Administrator

About Administrator

This author has not yet filled in any details.
So far Administrator has created 175 blog entries.

10 Tips For Deducting Charitable Contributions

This week we received a question from a taxpayer about how to determine the deductible portion of a silent auction item purchased at a charitable event. While the answer is pretty clear, it reiterated to us just how confusing deducting that charitable contribution/donation can be to a taxpayer.

Charitable contributions made to “qualified organizations” may help lower your tax bill. But what is considered a qualified charity and what type of documentation do you need to keep? Here are our 10 tips to help ensure your contributions not only help the charity, but reduce your tax liability on your tax return.

First and foremost make sure you are giving to a qualified organization. Also, note that you cannot deduct contributions made to specific individuals, political organizations and candidates. Want to check and see if an organization is qualified? Use this link.
In general, an individual may deduct contributions to most charitable organizations up to 50% of his or her adjusted gross income (AGI), but that limit is changed to 30% of their AGI for other organizations. When you look up a charity you can click on “deductibility status” and it will tell you which percentage applies to that particular charity.
To deduct a charitable contribution, you must file Form 1040 AND itemize deductions on Schedule A. Thus, if you are taking the standard deduction, none of your charitable giving will benefit you from a tax perspective.
Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction record or a written communication from the organization. The communication should contain the name of the organization, as well as the date and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
If your contributions of cash or property equal $250 or more, you must have a bank record, payroll deduction record or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283 to your return.
Donations of stock or other non-cash property are usually valued at their fair market value. Clothing and household items must generally be in good used condition or better to be deductible.
Fair market value is generally the price at which property would change hands between a willing buyer and seller.
Like our friend who purchased an item at the silent auction, if you receive a benefit (e.g. merchandise, tickets to a ball game or other goods and services), because of your contribution, then you can only deduct the amount that exceeds the fair market value of the benefit received.
Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
If you donate a vehicle, you most certainly will have to fill out Form 8283 as well as get a letter from the organization. However, there are additional conditions that you may have to meet. You can find them here.

By Administrator|2013-11-01T14:33:50-06:00November 1, 2013|Categories: Tax Talk|Tags: AGI limits charitable contributions, Do I need a receipt for giving $250 to a charity, do I need an appraisal for a donation over $5000, Form 8283, how to deduct charitable contributions, tax deduction for charitable contribution, tax deduction for charitable giving, tax deduction for donating a vehicle|Comments Off

How To Make Estimated Tax Payments

A while back we wrote a post on just how the mechanics of income taxes worked with regards to you receiving a refund or having to pay Uncle Sam. In the end it boils down to how much you had withheld from your paycheck versus the amount of tax you owe at your income level. But what if you work for yourself (i.e. self employed) and no one is “withholding” anything from your check? Then this post will clue you in on how you make your payments and keep Uncle Sam happy.

What is estimated tax?

Estimated tax is how you pay your taxes when you have income that isn’t subject to withholding. Just think of it as what your employer does for you (i.e. withholds taxes from your check) when you don’t have an employer so to speak.

Who has to pay it?

If you are filing as a sole proprietor (Schedule C), or receive income as a partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments. Fortunately, you only have to make payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments if you expect it to owe tax of $500 or more when you file its return.

When do you have to pay it?

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

For the period: Due date:

Jan. 11 – March 31 April 15

April 1 – May 31 June 15

June 1 – August 31 September 15

Sept. 1 – Dec. 31 January 15 of the following year

How do you pay it?

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. The worksheet in Form 1040-ES will help you figure the amount. You can then make your payment(s) using the voucher contained within or electronically via the EFTPS system.

What happens if you don’t pay it?

If you didn’t pay enough tax throughout the year (either through withholding or estimated tax payments), you may have to pay a penalty for underpayment of estimated tax. You can avoid this penalty if you owe less than $1,000 in tax after subtracting withholdings and credits, or if you pay at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

By Administrator|2013-10-25T15:48:04-06:00October 25, 2013|Categories: Tax Talk|Tags: 1040-ES, EFTPS, estimated tax due dates, estimated tax penalty, Estimated taxes, how to make estimated tax payments, how to pay estimated taxes, mechanics of income taxes|Comments Off

Planning for Retirement While Saving on Taxes Today

When you’re a corporate employee, you have a company-matched 401K and maybe even a fully funded pension plan (if you’re lucky). When you’re self-employed, saving for retirement falls 100% squarely on your shoulders. Furthermore, unless you want to still be working when you’re old and gray, it’s a good idea to start saving sooner rather than later.

