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New Tax Laws and Same Sex Marriage Ruling

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New Tax Law After Same Sex Ruling

The Supreme Court recently declared the Defense of Marriage Act unconstitutional. This means that, in some states, same-sex couples who are legally married can now receive the same Social Security, retirement and health care benefits that have long been available to heterosexual couples.  The ruling could even lead to a check from Uncle Sam for some!  This article discusses the financial and tax implications of this new ruling for same-sex couples.

Gift Taxes and Estate Planning

Gift and estate taxes have been a core issue for many same-sex couples. Since there was previously no federal recognition of same- sex couples, members of these unions were not able to pass their assets on to their spouses upon their death without being taxed. Now some same sex couples will be able to share the same spousal estate benefits that straight couples have enjoyed. The new ruling also makes it possible for married same-sex couples to share assets without having to pay gift taxes. This has been a problem in the past when a same sex-couple shared a house and split mortgage payments. Same-sex couples may want to consult with their tax professionals to make sure their estates and trusts are updated to take advantage of any new estate or tax benefits provided by the new laws.

Health Care Benefits

One of the greatest benefits of the new legislation is that a member of a same-sex union can now be recognized on their partner’s health insurance plan without the large fees that were added in previous years. In addition, same-sex couples can now elect a variety of more affordable and flexible health care plans with better rates. Even if a couple is happy with their current health insurance arrangement and chooses not to change plans, they may be eligible to file amended tax returns to collect taxes that have been paid on benefits in prior years.

Income Taxes

Until recently, same-sex couples were not able to file joint tax returns and thus had larger tax bills than heterosexual couples. One couple said they paid an additional $5,000 in taxes because they could not legally marry. As a rule of thumb, married couples pay less in taxes than individuals filing separately. This is especially true when one person in a couple earns significantly more than the other. In addition, married couples filing joint tax returns realize other tax benefits in areas such as capital gains taxes, child care credits and a larger exclusion for the sale of a home. These tax benefits will now be available to some same-sex couples. Although the new Supreme Court ruling potentially offers many tax benefits, same-sex couples may want to consult with a tax professional to see how it affects their specific set of circumstances.

If you have tax questions or tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com  or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

4 Tax Surprises and How to Handle Them!

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4 Surprise Taxes and How To Handle Them!

One thing is certain besides taxes….you probably will want to stay on IRS’s good side! Here are some common items you may come upon this tax season. These are a few terrible tax surprises and how to handle them!

 Alimony Collected

Now that you made it through the divorce you will also have to accept the fact that the IRS is going to take some of your alimony.

It is important to know that alimony is completely taxable. Alimony and other similar payments of the type from your former spouse are taxable the year that you receive them. Child support money on the other hand is not taxable.

It is important to make your IRS payments on alimony and other untaxed income via estimated filings so that you will not have a large tax bill in April.

One positive for the person that is writing the alimony check, the check amounts are deductible.

Unemployment Benefits

Unemployment benefits are considered wage income; therefore, the IRS does receive a portion of these benefits.

So that you do not have to pay a big tax bill in April, it is important, that when you apply for unemployment benefits, you select the option to have your federal income taxes withheld. Similar to payroll withholding, you fill out a form called the federal W-4Voluntary Withholding Request, or a like IRS-acceptable form. This way 10% of your benefit amount will be taken out of each unemployment check.

Excused Debt

The IRS still collects from the total amount of debt owed, even if some debt is excused.  For example, if you are able to modify your credit card bill from $10,000 to $5,000 you can expect the credit card holder to send you a form called the Form 1099-C or a similar statement. The rest of money owed from the debt will be labeled miscellaneous income and you will be expected to pay it.

It is important to keep in mind that there are certain debts that can be forgiven. The Mortgage Debt Relief of 2007 states that certain homeowners that qualify will be forgiven and will not have to pay taxes on that amount.

Money and Other Prizes Won

Are you lucky? Did you win a $1,000 raffle? Money won as a “prize” is listed on the lengthy list of taxes that needs to be paid.

Regardless of whether you win a monetary amount or any type of non-monetary gift you are expected to pay taxes on it. You must pay taxes on the fair market value of any property that you win. In most cases the company you won from will send you a 1099 form in which you will declare how much you have won.

It is important that you are careful when you report the amount of a non cash property. If you under report you could be subjected to an audit.

