New Site For Filing Old Tax Returns
He’s Back. Uncle Sam Wants You!!!!
Sometimes things happen. Life get’s in the way. Your health takes an unexpected turn for the worse. You have the best intentions of getting out of the financial hole you are in, but the hole just seems to keep getting deeper. No matter what the reason is, sometimes the tax returns just don’t get filed on time. And sometimes they don’t get filed for a few years. But don’t worry, now you have an option to get back on track. Introducing fileoldtaxreturns.com!
Fileoldtaxretruns.com is our recently developed sister site to helps those who specifically have unfiled tax returns from previous years. Why create a separate website; especially if the services are provided the same fine professionals who run Wilson Rogers & Company? Keep reading.
Software availability. If you have old tax returns to be filed and are the DIY type, you’ll quickly stumble onto something. Software providers typically STOP offering tax software for a particular year once the IRS has shut down the e-file platform. Thus, if you want to prepare your return electronically, there are a limited number of online sites you can use or you have to manually fill out the forms once you download them from the IRS website. But what if you don’t want to prepare the return?
Real people available year round. It’s no secret that most retail tax offices close up shop once the tax season is over. If you have a deadline to provide a tax return to someone (e.g. loan officer for that new home you’re trying to purchase), you might find it hard to locate anyone who can prepare it for you, when YOU need it. Thus, fileoldtaxreturns.com was created as a option so that taxpayers could get these old returns prepared all year round. Depending on the situation, you may be able to get them done in as little as 24 hours!
Real people available year round!
Repository of tax law. Tax laws are constantly changing. Even if you don’t want to have someone prepare your return for you, what laws and tax rates were in effect back when your tax return was due? Not to worry, fileoldtaxreturns.com has a tax help blog that has all of the historical information that you would need to ensure that your return was done right. While only containing historical tax rate tables at the moment, it will soon be expanded to include tax law summaries for each year as well as specific information on various credits, deductions and other items.
Help with IRS debt. It’s not uncommon for those who have unfiled returns to also have amounts owed to the IRS. Sure, you’ve seen all those companies with the late night infomercials telling you how you can settle your debt for pennies on the dollar if you owe more than $10,000 to the IRS. But can you trust them? How do you know if they are reputable? Well, fileoldtaxreturns.com has a dedicated Got IRS Debt page that will not only inform you of your options when it comes to settling your tax debt, but inform you of your rights!
So there you have it. If you have (or know someone who has) unfiled tax returns, why not pay a visit to the site? If you need to speak to someone, you can call the site’s dedicated support number at 844-TAXES88 or 844-829-3788. Plus, when you visit the site, you can sign up and save 30% off current year tax preparation rates.
Until next time…
10 Options For Solving Your IRS Debt
When it comes to settling your tax debt, there are 10 options “commonly” employed by resolution professionals (such as ourselves) or the individual taxpayer (see full explanations below):
» Full pay the tax owed
» File unfiled returns to replace Substitute for Returns (SFR’s)
» Dispute the tax on technical grounds
» Currently Not Collectable
» Installment Agreements
» Offers In Compromise
» Penalty Abatement
» Discharging taxes in bankruptcy
» Innocent Spouse relief
» Expiration of the Collection Statute
OPTION ONE – Full pay the tax owed
While seldom a popular option, sometimes the taxpayer does have the ability to pay the tax outright or borrow against an existing asset e.g. refinance a home mortgage or take out a home equity loan.
Surprisingly, in this situation, this option is usually the least costly of viable options available to the taxpayer. The reason for this is two-fold:
» The taxpayer’s equity in assets will usually disqualify the taxpayer from benefiting from options which grant debt forgiveness.
» Until the tax debt is paid in its entirety, it will continue to accrue additional penalties and interest.
