
Publications that will help you with International Tax issues are 54, 514,901, 4588 and 4732.
Tuesday, July 14, 2009
Tips on Self-Help for Offer in Compromise - IRS releases new Form 656-B Offer in Compromise Booklet
Below is the direct quote of the announcement on the IRS's new Offer in Compromise Booklet.
for those of you who have little income and cannot afford to hire an Enrolled Agent or Tax Attorney - you may want to visit the irs.gov and put in "Form 656-B" into the search box.
Download, read and then re-read the booklet before taking any actions. If you don't understand a section of the booklet, call the IRS and ask for clarification, They will not provide legal advise, however, they may help you with direct question pertaining to the instruction booklet.
Before you can file an Offer in Compromise (OIC), you will need to fill all of your past due tax returns.
IRS -July 8, 2009 - The Internal Revenue Service has released the new Form 656-B, Offer in Compromise Booklet, and the revised Form 656, Offer in Compromise.
The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to easily access the offer-in-compromise application without printing or sorting through the offer booklet.
The new Form 656-B contains all forms and instructions necessary to file an offer in compromise, including:
A checklist to determine if the offer can be processed.
The revised Worksheet to Calculate an Offer Amount. The worksheet was revised to be used with the new Form 433-A (revision Jan. 2008).
Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, revision Jan. 2008, and Form 433-B, Collection Information Statement for Businesses, revision Jan. 2008.
A revised IRS Offer in Compromise Low Income Guidelines table based on the 2009 U.S.
Department of Health and Human Services (HHS) standards.
A revised Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment.
The Offer in Compromise Summary Checklist to ensure all necessary information has been reviewed and the appropriate forms have been completed.
Form 656 (PDF) and Form 656-B (PDF) are available on IRS.gov in the Forms and Publication section, at the IRS Taxpayer Assistance Centers and by calling the IRS toll free at 1-800-TAX-FORM (1-800-829-3676).......###
for those of you who have little income and cannot afford to hire an Enrolled Agent or Tax Attorney - you may want to visit the irs.gov and put in "Form 656-B" into the search box.
Download, read and then re-read the booklet before taking any actions. If you don't understand a section of the booklet, call the IRS and ask for clarification, They will not provide legal advise, however, they may help you with direct question pertaining to the instruction booklet.
Before you can file an Offer in Compromise (OIC), you will need to fill all of your past due tax returns.
IRS -July 8, 2009 - The Internal Revenue Service has released the new Form 656-B, Offer in Compromise Booklet, and the revised Form 656, Offer in Compromise.
The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to easily access the offer-in-compromise application without printing or sorting through the offer booklet.
The new Form 656-B contains all forms and instructions necessary to file an offer in compromise, including:
A checklist to determine if the offer can be processed.
The revised Worksheet to Calculate an Offer Amount. The worksheet was revised to be used with the new Form 433-A (revision Jan. 2008).
Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, revision Jan. 2008, and Form 433-B, Collection Information Statement for Businesses, revision Jan. 2008.
A revised IRS Offer in Compromise Low Income Guidelines table based on the 2009 U.S.
Department of Health and Human Services (HHS) standards.
A revised Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment.
The Offer in Compromise Summary Checklist to ensure all necessary information has been reviewed and the appropriate forms have been completed.
Form 656 (PDF) and Form 656-B (PDF) are available on IRS.gov in the Forms and Publication section, at the IRS Taxpayer Assistance Centers and by calling the IRS toll free at 1-800-TAX-FORM (1-800-829-3676).......###
IRS Summertime Tax Tip
Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.
Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.
1) The cost of day camp can count as an expense towards the child and dependent care credit.
2) Expenses for overnight camps do not qualify.
3) If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
4) The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5) You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.
1) The cost of day camp can count as an expense towards the child and dependent care credit.
2) Expenses for overnight camps do not qualify.
3) If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
4) The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5) You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Monday, July 13, 2009
I had a dispute with my tax preparer over the fees for the tax return, she won't return my tax documents, what shall I do?
