Avoid These 5 Common Tax Filing Mistakes That Can Get You In Tax Trouble
Whether you file the simple 1040EZ or a complex 1040 and a raft of schedules, making a mistake on your tax form could lead to big tax trouble. Something as simple as a math error or unsigned form could invite extra attention from the IRS.
The tax agency sees those mistakes every year, and IRS representatives warn taxpayers to be careful when filling out their forms. Even if you think you have everything filled out perfectly, it never hurts to double-check and look for these common tax day errors.
#1 - Assuming Your Tax Pro Prepared Your Taxes Properly
Blindly trusting your accountant or tax preparer to file your taxes correctly can be costly. Of course you want to assume they do a great job, and most tax professionals do, but letting them file without your thorough review is a mistake.
We resolve back tax problems for people, and often what gets people in trouble is a simple mistake; like forgetting to report income, missing deductions, or taking too many deductions.
These are sometimes honest mistakes that if not caught early, can trigger red flags and have the IRS sending you letters of balances due.
No one knows your financial situation better than you do so it’s important you double check your return so you’re not blindsided with an unwanted surprise.
#2 - Waiting Until the Last Minute
Filing taxes is stressful enough. You do not need to make things worse by waiting until midnight on April 15 to get your return in the mail. Give yourself plenty of time to gather all the necessary documents and complete your return.
Keep in mind that unexpected problems could interfere with your last-minute tax filing plans. Getting your taxes done early is the only way to protect yourself from unforeseen circumstances that can delay your tax filing.
#3 - Failing to File on Time
If you cannot file your return on time, you can ask for an extension by filling out a single form. Even if your documents are in disarray, there is no excuse for not filing on time. Filing an extension gives you six more months to get everything in order and complete your return.
Keep in mind that you will still need to estimate the tax you owe and make your payment, even if you file an extension. Filing an extension extends the amount of time you have to get your return to the IRS, but it does not provide a reprieve from your tax debt. If you wait to make your tax payment, you will get hit with penalties and interest.
#4 - Not Making a Backup or Keeping Good Records
Making backup copies of your tax returns, income documents and schedules is an essential part of tax planning and preparation. Set up a folder or file box and use it to store your tax documents as they come in, and then scan each one before you put it away.
Once you have completed your return, be sure to make copies of every document, including your W-2 form and tax schedules, before sending the return to the IRS. If you file electronically, be sure to save a PDF copy of your return before completing the final step. Save all of those electronic tax documents on your computer or cloud storage device. Ordering a lost copy of a past year's return from the IRS is time-consuming and expensive. You can save time and money by making your own backup copies. If the IRS audits you or requests more information from you, all your records will be extremely helpful in the process.
#5 - Ignoring Letters From The IRS After You File Your Taxes.
Sometimes the IRS will send follow up correspondence, especially if you owe money to the IRS. It can be easy to ignore the first few letters. Even if you have the intention of paying your taxes soon you should still take action and either get on an installment agreement or reach out to a tax relief firm if your financial situation requires it.
OWE BACK TAXES?
Our firm specializes in tax problem resolution. We serve clients virtually so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
What is a Levy? IRS and Other Asset Levies Explained
Falling behind on your debts is never a fun place to be. It’s less fun when a levy is placed on your assets. In this article, we take a look at what an IRS levy is, why it happens, and what you can do about it.
Note: If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief. Often, we can resolve your IRS levy without you having to talk to the IRS. Call today.
What is an IRS Levy?
Simply put, if you owe back taxes and you ignore the IRS, the IRS can seize your property, take money from your bank accounts, or sell your assets in order to satisfy the balance due.
The IRS will give you plenty of notices via mail before they take this step. If you do not satisfy the debt or make payment arrangements by the specified date, the IRS will attempt to take the amount of the levy directly out of your bank account.
Other types of levies
Private creditors may issue a levy against your bank account with a court order. Court orders are not required for levies by government agencies. The creditor must notify you of the upcoming levy at least 21 days before removing any funds from your account. You may not withdraw money or close the account during this waiting period.