The good news is, the government makes it easy, and tax free, for you to build up your own personal retirement account. In this post we discussed in detail the options specifically related to those who are self employed. Below, we highlight two of the most common retirement plans in which people participate.

401K & Individual Retirement Accounts

A 401K is a special type of retirement fund set up and administered through an employer. Some companies offer to match a percentage of every dollar you contribute, making this a nice, pre-tax benefit. But if you are self-employed, there is a variant called a Solo/Individual 401K (available only to self-employed persons with no employees) that pretty much allows you to do most of the things you can with an employer offered 401K.

Traditional IRAs, or Individual Retirement Accounts, are set up with the help of a bank or financial planner, and are also non-taxable. That means that if you’re paying 30% of your net income to the IRS (not uncommon for self-employed folks) you can save 30 cents on every dollar you contribute to an IRA. Note that a traditional IRA contrasts with the newer Roth IRA. The Roth IRA uses after-tax dollars, meaning that contributions are not deductible. However, upon reaching retirement age, both the principal and your gains can be withdrawn tax-free.

Contribution Limits & Other Considerations

There’s a limit to how much you can invest in a retirement account. For 401Ks, the maximum you can stash away pre-tax is $17,500 ($23,000 if you’re 50 or older). For IRAs, it’s $5,500 ($6,500 if you’re age 50 or older).

Before you start stashing money away, though, remember that this tax savings does come with a price: You can’t touch the money you invest until you’re 65, or you end up paying not only the income tax, but penalties as well. In addition, you will have to pay income tax on that money when you retire (except Roth IRA withdrawals).

A Sound Investment?

In addition to helping you prepare for retirement, there’s another benefit of a retirement savings account; the potential to earn a substantial rate of return. Since you have the flexibility to divide your contributions among various investments, you can potentially earn substantially higher returns than the current 0.5% rate of interest that your savings account is giving you.

Of course, there’s no guarantee that any investment will earn money. Just talk to anyone who was close to retirement age when the economy took a downturn in 2008. Many people saw their 401ks and IRAs dwindle away significantly.

Yet, as a mechanism to save on your income tax, as well as saving for retirement, an IRA or 401K plan could be worth considering. They’re easy to set up, have few costs involved, plus they give you the freedom to invest your money in higher earning investments while still enjoying tax breaks.

By Administrator|2013-10-17T15:07:59-06:00October 17, 2013|Categories: Accounting Talk|Tags: 401K, Individual Retirement Account, IRA, Retirement account tax saving strategies, self employed retirement savings accounts|Comments Off

IRS Operations During The Government Shutdown

So, the IRS is closed during the current government shutdown. Does that mean that you get a free pass on paying your taxes, especially if you extended to the October 15^th deadline? Not exactly. Per the IRS, here is a brief summary of questions taxpayers have raised as well as their response.

What is the state of current operations?

Current IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.

No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed.

While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.

Automated IRS notices will continue to be mailed. The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.

How does this affect me?

You should continue to file and pay taxes as normal. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.

All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.

You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.

Tax refunds will not be issued until normal government operations resume.

Is the Oct 15 due date still in effect and should people still file?

Taxpayers should continue to file and pay taxes during a lapse in appropriations as they would under normal government operations. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.

Will paper tax returns be considered timely filed even though the IRS is not processing paper returns?

Yes. the United States Postal Service is operating during the shutdown, and they will postmark and deliver mail to the IRS. Any return postmarked by the due date will be considered timely filed by the IRS even though processing of the return may not occur until after the return due date depending on the length of the lapse in appropriations.

Is the IRS continuing to issue levies or liens during this period?

During the lapse in appropriations, the IRS is not sending out levies or liens – either those generated systemically or those manually generated by employees. The IRS notes that taxpayers may still receive levy or lien correspondence with October mailing dates, but those notices were printed before IRS shut down operations were fully complete. (It is standard practice for these notices to be printed with a future date to allow for mailing time to reach taxpayers.) In addition, the IRS notes that other letters related to liens and levies – such as notifications that a taxpayer could potentially be subject to a lien or a levy at a future date – continue to be automatically generated by IRS systems during the appropriations lapse. However, the IRS emphasizes that these notices are not actual levies or liens; just a notification of potential future action.