OPTION TWO – Filing unfiled tax returns and replacing Substitute for Returns
When resolving a tax problem, it is relatively common to find that the taxpayer has back tax returns which have not been filed. There are three reasons why it is necessary to file the required back tax returns and get the taxpayer “Current” so to speak:
» Failure to file tax returns may be construed as a criminal act by the IRS and can be punishable by one year in jail for each year not filed. Filing unfiled returns brings the taxpayer “Current”
» Filing unfiled returns to replace “Substitute for Returns” may lower the tax liability owed and the associated interest and penalties
» A settlement cannot be negotiated with the IRS until the taxpayer becomes “Current”
OPTION THREE – Dispute the tax on technical grounds
If there is a technical basis to dispute the amount of tax owed, there are a number of paths to consider, including:
» Filing an amended return if the statute of limitations to file has not expired
» Filing an Offer In Compromise – Doubt as to Liability
OPTION FOUR – Currently Not Collectable Status
If a taxpayer does not have positive cash flow above the level to pay their necessary living expenses or have equity in assets to liquidate, the taxpayer may qualify for Currently Not Collectable Status (CNC). This is most commonly seen when the tax payer is unemployed or underemployed. In this situation, the IRS places a temporary hold on the collection of the tax owed until the taxpayer’s financial situation improves. If over a longer period of time, the tax payer’s financial situation does not improve, the taxpayer may then become a viable Offer In Compromise candidate.
OPTION FIVE – Installment Agreements
In most cases, the IRS will accept some type of payment arrangement for past due taxes. In order to qualify for a payment plan the taxpayer must meet set criteria. They include:
» The taxpayer must be current- all returns must be filed
» Disclose all assets owned
» The difference between the taxpayer’s monthly income and allowable monthly expenses will be the amount that the IRS will request that the taxpayer pay on a monthly basis
» Monthly payments will continue until the taxes owed are paid in full
OPTION SIX – Offers In Compromise
The IRS Offer in Compromise program provides taxpayers that owe the IRS more than they could ever afford to pay, the opportunity to pay a small amount as a full and final settlement.
» This program also allows taxpayers that do not agree that they owe the tax or feel that the tax has been incorrectly calculated, a chance to file an Offer in Compromise and have their tax liabilities reconsidered.
» The Offer in Compromise program allows taxpayers to get a fresh start.
» All back tax liabilities are settled with the amount of the Offer In Compromise.
» All federal tax liens are released upon IRS acceptance of an Offer In Compromise and payment of the amount offered.
An Offer in Compromise filed based on the taxpayers inability to pay the IRS looks at the taxpayer’s current financial position and considers the taxpayers ability to pay as well as the taxpayers equity in assets. Based on these factors, an Offer amount is determined.
» Taxpayers can compromise all types of IRS taxes, penalties and interest.
» Even payroll taxes can be compromised.
If the taxpayer qualifies for the Offer In Compromise program, they may be able save thousands of dollars in taxes, penalties and interest.
OPTION SEVEN – Penalty Abatement
In most cases, penalties make up 10-30% of the total tax obligation. A penalty abatement request can eliminate some or all penalties if the taxpayer has reasonable cause for not paying the tax on time or paying the appropriate amount of tax.
Reasonable cause includes:
» Prolonged unemployment
» Business failure
» Major illness
» Incorrect accounting advice
» Incorrect advice from the IRS
To prevail in a penalty abatement request, as in most tax matters, the burden rests with the taxpayer to be able to adequately document the reasonable cause.
OPTION EIGHT – Discharging Taxes in Bankruptcy
Bankruptcy can discharge federal income taxes if certain requirements are met. However this depends upon both the type of bankruptcy and the type of tax owed.
Chapter 7 is the chapter of bankruptcy law that provides for the liquidation of non-exempt assets and the discharge of dischargeable debts. Chapter 11 and Chapter 13 provide for repayment of debt in whole or in part.
To discharge taxes in bankruptcy, a number of criteria must be met including:
» 36 months have expired from the tax return due date
» 24 months have expired from the date the tax was assessed
» 240 days have passed since the tax was assessed and filing bankruptcy
» All tax returns must have been filed
OPTION NINE – Innocent Spouse relief
Sometimes a taxpayer will find themselves in trouble with the IRS because of their spouse’s or Ex-spouse’s actions. The IRS realizes that these situations do in fact occur.
In order to help taxpayers that have tax problems which are due to the actions of their spouse, the IRS has developed guidelines for taxpayers to qualify as an innocent spouse. If a taxpayer can prove they meet these guidelines, then the innocent taxpayer may not have to pay some or all the taxes caused by their spouse or ex-spouse.