Funds earned from child support, social security, unemployment, workers' compensation settlements and certain other types of government agency payments are exempt from levy. You must request the exemption and offer proof of the source of the funds.
Wage Garnishments
Government agencies may also garnish an employee's wages for back taxes, child support and other delinquent payments required by law.
The IRS has the authority to levy up to 85 percent of the employee's paycheck. The levy notice will be sent to your company's payroll or human resources department. You must then withhold the appropriate amount of money from the employee's paycheck and send it to the IRS or state tax board. The employee must provide a wage garnishment release if he is able to work out a payment arrangement.
If you are behind on your taxes, the IRS may levy most payments from federal agencies. This includes railroad retirement benefits, Medicare supplier and provider payments, payments on contracts between your company and a government agency, federal retirement annuities and travel reimbursements.
You may apply for a hardship exemption if the levy will cause your company undue financial distress. Companies going through bankruptcy proceedings are automatically exempt from IRS levies.
Seizing Your Assets
The IRS may also seize your real estate and personal property such as a car or boat. You will receive a 30-day notice indicating that seizures will follow if you do not pay your outstanding taxes or contact the IRS to make payment arrangements. This authority also extends to property and money you own that are being held by another party, such as life insurance cash value. The government sells its seized property at auction to recover some of the funds owed by delinquent taxpayers.
What To Do If You Have An IRS Levy
Back taxes don’t just disappear if you ignore them long enough. Putting your head in the sand will cause the problem to get worse.
If you have back tax debt, we highly recommend you reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation.
Think Tax Filing Season is Over? Why You May Need to File an Amended Return
Few people look forward to tax filing season. Unless you are an accountant who loves tax season, you probably dread this time of year, and you are thrilled when your return is in and your refund is on the way or your tax debt is all paid off.
When you sign your tax return and send it in, you may think that tax filing season is finally over, and that the IRS will not be bugging you for another year. That’s unfortunately not the case. Millions of Americans get letters from the IRS stating they owe more money or asking for more information. So there are times when you may need to revisit your old return and file an amended one.
NOTE: If you have back tax debt, are under audit, or have multiple years of unfiled tax returns, we highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation.
So when should you file an amended return, and how do you go about it? Here are some key things you need to know.
You Forgot to Report All Your Income
If you neglected to report all of your income, it is only a matter of time until the IRS finds out, and when they do you could be on the wrong side of a big bill. So instead of waiting for the IRS to catch up, fess up by filing an amended return.
Be sure to gather up all of your documents and compare the income you reported to the new total you have now calculated. If you owe any additional tax, you will want to pay it right away to avoid interest and penalties.
Brokerage Forms are Sometimes Late
If you have stock market holdings and own mutual funds, you will be receiving forms from the brokerage firms that hold those accounts. Those forms will provide details of the dividend income and capital gains you received, so you can provide accurate filings to the IRS.
What you may not know is that those brokerage and mutual fund statements are sometimes sent out late. Worse yet, the numbers are often updated after the fact, meaning the information you filed on your original return may no longer be accurate.
If you receive an updated 1099 from your brokerage firm or mutual fund company, you may need to file an amended return to account for the discrepancy. If you fail to update your own numbers, the IRS could come after you for additional taxes and penalties.
You Got a Tax Bill But You Know You Don’t Owe It
This can be tricky and it’s best to have representation from a tax resolution firm like ours. If the IRS is sending you letters claiming you owe money, but you’re certain you don’t owe, then filing an amended return can sometimes do the trick.
Another thing to note is that the IRS makes mistakes. So having an IRS Relief firm like ours on your side can help clear these mistakes and settle your tax debt.
You Forgot to Claim a Legitimate Credit or Deduction
Sometimes an amended return can reduce the amount you owe if you forgot to claim a legitimate tax credit or deduction.