Practioners must promptly return ALL records of the clent, even if a fee dispute exists. Even if the state law permits retention, the Federal law does not. Especially if the documents must be attached to the tax return.
Also the IRS states that the client must be allowed to access his/her tax documents to review and copy necessary records to comply with the Federal tax obligation.
Practitioner may retain copies of clients records. (Visit irs.gov for exact tax code/law)
It would be in your best interest to resolve the dispute. Try to understand why the Practitioner is charging you the amount that is in dispute. Usually the fee for service goes up when the tax professional has to complete an additional form, (and there are new and additional forms that we must complete by law) or they had to spend time completing bookkeeping services because you gave the information in a folder with no totals.
You response may be, but why didn't she tell me when I meet with her?. And her response may be, she didn't know how much time sorting out the folder or shoebox full of receipts would take.
If you don't have the money. Be honest and tell the tax professional. Being reported to the IRS for holding up a client's tax return is NOT something a tax professional wants to happen.
Also the IRS states that the client must be allowed to access his/her tax documents to review and copy necessary records to comply with the Federal tax obligation.
Practitioner may retain copies of clients records. (Visit irs.gov for exact tax code/law)
It would be in your best interest to resolve the dispute. Try to understand why the Practitioner is charging you the amount that is in dispute. Usually the fee for service goes up when the tax professional has to complete an additional form, (and there are new and additional forms that we must complete by law) or they had to spend time completing bookkeeping services because you gave the information in a folder with no totals.
You response may be, but why didn't she tell me when I meet with her?. And her response may be, she didn't know how much time sorting out the folder or shoebox full of receipts would take.
If you don't have the money. Be honest and tell the tax professional. Being reported to the IRS for holding up a client's tax return is NOT something a tax professional wants to happen.
Monday, July 6, 2009
DOJ and the IRS's answer to unfiled taxes over a period of time
WASHINGTON – Sheri Redekker Barry and Warren Thomas Barry, a wife and husband who are both real estate agents in Fort Myers, Fla., have been sentenced to prison for conspiracy and failure to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge John E. Steele on Monday sentenced Sheri Barry to 36 months in prison and Warren Barry to 24 months in prison. The court also ordered the Barrys to pay restitution in the amount of $555,728.
In March 2009, a federal jury convicted the Barrys of conspiring to impede and impair the IRS. The jury also convicted Sheri Barry of four counts of failure to file for the tax years 2002 through 2005 and convicted her husband of three counts of failure to file for the tax years 2003 through 2005.
According to the indictment and evidence presented at trial, Sheri Barry had not filed a tax return since 1988, and Warren Barry had not filed a tax return since 2000. The Barrys sent multiple letters to the IRS advancing false and frivolous tax defer claims purporting to set forth reasons why the defendants were not required to file returns or pay taxes.
In March 2009, a federal jury convicted the Barrys of conspiring to impede and impair the IRS. The jury also convicted Sheri Barry of four counts of failure to file for the tax years 2002 through 2005 and convicted her husband of three counts of failure to file for the tax years 2003 through 2005.
According to the indictment and evidence presented at trial, Sheri Barry had not filed a tax return since 1988, and Warren Barry had not filed a tax return since 2000. The Barrys sent multiple letters to the IRS advancing false and frivolous tax defer claims purporting to set forth reasons why the defendants were not required to file returns or pay taxes.
My tax preparer made a mistake on my tax return, what should I do?
It depends. Did you sign and mail the tax return?
If so, the error is yours and you will be held responsible should the IRS ask questions.
You can file a 1040 X to correct the error. (Amended U.S. Individual Income Tax Return) Allow the IRS 8 to 12 weeks to process the Form 1040 X
At the bottom of the 1040 X http://www.irs.gov/pub/irs-pdf/f1040x.pdf in Part II, there is a place to explain why you are making the changes on your tax return.
Should you need help with this issue, visit, http://taxeswilltravel.com/pdr.htm
If so, the error is yours and you will be held responsible should the IRS ask questions.