By Administrator|2013-10-10T12:51:00-06:00October 10, 2013|Categories: IRS Talk|Tags: do I need to pay taxes during government shutdown?, filing tax returns during government shutdown, IRS operations during the government shutdown, IRS shutdown, October 15th deadline and government shutdown, tax liens during government shutdown|Comments Off

Understanding IRS Debt and Allowable Expenses

When an individual is facing IRS debt and is working to get it resolved, they’re often required to fill out a Collection Information Statement. The Revenue Officer assigned to the case is allowed to (and often does) question any expenses that look fishy. However, what expenses are considered allowable can sometimes perplex a taxpayer.

For example, the IRS sets very specific limits on what a household can claim as an expense. These are often referred to as the National Standards. However, IRS simultaneously explicitly prohibits the claiming of certain expenses for collection purposes, including expenses that are deductible or create tax credits on a tax return. Many taxpayers are confused by this fact, and it’s just one of the numerous inconsistencies across the tax code.

When it comes to the dollar amounts which are considered allowable per the National Standards, many people are shocked at how low some of the numbers are. Conversely, there are other people that are shocked at how large some of the numbers are. Keep in mind that the IRS National Standards reflect the government’s calculation regarding a precisely middle class existence. For example, the allowable housing expense will vary geographically, because housing is cheaper in some parts of the United States, and much, much more expensive in other parts. However, the allowable expense for any area represents the median housing cost for that geographical area.

The National Standards for other expenses, such as public transportation and out of pocket health care costs, are the same for everybody nationwide, and are updated every couple years. For food, clothing, and other miscellaneous expenses, the IRS allows a set amount based on the number of family members in the household.

Historically, the IRS has not allowed expenses for unsecured obligations, such as your minimum monthly credit card bills and student loan payments. However, as part of the 2012 “Fresh Start” program, the IRS now gives collections personnel discretion on these items. Your Revenue Officer may permit you to claim these items, and it is therefore better if you do so up front, and let them tell you later that you can’t.

Hopefully this gives you a little more insight into why some expenses are allowed and how they are calculated. In the end, the most important fact is to ensure that that you claim every allowable expense on your Form 433. Doing so will ultimately minimize the amount you end up paying the IRS on your back tax liabilities.

By Administrator|2013-10-05T18:44:00-06:00October 5, 2013|Categories: IRS Talk|Tags: Collection Financial Standards, IRS Allowable Expenses, IRS Debt, IRS Form 433-A, IRS Form 433-B, IRS National Standards|Comments Off

Why You Shouldn’t Become An Entreprenuer

Many of us dream of having our own company or at least working for ourselves. Let’s face it, how liberating would it be to not have to report to the “man” day in and day out? Well, while that might sound all fine and dandy, it’s quite another thing in practice. We’re in the fortunate business that we get to counsel many aspiring entrepreneurs before they take the big leap. Our advice? Simple; don’t do it. Well, don’t do it for the wrong reasons at least.

Outlined below are five reasons you should NOT become an entrepreneur; which account for 90% of the reasons people want to become one. However, we then follow this up with five reasons you should take the plunge. Ready? Let’s get started.

Reasons against becoming an entrepreneur

You want to be rich. Going into business because you want to make loads of money is just a bad idea. Truth be told, making money on your own is an extremely hard and volatile venture. And if you think it’s a good return on investment, that’s just bad math. Most businesses fail within a few years and those that do make it often take years to become profitable. Plus, for the first few years don’t expect to take a check. Total up all of the above and the phrases “starving artist” and “struggling musician” start to make sense. So if you’re motivated by money, you’re far better off being a banker, investor or consultant or something.

You hate your boss. If you think that getting rid of your boss frees you up from having to report to anyone, think again. Every CEO of a major company still has a boss. They are called the Board of Directors, shareholders and customers. So when you become the CEO, all you really do is just trade one boss for thousands more (e.g. customers). And guess what? Customers are some pretty demanding folk.

You want to work less. People often tell us that they want to work for themselves because they want to spend more time with their kids or family. Okay. Unfortunately that’s not how it works. In reality you will get “flex time” but in the form of you picking any 24 hours of the day to work your tail off. Over time a successful entrepreneur may work less than they did in Corporate America, but this often takes many years to accomplish. In the beginning, you will be responsible for making everything happen.