Even if you have already filed your return, you can still go back and claim any credits or deductions you may have missed.
File Your Amended Return Within Three Years
You only have a limited amount of time to file an amended return, so you need to act quickly. In most cases you will need to file your amended return within three years, and if you miss the deadline you could be out of luck.
If you think you need to file an amended return, check out your tax records for the last three years. If you identify any potential issues, or overlooked credits and deductions, it is time to file your amended return.
Tax filing season may be over, but you can always file an amended return. As long as you are within the allowable time period, you can adjust your already filed returns to reflect previous omissions, or take advantage of overlooked deductions.
OWE BACK TAXES?
Our firm specializes in tax resolution. We serve clients virtually so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
Four Things Your Tax Preparer Won't Tell You (and How It Can Get You In Tax Trouble)
Tax time will be here (again) before you know it. If your tax return is a simple one, you may be up to filing the return yourself. But if your situation is somewhat complicated, seeking the help of a qualified professional is probably the best move.
Our firm specializes in helping people resolve their back tax problems such as filing years of unfiled returns, settling your back taxes with the IRS, or negotiating favorable payment plans often unknown to the common taxpayer.
There are millions of people getting threatening letters from the IRS every year and we can help. But how did these mostly honest people end up in trouble in the first place?
When you hire a professional to do your taxes, you assume that the person doing your taxes is an expert, with years of training, the right licenses and certifications and the expertise needed to do the job and do it right. In many cases, that blind trust is not too bad, but you cannot simply pick any old tax preparer.
The fact that the person you hire is allowed to do taxes is no guarantee of quality, or even of qualifications. Here are five things your tax preparer may not tell you, and how they can earn you with an unwanted tax bill at the end of the year.
Note: The COVID-19 tax relief, forgivable loan programs and stimulus checks all have different and unforeseen tax consequences that you’ll need to consider. If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today.
#1. A Lot Of Tax Preparers Have No Tax-Specific Training or Expertise
The fact that an individual, or an employee of a large tax preparation company, is allowed to complete tax returns means almost nothing. The tax preparer is not required to have tax-specific training or expertise to obtain the paid preparer tax identification number (PTIN) they need. The only requirement for getting the required PTIN is the completion of a simple form - one that takes about 15 minutes to fill out.
Before you hire any tax professional, you should ask about their specific training, qualifications and expertise. Find out how long they have been doing taxes, ask about audits they have been involved in and share your personal tax situation. Above all, do not hire anyone until you feel comfortable with their ability to handle your tax return properly.
A CPA or Enrolled Agent licensed by the IRS is your best bet when looking for qualified tax professionals. We hear horror stories from our tax relief clients all the time where the tax preparer messed up something on their tax return or didn’t give the client the right tax strategy, so they ended up with a burdensome tax bill.
#2. They Won't Be Preparing Your Return
It is an open secret in the world of tax preparers that returns are prepared in stages. That means the owner of the firm or the most experienced professional will probably not be the one who initiates your return.
Instead, a junior associate will likely enter your income information and other relevant data, identify potential deductions and tax credits and give your return a quick review. Once that is done, a senior advisor or tax preparer should look at the return, verify that it is correct and sign off on it.
This can often cause a communication breakdown causing issues that could land you with a large tax debt. Most taxpayers blindly trust their tax pro and don’t thoroughly review the deductions and tax return draft.
If you are not comfortable about this multi-step process, it is important to share your concerns with your preparer. The sheer number of tax returns large firms handle during a busy season makes this multi-step process necessary, but it is important to know how things work and what you can do to ensure the right level of attention.
It’s also extremely important to review the return in full detail to avoid any unwanted surprises, audits, or unforeseen tax debt.
#3. I May Not Research Unusual Deductions and Tax Breaks
Professional tax preparers tend to be a pretty conservative bunch, and that is good news when it comes to your chances of being audited. It can be bad news, however, for your overall tax bill.