You can file a 1040 X to correct the error. (Amended U.S. Individual Income Tax Return) Allow the IRS 8 to 12 weeks to process the Form 1040 X
At the bottom of the 1040 X http://www.irs.gov/pub/irs-pdf/f1040x.pdf in Part II, there is a place to explain why you are making the changes on your tax return.
Should you need help with this issue, visit, http://taxeswilltravel.com/pdr.htm
Friday, July 3, 2009
Is it true that you can get IRS penalties lowered?
Yes. Under certain circumstances you can request an Abatement of Penalties, using form 843.
The are a number of stipulations. For exact tax codes, visit irs.gov and put in abatement into the search box
The are a number of stipulations. For exact tax codes, visit irs.gov and put in abatement into the search box
Thursday, July 2, 2009
What's IRS's telephone number?
1 800 829-1040
Be prepared; If you owe the IRS, they will ask you who your employer is and where do you bank.
Remember it is a Federal crime to lie to a Federal Agent. Are IRS customer service agents considered Federal Agents? I wouldn't want to be the one to find out.
Answer each question honestly. Try not to volunteer information unless you are sure it will help your situation. Often times volunteering information leads to additional questions that may not be helpful to your case.
For help with past due tax returns, visit http://taxeswilltravel.com/pdr.htm
Be prepared; If you owe the IRS, they will ask you who your employer is and where do you bank.
Remember it is a Federal crime to lie to a Federal Agent. Are IRS customer service agents considered Federal Agents? I wouldn't want to be the one to find out.
Answer each question honestly. Try not to volunteer information unless you are sure it will help your situation. Often times volunteering information leads to additional questions that may not be helpful to your case.
For help with past due tax returns, visit http://taxeswilltravel.com/pdr.htm
Wednesday, July 1, 2009
I just got married and my wife didn't file her taxes for the past two years. How will this affect me?
It depends. Did you file a married filing joint return with her yet?
If not, then don't until her past due tax returns are filed. You can file married: filing jointly, after your wife files and pays (if there is a balance) her past due tax returns.
If you already filed a tax return with your new wife - you will want to learn more about: http://www.irs.gov/pub/irs-pdf/f8857.pdf - Form 8857 - Request for Innocent Spouse Relief
If the IRS finds your wife's social security number on a bank account, they may levy the funds, even if it is a joint bank account.
You may be an innocent spouse, but not until you can prove it.
For the exact tax code (laws) on Innocent Spouse - visit the irs.gov site and in the search box put in: innocent spouse. This will provide you with more detailed information.
Should you need help with past due tax returns - we are available. http://taxeswilltravel.com/pdr.htm
If not, then don't until her past due tax returns are filed. You can file married: filing jointly, after your wife files and pays (if there is a balance) her past due tax returns.
If you already filed a tax return with your new wife - you will want to learn more about: http://www.irs.gov/pub/irs-pdf/f8857.pdf - Form 8857 - Request for Innocent Spouse Relief
If the IRS finds your wife's social security number on a bank account, they may levy the funds, even if it is a joint bank account.
You may be an innocent spouse, but not until you can prove it.
For the exact tax code (laws) on Innocent Spouse - visit the irs.gov site and in the search box put in: innocent spouse. This will provide you with more detailed information.
Should you need help with past due tax returns - we are available. http://taxeswilltravel.com/pdr.htm
Tuesday, June 30, 2009
I had surgery last year and didn't file my taxes, will this effect my credit score?
No, not unless you fail to file in the very near future before the IRS or your state tax agency puts a tax lien on you.
Tax Liens usually end up on your credit report.
Filing your taxes ASAP and informing the IRS using Form 843, ask that penalties be abated because of a major illness. Attached supporting documentation such as copy of hospital bill.
If you need help with preparing your past due returns click on over to: http://taxeswilltravel.com/pdr.htm
Tax Liens usually end up on your credit report.
Filing your taxes ASAP and informing the IRS using Form 843, ask that penalties be abated because of a major illness. Attached supporting documentation such as copy of hospital bill.
If you need help with preparing your past due returns click on over to: http://taxeswilltravel.com/pdr.htm
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