You like the idea of control. Some individuals are enamored with power. Titles, money, expensive toys etc. exemplify this for these individuals. What it’s really like: everyone else is your boss – all of your employees, customers, partners, users, media are your boss. On top of that, there is very little control in a business. Things are constantly happening and needing to be addressed. What’s worse is that if you’re one who likes predictability, you will soon find yourself pulling your hair out. Entrepreneurship is far from predictable.

You want to get rid of the stress of corporate life. Sure, reporting to a demanding boss is stressful. So is figuring out how your going to negotiate a line of credit to keep the company open 20 more weeks while you wait on that Federal Government vendor payment to come in. The reality is that we make our own stresses and they follow us. Building a business is cool but it involves a lot of work. So if you’re trying to escape for stress reasons, you may want to reconsider.

Okay, so now that we’ve got that covered, why should you take the plunge to head up your own endeavor? Follow us please.

Reasons for becoming an entrepreneur

You’ve identified an unfulfilled market space. Most ideas that come to market tend to be slight modifications of existing concepts. This is not to say that we don’t derive benefit from what they provide, it’s just that it’s not earth shattering (e.g. ATMs vs. a personal banker). However, if you have figured out a new concept that isn’t being used by your competitors and can truly cause a paradigm shift, therein lies a market opportunity (think Segway). And where opportunity and demand intersect, money is often made.

You are passionate about something. A good friend of ours always says that you shouldn’t go to college to major in what you love, but what you can find a job in. While that is good financial advice, it’s not the best advice for those seeking to run their own show. You see, we’re big believers that passion carries a lot of weight and can take you places that “doing a good job” simply can’t.

Take Tony Robbins for example. While many will say that Tony isn’t extremely talented and he didn’t go to college, few will argue that he hasn’t made himself a household name. How did he do it? By taking the bull by the horns so to speak and forging his own way. That takes a lot of guts giving how hard this entrepreneurship journey tends to be. But if you have passion, good things tend to follow; which is typically a result of how hard you are willing to work and the lengths which you are will to strive to make your dream a reality.

You’ve figured out a better way to do something. Capitalistic societies are cool in the sense that if you have an idea that can improve life in some fashion, you can probably do well financially. Thus, if you have a concept or product that will truly change the way things are done (e.g. powering cars off water vs. gasoline); you should by all means go for it.

You want to make a difference in society. This world is full of individuals and companies that just want to make a quick buck. The ones that are truly great are those that want to make things better. Back in the day Ben & Jerry’s was one of the pioneers of the now common “Corporate Responsibility” movement. But some companies such as One Laptop Per Child take it a step further in trying to improve situations, people, socioeconomic groups and the like. So if you are trying to make things better and you can make a little coin in the process, by all means be our guest.

You just can’t live your life any other way. Sometimes you will hear people say that they weren’t meant to go to college, or work inside an office, or work for someone else. If you truly thrive in working in an entrepreneurial environment, then it’s probably best that you become one. Yet, the keyword here is thrive. Whenever you find a situation that lets you be the best that you can be, you should embrace it. Whether it’s your job, hobbies or love interest; when you find something that fits perfectly, don’t attempt to resist it. Often times, you will regret it if you do.

“Do what you love. The money will follow!”

By Administrator|2020-09-21T12:40:00-06:00September 27, 2013|Categories: Business Talk|Tags: 5 reasons to not leave corporate america, 5 reasons to start your business, Broke CEO, Eric P Butts, Tony Robbins, Why You Should Become An Entreprenuer, Why You Shouldn't Become An Entreprenuer|Comments Off

Ensuring You Don’t Miss Business Expense Deductions

When you run a small business, saving money on your tax return sometimes comes down to little more than keeping good records. Unfortunately that means tracking all those little expenses, because they can add up throughout the year. The question is, are you capturing all those small expenses? If not, here are some tips on how to ensure you’re not leaving money on the table.

Frequently Forgotten Expenses

It’s staggering how much goes into running a small business, and how quickly things can become tangled between business and personal accounts – especially for sole proprietors. Think about it. You’re doing your grocery shopping and remember you need a new desk calendar, so you toss one in your cart. Or you’re Christmas shopping on Amazon and see a good deal on printer ink, so you stock up. Or maybe you’re meeting a potential client for breakfast and while you remembered to deduct your meal, you forgot about the mileage to get there.