Your tax preparer will no doubt apply the most common deductions and tax credits to your return, things like the deduction for educational expenses and health care costs and the earned income and retirement tax credits. What they may not do is research more unusual tax credits and deductions, even if they could potentially save you money.
If these special circumstances apply to your return, you should discuss the situation with your tax preparer and look for ways to include them with your filing. You may need to pay an extra research fee or renegotiate the cost of preparing and filing your return, but the tax savings could be worth the extra cost.
#4. CPA Does Not Mean Tax Relief Pro
When clients get into tax trouble or get behind on paying their tax debt, they often turn to the very same tax pro that prepared the return. Unfortunately, most CPAs and tax preparers are not skilled in tax relief.
Tax relief means they know all the available programs the IRS has to settle your tax debt or give you favorable payment terms that don't drown you in penalties and interests. Even if they think they know, they often aren’t experienced in negotiating with the IRS on your behalf.
It is easy to assume that every CPA is a tax relief expert. After all, the CPA designation is one of the most difficult professional statuses to obtain, and only the most qualified accountants get to put the letters CPA on their business cards.
Even so, not all certified public accountants are tax relief experts, and many do not know any more about settling your tax debt than you do. Some CPA firms prepare tax returns for their clients as a courtesy, but their staffs may not have specific training or expertise in tax law, or tax relief negotiations.
If you have back tax debt, we highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation.
Work from Home Tax Forms: How to Store Them, How to File Them and How to Reduce Your Liability
Working from home can be a dream come true, especially if you also work for yourself. Opportunities for freelancers, gig workers and other self-employed men and women have exploded in recent years, giving people the freedom they crave without sacrificing the income they need. This is far more evident with the current COVID situation where millions of Americans are now commuting from their bedroom to the dining room table for a Zoom call.
That freedom and flexibility can be intoxicating, but there is an unwelcome hangover as well. Tax issues can make working from home less attractive, and more expensive, leaving many gig workers, new freelancers, and small business owners frustrated. But if you plan carefully and know what to do, you can reduce the tax headache and enjoy the perks of working at home. Here are some key things to know before the tax man comes calling.
But before we jump into tax strategies, it’s important to note that the IRS is increasing enforcement in the coming months and even years after this pandemic. More small businesses and independent contractors are going to find themselves getting letters from the IRS requesting for more information or stating they owe money to the IRS. If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today.
So, lets jump into some best practices for keeping your tax records clean in case the IRS comes knocking on your door.
Gather Contact Information from Your Clients
Whether you are preparing sales brochures for local businesses, designing websites for new startups or putting together dozens of individual side hustles, it is important to have contact information for every client.
The typical freelancer may have dozens of clients in a single year, and being able to contact them is an essential part of doing business. So go through your email lists, sort out your invoices and create a database of addresses and telephone numbers. Hopefully you will receive all your documents on time, but if not, that contact information will help you track down the missing paperwork.
Store Electronic and Paper Copies
The old saying that it is better to have it and not need it than need it and not have it is doubly true when you are self-employed. For gig workers, freelancers and other self-employed individuals, the loss of a single tax form could delay filing for months and even trigger an audit by the IRS.
That is why it is so important to build redundancy into your document storage. That means scanning each 1099 form as it is received, storing it on your hard drive, cloud account and offline storage device. It also means making paper copies of those critical documents and storing them in a safe place. These tax forms will be important when the tax filing deadline rolls around, so make sure you have them when you need them.
Keep Your Own Ledger
In a perfect world, every freelancer and at-home worker would receive all the tax forms they need, but that perfect world is the exception and not the norm. If you want to be ready for tax time and avoid unwanted entanglements with the IRS, you need to keep your own ledger.
Having your own records to back up your earnings estimates will help you in many ways, from qualifying for lower cost health insurance to getting a jump start on your tax return. It may be a little extra work, but keeping your own ledger will pay off in the long run.
Check Off Each Form As It Is Received
Now that you have your ledger in hand (or on your computer), you can cross reference your records and check off each 1099 form as it is received. When you have crossed the last form off your list, you can start filing your taxes and get the refund you deserve.