OPTION TEN – Expiration of the Collection Statute
The IRS has 10 years from the date of assessment (usually close to the filing date) to collect all taxes, penalties and interest from the taxpayer. The taxpayer does not owe the tax after the 10-year date has passed.
Listed below are some of the most common exceptions to this rule:
» If the taxpayer agrees in writing to allow the IRS more time to collect the tax
» If the taxpayer files bankruptcy during the 10 year period
» If the taxpayer files an Offer In Compromise.
I’m a failure; but so are most people.
Me? Big Time Failure!
I worked for 4 companies throughout my corporate career and never lasted longer than 4 years at any of them. My failure to be able to “tolerate” simply doing something because someone said it should be done is what routinely led to my departure.
I’ve failed, many times over, to keep my weight in check. While I’m nowhere near obese, I am also nowhere near my svelte days when I was on the football team in high school or when I rode as a bike messenger. I get the weight off by riding hundreds of miles on my bike, and then manage to gain it back months (sometimes years) later. Blame this failure on my immense love of food and inability to control my desire to feed my face!
After three years of running this company night and day, I’ve failed to achieve the revenue or profit goals that we outlined in our original business plan. What’s worse is that people would consider me a “smart” finance person and I’m supposed to be good at numbers right? So why then could I not accurately project the revenues and expenses of this company over that three year period? Oh yeah, because this was uncharted territory for me – having to figure out exactly how many clients you get when you spend $X on a marketing campaign. Better yet, figuring out which marketing campaign even works!
On top of the above, I’ve failed my family for years. I’ve failed to spend as much time with them as I both want and should. I’ve failed to be there when they’ve rung me on the phone and I thought “I’m busy with something, I’ll just call them back later.” I’ve failed my wife and daughter by not giving them all the hugs, kisses and love that I can possibly muster. With all these failures, I’m surprised that I am even loved at all.
So why do I keep failing? Well, I wrote about that extensively in this post so I won’t rehash any of it. But you want to know the interesting thing? Most people are failures. Let me explain.
Failure is defined as the state or condition of not meeting a desirable or intended objective, and may be viewed as the opposite of success. The key component in the preceding sentence is “may be” and should not be misconstrued with “is.” In other words, failure is simply not meeting an objective. This doesn’t mean that you are not succeeding or will not achieve your goal at some point. The key in moving from failure to success can be summed up in the following quotes:
“I can accept failure, everyone fails at something. But I can’t accept not trying.” – Michael Jordan
“Success consists of going from failure to failure without loss of enthusiasm.” – Winston Churchill
“Only those who dare to fail greatly can ever achieve greatly.” – Robert F. Kennedy
“Giving up is the only sure way to fail.” – Gena Showalter
“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.” – Denis Waitley
“I have not failed. I’ve just found 10,000 ways that won’t work.” – Thomas A. Edison
With that said, yes, I am a failure. Most of us are failures. But mark my word, at some point in the future someone will say “Jared Rogers a failure? That guy has to be one of the most successful people I know!” Yet, they won’t be saying this because I was a failure; they’ll be saying it because I didn’t quit.
Until next time…
Understanding The Gift Tax
So a few weeks ago, someone posed the following question to us regarding gift giving:
Can you please explain how the gift-tax system works and what its rationale is? I know that if I give someone a gift below a certain amount, then I don’t have to pay gift tax. But what happens if I give over that amount? My contribution was made with after-tax money. Why do I have to pay a gift tax? It just feels like I am being double taxed.
We thought it was a good question, so let’s explain what the so-called gift tax is really all about.
Lifetime Exclusion
Our current tax system essentially treats the transfer of wealth the same whether the transfer was made during the donor’s lifetime or posthumously. However, the IRS grants taxpayers a life time exclusion (also called the lifetime exemption) that allows them to give away $5,340,000 (in 2014) at either stage or a combination of the two. Thus, a taxpayer can give up to this amount during their lifetime or after death without either the recipient or the donor owing any tax on that transfer.
Annual Exclusion
A common source of misunderstanding surrounding gift tax has to do with how the lifetime exclusion amount relates to the annual exclusion. The annual exclusion allows a taxpayer to give $14,000 (in 2014) to another person per year without it counting against the lifetime exemption. You and your spouse can combine this annual exclusion to double the size of the gift to a done if you would like (up to $28,000). So what happens when you give more than the above amounts? Well, you then have to deduct the difference against your $5,340,000 lifetime exclusion. Just how do you do this?