These types of common, but small, expenses can quickly add up to a major tax deduction. The trick is remembering to deduct them. Some of the most common (and often overlooked) business expenses include:

PayPal and other payment processing fees. If you get paid via PayPal, then you know they charge around 3% of each transaction for the service. These fees quickly add up so make sure you’re keeping track and adding them to your tax return as “bank fees.”
Dues and subscriptions. Do you belong to paid forums or membership sites related to your business? These charges are deductible as well.
Small Office supplies. This includes the stuff like paper, pencils, staples, etc. It’s not uncommon to forget that you bought these things or to purchase them during a trip where you’re also buying personal items.
Domain names and hosting. Your Hostgator bill, GoDaddy purchases, etc.
Advertising. Whether you do pay-per-click via Google or Facebook, buy mailing lists, or pay for ad placement on other websites, it’s all deductible.
Commissions. Do you have sales staff? Deduct those payments!
Business Mileage. Remember that trip to get the office supplies above? You did deduct the mileage right? Is tracking your miles too hard? Consider getting an app for your phone like Tap2Track Mileage which uses GPS to do all the calculating.
Depreciation. Most of the time your accountant will do this without any input from you. But if you use equipment or a vehicle in your business, you should check that deprecation is being calculated and included on your return.

Keeping Good Records

So once you know what expenses to track, the key to getting the biggest tax deductions lies in keeping good records. For most small businesses, the simplest solution is to use a software program set up specifically for this purpose, such as Quickbooks or Peachtree. However, if you’re not that disciplined then make sure you charge your business expenses only to your business credit or bank card. That way, they are at least in one place. And if you’re not that disciplined? Heck, just throw all the receipts in a box and give them to your accountant at the end of the year.

No matter what solution you choose, though, make sure you consistently record your expenses. The last thing you want to do is scramble at the end of the year to find receipts and enter data. That would be a nightmare. Instead, set aside time each week (or more often, if necessary) to update your books. If you find it overwhelming and you tend to put it off, consider hiring someone to maintain your accounts for you. Remember – what you pay him or her is deductible as well!

Finding all those overlooked expenses can mean the difference between a huge tax bill and one that is more manageable. While the things listed here will get you started, it’s a good idea to also speak with a tax professional. Make sure he or she fully understands the nature of your business, so he or she can ask the right questions and make appropriate recommendations for your business write-offs.

Top Tax Write-offs for the Self-Employed (turbotax.intuit.com)
Small Business Tax Write-Offs: Rules & Regulations (staples.com)

By Administrator|2013-09-22T22:33:27-06:00September 22, 2013|Categories: Accounting Talk|Tags: forgotten business expenses, how to keep good business records, keeping good business records, missed tax business deductions, overlooked business expenses, Quickbooks, Tax deduction|Comments Off

How To Get IRS Currently Not Collectible Status

If you are facing IRS debt issues, a great tool for getting them momentarily off your back is a status known as Currently Not Collectible (CNC). The IRS recognizes that you may be in a financial condition that renders you unable to pay anything on your taxes. When we represent taxpayers that are either insolvent or are having major cash flow issues, the Currently Not Collectible Status is the option that we attempt to obtain most often.

If you have negligible assets (e.g. bank accounts, home, cars) that the IRS can seize, and you have no income beyond what is absolutely necessary for you to live, the IRS may determine that your liability is currently uncollectible. CNC status defers collection action under the undue hardship rule. If you are one of these uncollectible cases, the Revenue Officer assigned to your case will remove your case from active inventory until your financial condition improves. CNC status is generally maintained for about one year. Keep in mind that if you are in CNC status, penalties and interest will continue to accrue on your tax liabilities.

There are many reasons the IRS may consider your case as uncollectible. These include:

The creation of undo hardship for you, leaving you unable to meet necessary living expenses
The inability to locate any of your assets
The inability to contact you
You die with no significant estate left behind
Bankruptcy or suspension of business activities with no remaining assets
Special circumstances such as tax accounts of military personnel serving in a combat zone

Before closing your case for the reason of undue hardship, we can guarantee that the IRS will request a financial statement from you so that they can review your finances. The review is similar to the review for an Installment Agreement request; both of which are similar to a mortgage application. You will be required to provide financial documentation such as bank statements, copies of mortgage statements, car payments, pay stubs, etc. If your assets are negligible and your net disposable income is negligible, you’ll most likely to be able to obtain CNC status.

The IRS will periodically re-examine your finances to see if your financial condition has improved to the point that some payment can be demanded. This financial review will occur about once a year and you must then complete a new financial statement. The IRS may question you by phone or in person about your updated financial information or they may simply send you the form and request that you return it by mail.