Be sure to scan each form as you receive it and make several backup copies. Having this documentation on hand will make your life easier should the IRS question part of your return or request additional information about the income you are claiming.
Reduce Your Tax Liability with a Solo 401(k) or SEP-IRA
Many new freelancers and gig workers are surprised at the high taxes they are required to pay, and the self-employment tax can be a particularly devastating blow. This extra tax is assessed to self-employed individuals, and it can have a big impact on members of the gig economy.
You may not be able to eliminate the self-employment tax, but there are steps you can take to keep your tax liability to a minimum. Retirement plans for the self-employed are among the most generous around, and opening a solo 401(k) or SEP-IRA could allow you to shelter tens of thousands of dollars in income.
These self-employed retirement plans do require some setup and a fair amount of paperwork, but once in place they can be used year after year to reduce your tax liability, so you can keep more money in your pocket and send less to the IRS.
Being self-employed and working from home can be wonderful, but it is important to be prepared for the realities. One of those unpleasant realities is taxes, and keeping track of your work at home tax forms will be critical as you make the transition. The tips listed above can help you keep proper records, stay on the right side of the IRS and even reduce your tax liability.
OWE BACK TAXES?
Our firm specializes in tax resolution. We serve clients virtually so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
Considering Bankruptcy to Get Rid Of Your Back Taxes? 3 Alternatives to Explore Before You File
If you are drowning in late payments and working harder and harder to make ends meet, you may think a bankruptcy filing is the only way out, but that is not necessarily the case. Filing for bankruptcy is one solution, but it is a drastic step that should only be taken as a last resort.
This is especially true if you owe back taxes to the IRS or state. Depending on what type of taxes you owe, you might not be able to wipe out your back taxes in bankruptcy proceedings.
It’s important to weigh all your options and get a clear picture of your financial situation, so in this article, we share with you 3 smart steps to take before declaring bankruptcy.
Depending on how much you owe, who your creditors are, and how the rest of your financial life looks, you may be able to dig yourself out of the hole and take back control without having to declare bankruptcy. Here are three smart alternatives to consider before calling a bankruptcy attorney.
3 Alternatives to Explore Before You File
1. Contact A Tax Relief Firm
Most bankruptcy attorneys aren’t familiar with the complex tax laws so they won’t accurately be able to assess your tax situation.
A tax relief firm like ours can help you assess your back tax situation and often help you settle your back tax problems with the IRS. If you owe a substantial amount of back taxes, this may be a good way to reduce your overall burden. This can also be a good first step to getting back on track with your finances.
2. Request a Lower Interest Rate On Other Balances
When you are paying 18% or more in interest, it can be hard to keep up with the charges, let alone make any headway on the outstanding balance. Credit card interest rates are among the highest around, and those outrageous rates have trapped many consumers in a spiral of ever increasing balance.
How different would your finances look if your interest rate was cut in half? Would you finally be able to get ahead of the interest charges and start paying down your balance? If so, it is time to get your credit card issuer on the line.
Even if you do not think your credit card issuer will be receptive, it never hurts to ask. And when the credit card company finds out that you are thinking about filing bankruptcy, they may be more willing to negotiate than you think.
For tax problems, the IRS can sometimes remove penalties and interest from your tax balance, so it’s important to reach out to our firm to see what your options may be.
3. Refinance
Even if your credit card issuers and lenders are not willing to budge on the interest rates, you could still save money and avoid bankruptcy. Refinancing your existing balances through a home equity line of credit, a personal loan or other means could lower your interest rate substantially and slash your monthly payments.
If you do decide on this strategy, it pays to shop around. The more you can lower your interest rate, the more money you can save - and the faster you will be able to pay off your balances.
But it’s incredibly hard to refinance if you have an IRS tax lien or wage levy. Our firm can get these released and help you get on financial track.