Reporting
You, or your estate if the taxpayer is deceased, must file Form 709 United States Gift Tax Return by the same date that your Individual Tax Return is due (April 15th). You will owe no tax on your gifts unless you have already given more than the lifetime exclusion. Once you file Form 709, the government notes what your remaining exemption is. The same process is followed every time you exceed the annual exclusion limit (e.g. $14,000). Then at your death, any bequest beyond the remaining limit is subject to taxation. Thus, it’s not until you reach this point that your gift is subject to double taxation so to speak.
If you want more information on the gift tax and reporting, check out this nifty little IRS site
on the topic. Still have questions? Why not give us a call or shoot us an email via our contact information below and we’d be happy to chat with you.
Restricted Stock Unit (RSU) Taxation
Employee compensation is a major expenditure for most corporations. As such, some firms find it easier to pay, at least a portion of, their employees’ compensation in the form of stock. This post will discuss the tax implications one should be aware of if they are the recipient of Restricted Stock Units or RSUs.
How do Restricted Stock Unit Plans work?
A RSU represents an unsecured promise by the employer to grant a set number of shares of stock to the employee upon the completion of the vesting schedule. Once an employee is granted RSUs, the employee must decide whether to accept or decline the grant. If the employee accepts the grant, they may be required to pay the employer a purchase price for the grant.
After accepting a grant and providing payment (if applicable), the employee must wait until the grant vests. Stock is not issued at the time of the grant. However, once the recipient of a unit satisfies the vesting requirement, the company distributes shares, or the cash equivalent of the number of shares used to value the unit.
Income Tax Treatment
The following example reflects a salary of $65,000, a grant of 400 shares of hypothetical XYZ Company stock and a sale of said stock one day after vesting.
Step 1: Compensation Income From The Vesting Of The RSU Award
Under normal federal income tax rules, an employee receiving Restricted Stock Units is not taxed at the time of the grant. Instead, the employee is taxed at vesting (when the restrictions lapse) unless the employee chooses to defer receipt of the cash or shares. In these circumstances, the employee will have compensation income or “ordinary income” in tax parlance. The amount of income subject to tax is the difference between the fair market value of the grant at the time of vesting or distribution, minus the amount paid for the grant (if any).
In our example, the compensation is calculated as 400 shares vesting times the $20 per share fair market price on that date. The employee now has compensation income of $8,000. This will also be the stock basis of said shares for use in the next step. On the employees W2, this $8,000 will be added to the $65,000 in wage compensation and taxed at “ordinary income’ tax rates.
Step 2: Calculating Capital Gains or Losses
For grants that pay in actual shares, the employee’s tax holding period begins at the time of distribution (which may or may not coincide with vesting depending on the plan rules), and the employee’s tax basis is equal to the amount paid for the stock plus the amount included as ordinary compensation income.
In our example, the employee has 400 share of stock with a basis of $8,000. The very next day they sell all 400 shares when the stock is trading at $22 per share. The employee has just created a capital gain of $800, which is the difference between their $8,800 sales price and $8,000 basis. As they held the stock for less than one year between when they obtained it and sold it, the $800 gain will be reported on their tax return as a short term capital gain via Form 8949 or Schedule D (depending on if they had any other adjustments).
Special Consideration – Tax Withholding Choices
Sometimes when one is granted RSUs, they would like the employer to “withhold” some taxes to cover the amount that will be included on their W2 as compensation income. Generally speaking those options will include:
- Net Issuance – The employer will deduct a number of shares from your vested shares and give you the rest (broker remits net proceeds to employer, employer remits the value of the deducted shares to Government, money shows up as “withholding” on paycheck).
- Same Day Sale – If you make this choice, you sell everything on the day of vesting. The employer will then withhold a portion of the proceeds as “withholding” and report them on your W2.
- Sell To Cover – If you make this choice, or if you don’t have a choice, your employer sells just enough shares to cover the tax withholding. The key difference between Sell to Cover and Net Issuance is that the employer uses a broker in Sell to Cover but doesn’t use a broker in Net Issuance.
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