As with all information you give the IRS, make sure that what you say is absolutely truthful. The IRS may also monitor your financial condition by computerized review of your tax returns. For example, the IRS computers may flag your return if your reported gross income exceeds some pre-established amount. Remember, the IRS only has 10 years from the date of assessment to collect delinquent taxes; once the statute expires, so does your liability.

Millions of Americans have remained in CNC for years and completely avoided having to pay their back taxes. Obviously, these folks could not title assets in their own name or have significant income available for IRS levy. Still, many of these uncollectible cases enjoyed relatively comfortable lifestyles. If you maintain no assets in your own name, you have a small income, and expect your financial situation to continue as it currently stands, then remaining in CNC status may be your most practical remedy.

However, if you do not intend on remaining uncollectible until the statute of limitations expires or you don’t want the tax liability hanging over your head, then you may want to consider an Offer in Compromise while your financial situation isn’t so great.

Do YOU Need Help With Your IRS Debt?
This post (the one you’r reading) is one of the most viewed on our site. Why? Because many people have tax issues that they want to resolve. If you have old tax returns that need to be filed or want to learn how a professional can help you with your situation, why not visit our sister site File Old Tax Returns? You might be surprised to learn that we may be able to help you out for less than you are thinking. Plus, hear some valuable information on your taxpayer rights from the IRS Commissioner himself!

By Administrator|2013-09-12T15:38:19-06:00September 12, 2013|Categories: IRS Talk|Tags: Buying time with the IRS, Inability To Pay IRS Debt, IRS CNC Status, IRS Currently Not Collectible|Comments Off

Remove Wage Garnishments With The Help of The Taxpayer Advocate Service

The IRS is the only collections authority that can take significant actions that will make it hard for you to live. One such situation is when they start to garnish your paychecks. A wage garnishment is one of the most-feared IRS collections tactics, and rightly so. Your employer is legally obligated to implement it. If they don’t, they can face stiff penalties themselves.

The bright side in these situations is that an IRS wage garnishment does NOT follow you to another job. So, if you have a wage levy in place and decide to quit your job in order to get out of it, we would encourage you to seek employment to get back on your feet. The IRS won’t know where to send another wage levy to an employer until some sort of tax return information gets filed. For example, when your employer issues you a W-2 after the end of the year, they are required to file a copy of it with the IRS. When this happens the IRS will then know where you work and may file a new wage levy at your new employer.

So, if an IRS wage levy or wage garnishment is creating a significant economic hardship for you, you are encouraged to do one of two things. One is to seek professional tax representation to assist you in resolving the matter. If your tax situation is fairly complex, you’re going to want to hire professional tax representation to resolve your situation. If your tax situation is otherwise simple, or you simply cannot afford to hire professional tax relief assistance, then by all means contact your Local Taxpayer Advocate.

There is a Local Taxpayer Advocate (LTA) office in all 50 states and very large cities will have a dedicated office (ex. Cleveland and Cincinnati OH). Contact these folks and tell them your situation; it’s their job to help out folks such as yourself, and it’s a service already paid for by your tax dollars (nice how that works, right?). The nice thing about the Taxpayer Advocate service is that they are an independent arm of the IRS, and they function OUTSIDE of the normal bureaucracy of that agency. In fact, the Taxpayer Advocate service reports directly to Congress, NOT to the Commissioner of the Internal Revenue Service.

If you’re seeking assistance from the LTA, you will most likely want to file the following form, which is IRS Form 911, Request for Taxpayer Advocate Assistance. Your LTA can provide you with this form.

So, again, don’t let an IRS wage garnishment make you think that you can’t go get a job. The wage levy from your previous job does NOT automatically follow you over. Also, either seek professional tax resolution assistance from a reputable firm, or contact your local Taxpayer Advocate office to get help.

As always, ignoring your IRS problem does NOT make it go away. It is always best to confront the problem head on, get it resolved, and then move on with your life. If you would like us to help you with your situation, please give us a call at 773.239.8850.

Taxpayer Advocate Service: Helping You Resolve Tax Problems (clarksvilleonline.com)
According to Report From the TIGTA, the IRS is Currently Unable To… (prweb.com)

By Administrator|2013-09-07T13:59:40-06:00September 7, 2013|Categories: IRS Talk|Tags: Garnishment, IRS, Office of the Taxpayer Advocate, Wage|Comments Off

The Affordable Health Care Act and 2014

Come January 1^st 2014, nearly all Americans will be required to have health insurance as mandated by the Affordable Care Act. But just what exactly does this mean for individuals and businesses?