A bankruptcy filing can provide a fresh start for those in dire financial circumstances, helping them recover and rebuild their shattered monetary lives.
Even so, bankruptcy is not the only way out, and it is important for those considering this solution to research the alternatives first. The three bankruptcy alternatives listed above can also give you the fresh start you need, without the stigma or long-lasting impacts of a bankruptcy filing.
IMPORTANT: We highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other relief programs or get your penalties and interest forgiven. Reach out to our firm today for a consultation, at https://bpbtaxresolutions.com/contact-us/.
IRS Collections Is Starting Back Up. What To Do If You Owe Back Taxes
2020 threw a huge wrench into everything and the IRS collections proceedings are no exception. With the tax deadline pushed until July 15th and a lot of the IRS closed under shelter at home orders due to COVID-19, to the IRS being tasked with sending millions of Americans their stimulus checks, the IRS collections proceedings took a backseat.
If you owe back taxes you might just assume you got some breathing room. However, things are starting to pick back up.
According to the Taxpayer Advocate, as of late June 2020, the IRS generated more than 20 million notices, yet these notices were not mailed to anyone. It seems now that the IRS is once again starting to send threatening notices to taxpayers who owe back taxes.
In this article, we share a few things you must do in order to get out of tax trouble and settle your back tax balances.
IMPORTANT: We highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other relief programs or get your penalties and interest forgiven. Reach out to our firm today for a consultation.
FILE BEFORE JULY 15th
Before we talk about any tax relief options, you must first get into compliance. That means being current on all your tax return filings, including your 2019 tax return.
If you missed the deadline, you must still file as soon as possible before you begin exploring tax relief options. If you have multiple years of unfiled tax returns, reach out to our firm for help today.
PENALTIES AND INTEREST
Any time you don’t pay your taxes, the IRS first hits you with a club called penalties and interest. Under normal circumstances, these penalties start accruing from day 1 after the tax deadline. Because of COVID-19, the IRS is providing additional time to respond before interest or penalties apply.
If your tax bill already has penalties, our firm might be able to help remove some of the penalties by negotiating with the IRS on your behalf.
OFFER IN COMPROMISE
You might have heard advertisements about settling with the IRS, or the IRS Fresh Start program. Not everyone qualifies for it, but if your income or business was drastically affected by COVID-19, there’s a good chance you can qualify now. This means the IRS will reduce your tax balance to a fraction of what you owe.
It’s important to hire a tax relief firm like ours to walk you through this process and properly represent you before the IRS. Talking to the IRS before talking to us would be like going to court without a lawyer.
DON’T TALK TO THE IRS IF YOU OWE $10k OR MORE.
Even though things are tough right now, the IRS’s main job is still to collect the taxes it thinks you owe them. That by nature pits them against you. Often talking to the IRS can be a treacherous path and you risk the chance of saying something self-incriminating. Save yourself the headache, time, and money by reaching out to our tax relief firm today. You wouldn’t go to court without a lawyer and you definitely don’t want to approach the IRS without expert representation.
Tax Day Is Now July 15, Here’s What You Need To Know.
COVID-19 turned the world upside down. With most of the country shut down, businesses closed, and people forced to “stay-at-home” in order to keep everyone safe, it was just a matter of time before the IRS postponed tax day.
On March 21, 2020, the IRS announced that they’d be delaying the tax filing deadline that was normally April 15th. The new tax filing due date is now extended to July 15th.
Simply put, this means you have until July 15th to file your taxes without having to pay penalties and interest, regardless of the amount owed.
Note; if you have prior years of unfiled tax returns, you should file as soon as possible to avoid penalties and interest on those years. The IRS will base the $1200 ($2400 for joint filers) COVID-19 stimulus payments on your 2019 return. If 2019 has not been filed they will base it off of your 2018 income tax return. Contact us for a free, no-obligation, confidential consultation. If you think you might owe back taxes for other years or haven’t filed your 2018 or 2019 income tax return you’re still going to find yourself in tax trouble, so contact us today.
WHAT YOU NEED TO KNOW
#1 - It’s Automatic
Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.
#2 - Your Taxes Are Still Due
Despite having more time to file and pay your taxes, if you’re going to owe taxes they will still be due by July 15th. You just have a bit more time to pay your tax bill but if you don’t pay by July 15th, you will start accruing penalties and interest.
#3 - You Should Still File Correctly and On Time
Waiting until after July 15 to file is also a poor plan, because you will only accrue more penalties and interest if you miss the deadline. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868. Filing an extension does not mean you have more time to pay. It simply means you’ll end up paying more with penalties and interest, sinking you deeper into a hole.
So make sure you file on time!
#4 - Check Your State Filing Deadline
Though the IRS is offering tax payers some relief by delaying the federal tax deadline to July 15th, you still need to double check when your state taxes are due. Though most states are following the July 15th filing deadline, some states still might require taxpayers to file by different dates.
#5 - It’s still a good idea to file early, especially if you’ll owe taxes
The sooner you file your tax return, the sooner you’ll know if you owe money or you’ll get a refund. Filing before July 15th can give you a heads up and give you time to prepare for the financial burden you might face, especially during these uncertain times.
Our firm specializes in tax resolution and our experts can provide additional help with COVID-19 SBA Loan programs. We also serve clients virtually so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
How to Stop an IRS Tax Levy
Of all the companies you might owe money to, the Internal Revenue Service can be the least forgiving. If you don't pay your taxes, the IRS will levy and take possession of your property, including cash accounts, wages, and real and personal property. The IRS will sell non-liquid assets to raise funds to satisfy the balances you owe.
If you’ve received a levy notice from the IRS, it’s time to ACT IMMEDIATELY. Our firm may be able to get your levy released the same day but you must call now for a confidential consultation.
Forewarned Is Forearmed
Unless you don't open your mail or you moved without leaving a forwarding address, you probably won't be blindsided by an IRS levy. You'll receive a "Notice and Demand for Payment" of your tax balance well in advance of any action taken.
If you ignore this notice, the IRS will follow up by sending you a "Final Notice of Intent to Levy and Notice of Your Rights to a Hearing." Now the clock begins ticking.
You have 30 days to pay your tax balance or to contact the IRS to try to stop the levy. Even if you're unaware of the levy proceedings, your employer has a little bit of time to warn you if he receives notice that the IRS plans to take the bulk (up to 90%!) of your paychecks. Your employer doesn't have to begin sending your earnings to the IRS until the next pay period. With any luck, your employer will let you know what's going on within this time frame, so you can take action.
If the IRS levies your bank account, the bank will freeze the money in the account and remit it to the IRS after 21 days. Therefore, you must act quickly to try to have the funds released upon receiving a notice that the IRS has levied your bank account.
Contact A Tax Relief Firm
Now is not the time to do it alone. If you call the IRS, they will often trick you into giving incriminating answers, further distancing you for the tax relief you so desperately need.
They are not your friend. They are there to collect what they believe you owe in taxes. Contact a professional experienced in tax resolution to help you with your case. Would you go to court without a lawyer? Well, it’s the same with the IRS. You need professional representation from a CPA, Enrolled Agent or tax attorney who is also a tax resolution specialist.
Establish Hardship
If the IRS intends to levy your pay or Social Security benefits and you can't come close to making ends meet on what's left, the IRS wants you to contact them. The contact phone number should appear on the levy notice. DO NOT CALL THE IRS (see our note above).
The law requires that the IRS leave you with the total of your tax exemptions for the year plus your standard deduction divided by 52 if you're paid weekly.
Gather your documents and call our firm. We’ll help make the case to the IRS and explain that the levy will cause hardship for you and your family. You'll have to provide documented evidence of this, but if you do, the IRS will release the levy. This doesn't mean you no longer owe the tax. It just means that the IRS will leave your earnings and income alone and work with you to figure out some other way for you to satisfy the balance.