Well, on June 28^th Rice University’s Baker Institute for Public Policy hosted a presentation by Vivian Ho, Ph.D., a professor of economics at Rice University and a professor of health services research at Baylor College of Medicine. The presentation addressed some of the highlights of what is considered by many as a “very complex piece of legislation.” Below are some of the highlights.

THE UNINSURED

Those without health insurance are required to have it or buy it by Jan. 1, 2014, or face a penalty. The penalty will be $285 per family or 1 percent of income, whichever is greater. By 2016, the penalty increases to $2,085 per family or 2.5 percent of income.

According to the U.S. Census Bureau, more than 40 million Americans lack health insurance, often because they are part-time workers, unemployed or self-employed, or they are full-time employees whose employers don’t provide coverage.

All 50 states must create an exchange, which Ho says is like a big shopping mall, with individual insurance stores inside. Consumers “visit” each store, and compare all the different insurance plans offered through the exchange, then select the one that best suits their needs and the needs of their families.

“The exchanges will serve as an insurance marketplace, a one-stop-shop for those who do not have employer coverage and are looking for private coverage,” Ho said. All 50 state exchanges must be operational by Oct. 1, 2013 to begin open enrollment for the 2014 plan year.

The government will provide subsidies to low- and middle-income Americans to help them buy insurance through these health exchanges – the individual pays a part of the insurance premium, and the government pays the rest.

THE ALREADY INSURED

Under the Affordable Care Act, insurance companies are no longer allowed to set an individual’s premium cost based on gender or health status. The act also prohibits insurance companies from dropping coverage or capping coverage for people who develop long-term illnesses or disabilities – a measure that has already been in existence in some states, and now should offer peace of mind to many more, Ho said.

However, policies purchased through a health exchange are allowed, under the Affordable Care Act, to cost three times more for an older person than a younger person. “Currently, older individuals are charged about four or five times higher than younger people,” Ho said. “The new three-to-one ratio will likely cause premiums to go up for younger individuals.”

The new law also requires insurance companies to cover the children of insured parents up to age 26 – this provision went into effect in 2010, the year the act was signed into law.

PEOPLE WITH PRE-EXISTING CONDITIONS

Starting in 2014, the law makes it illegal for any health insurance plan to use pre-existing conditions to exclude, limit or set unrealistic premium rates on coverage for adults – the requirement to cover children under age 19 for pre-existing conditions began in 2010.

EMPLOYERS

Employers in the United States are not currently required by law to provide health insurance coverage to employees. However, the Affordable Care Act changes that, by requiring employers with 50 or more workers to provide those workers with affordable and adequate health coverage, or face fines.

That provision was set to go into effect Jan. 1, 2014, but on July 2, the Obama administration pushed it back by a year. The delay resulted from business groups’ complaints that the law was too complicated and they needed more time to update technology and to plan how they would offer health coverage to employees without yet knowing how much the coverage would cost. Like individuals, businesses can also purchase insurance policies through state exchanges for their employees, but not all state exchanges are in place yet.

Businesses with fewer than 50 workers will be exempt from providing health insurance to their employees, and those employees likely will look for private insurance on state exchanges.

When the delay concludes and employers must provide their employees with health coverage, larger employers won’t be affected as much, but middle-sized firms with 100 to 1,000 employees will likely experience a price increase in providing coverage for their employees, Ho said.

“This is mainly because many of these companies didn’t offer health insurance,” she explained, “or they offered health insurance that had extremely high deductibles and didn’t cover many standard services.”

Small firms with 100 or fewer employees will likely experience a decline in the amount spent on each employee’s coverage, she said.

“A lot of people don’t realize there are actually subsidies available for small employers – especially for those with 25 or fewer workers – to purchase health insurance,” Ho said, “and that will make it more affordable for these small companies.”

By Administrator|2013-08-27T12:41:38-06:00August 27, 2013|Categories: Accounting Talk|Tags: 2014 Affordable Care Act, 2014 Health Care Reform Changes, 2014 health insurance, 2014 Obamacare mandates, Obama Care, The Affordable Health Care Act and 2014|Comments Off

Previous 8910 Next

About Administrator

ABOUT

RESOURCES

About Administrator

Related articles

Related articles

ABOUT

RESOURCES