Make Payment Arrangements
We can also ask for payment terms for your tax balance even if the levy won't cripple you financially. If you enter into an installment agreement, the IRS will typically release the levy unless the notice you received specifically states otherwise.
You Can “Settle” For Less Than You Owe
An offer in compromise allows you to settle your tax balance for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. The IRS considers your unique set of facts and circumstances:
- Ability to pay;
- Income;
- Expenses; and
- Asset equity.
The IRS will generally approve an offer in compromise when the amount offered represents the most they can expect to collect within a reasonable period of time. It’s best to explore all other payment options before submitting an offer in compromise as the Offer in Compromise program is not for everyone. Make sure you hire a tax professional to help you file an offer, and be sure to check his or her qualifications.
The IRS really doesn't want to destroy you financially. It just wants the money it's owed. If you can make some arrangement to pay or prove that you don't owe the tax, or if you legitimately cannot pay it at this time, you may be able to make the levy go away.
Our firm specializes in tax resolution, even if you have years of unfiled tax returns, we can help! If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
How to Protect Yourself When Paying Taxes – Vital Steps You Need to Take Now
Tax season can be an unpleasant time of year for a lot of taxpayers, especially if you owe money to the IRS or State. The only thing you can do is make the most of it, prepare ahead of time, and pay the lowest amount allowed by law.
Whether you are due a refund or writing a big fat check to the IRS, there are some steps you should take after your return has been filed. Here are three critical steps to take once the tax filing deadline has come and gone.
Step #1: Print Off Hard Copies of All Your Forms and Receipts
Even if you save all of your documents on the computer and in the cloud, it is a good idea to print off hard copies and store them in a safe place. From the 1099 forms detailing your interest and dividend payments to the receipts that back up your charitable donations and business expenses, you never know when you will need this information.
You will appreciate having those hard copies on hand if your computer crashes or your cloud storage service fails. It takes only a couple minutes of printing, and those couple minutes could save you weeks of hassle down the road.
Step #2: Check Your Refund Status Or Balance Due Online
Even if you file electronically, you cannot expect instant service on your tax refund. It is the IRS after all. Even so, you should see quick action on your return and a notice that it has been accepted. Keeping an eye on your tax refund is one of the best ways to protect yourself and make sure the money you are owed does not end up in the hands of identity thieves.
This is also true if you owe money to the IRS. There have been tax identity theft cases where someone else files a tax return with your social security number, leaving you to deal with the liability or adding on to the amounts you owe.
If you use a tax filing software package, you should receive a notice by email when your return is submitted to the IRS, and another when it has been accepted. Watch your email box carefully and follow up if you do not receive those notifications within a day or two.
Once a week has passed, be sure to check the Where's My Refund page at the IRS.gov website to see where your refund stands. This handy tool provides a real-time picture of your refund status, from the time it is received by the IRS to the minute the money hits your bank account.
If you owe money, log in to your IRS account here and check the balance to make sure it lines up with what you know you owe. If there are discrepancies, contact your tax resolution firm ASAP.
Step #3: Prepare for Next Year
You just filed your taxes, and the last thing you want to do is think about filing for next year. Despite this trepidation, now is the perfect time to start getting your ducks in a row for the filing season to come.
Start by looking at your current year's return and think about ways you could have lowered your tax balance. Perhaps you could have given more to your favorite charity. Maybe you could have increased your retirement savings rate. Knowing what you did wrong this year will make it easy to adjust your strategy and save more money going forward.
Nothing can make filing taxes a truly pleasant experience, but dealing with the IRS is something every American needs to do. Now that your tax return has been duly filed and your 1040 form is on its way to the IRS, taking the right steps can save you money down the line, protect you from identity theft and make future tax dealings a little less stressful.
ABOUT BPB TAX RESOLUTIONS, LLC., OMAHA
Our firm specializes in tax resolution, even if you have years of unfiled tax returns, or owe the IRS over $10,000 we can help! If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