If you have tax any questions or tax debt you are unable to pay our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years, in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services, visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

 

 

New Healthcare Changes for Small Businesses – IRS

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New Healthcare Changes for Small Businesses

The Supreme Court recently settled a divided debate when it ruled that the Patient Protection and Affordable Care Act (PPACA) individual mandate is constitutional and that the “shared responsibility payment” is a tax. How will this affect you?

History

Beginning in 2014, the PPACA will require individuals to carry a minimum healthcare coverage for themselves and their dependents or they will have to pay a fee which is called a “shared responsibility payment.” Before the Supreme Court decision was made, the first definition stated the shared responsibility payment was a “penalty” for people who decided not to purchase health insurance under the required mandate. In this decision the Court decided that the mandate was constitutional because the payment was included in Congress’ immense power to tax. Therefore, the court decided that the required shared responsibility payment was indeed a tax.

How will this ruling affect you? If you have health insurance through a private provider or with Medicaid or Medicare, some unique groups, and individuals with low incomes will be exempt from the individual mandate. However, the Congressional Budget Office believes around 4 million U.S taxpayers will have to pay the mandate tax in 2014 when these provisions are executed. Most of these 4 million taxpayers are included in the 27 million small businesses in the United States. Due to the fact many small business owners are sometimes underinsured or uninsured. Therefore they will be a likely group that will be subject to the shared responsibility payment.

It seems that these added taxes could be quite substantial. The household income and family size will affect how much the taxpayer will owe. For example, when the mandate provision is fully implemented in 2016, the additional tax liability could be 2.5% of the family income or $695 for each uninsured adult, whichever is more, up to $12,500.

More on the Mandate Tax

Per the Supreme Court’s decision the shared responsibility payment will be a tax. Originally, the legislation labeled the individual mandate as a penalty. However, the Supreme Court did not want it to punishable by nature. However, one thing is certain: The IRS has the authority to assess and collect the tax.

It is still unknown how the IRS will administer the mandate tax. Usually the IRS sends notices to the taxpayers with unpaid balances. Then if the taxpayer does not pay the balance, the IRS transfers the account to collections, where they then can file liens and levies of wages, income, and certain financial accounts. However, it does seem the PPACA has given the IRS restricted authority on how it will collect the mandate tax.  Right now, under the current legislation, the IRS cannot send unpaid mandate tax balances to collection for enforcement, or can it issue liens or levies. The IRS will give out notices and offset refunds in order to collect the tax.

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionalresolution.com. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.

 

 

 

 

IRS Collection Financial Standards

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Are you delinquent on your taxes and can’t afford to pay your tax debt? The IRS released updated Collection Financial Standards on April 2, 2012, to help with calculating delinquent tax repayment of federal taxes. These standards help to define a taxpayer’s ability to pay a tax liability.

Standards include the following four categories of allowable living expenses:

Food, clothing, and other items Food, apparel and services, housekeeping supplies, personal care products and services, and miscellaneous (either living expenses that are not included in the former categories, or expenses in the former categories that exceed the standards)

Out-of-pocket health care expenses In addition to what is paid for health insurance, this includes medical services, prescription drugs, and medical supplies (such as vision care items like glasses and contacts)

Housing and utilities Rent or mortgage, property taxes, insurance, interest, and utilities such as gas, electric, water, garbage collection, landline and cellular phone, internet, and cable; calculated as a local standard according county US Census, American Community Survey, and BLS data, also takes into account how many persons are in the household

Transportation Monthly loan or lease payments as well as operating costs including maintenance, repairs, insurance, fuel, registration, licenses, inspections, parking, and tolls; public transportation alone or in combination with vehicle ownership; calculated as a local standard

The six-year rule for repayment of tax liability allows for payment of living expenses exceeding the Collection Financial Standards and other expenses like minimum payments on student loans and credit cards, as long as the liability can be paid in full within six years. This includes paying off the penalties and interest.

If you need help with delinquent taxes or have an unresolved tax liability, our tax resolution professionals can provide the tax settlement help you need. Visit professionaltaxresolution.com for more information about our tax settlement services. Our staff has the experience and expertise necessary to know which tax settlement option will most effectively resolve your specific back tax issues.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

Expansion of the Tax Settlement Provisions of the Fresh Start Program

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The Federal Government recently announced a major expansion of its Fresh Start Program which was initiated last year to help taxpayers stuggling with tax debt. The recent changes supplement efforts that were already in place under the original Fresh Start Program to help individuals and businesses meet their tax obligations and reach tax settlements. Three major areas targeted by the recent Fresh Start expansion are penalty relief, Installment Agreements, and Offers in Compromise. The changes to these areas of tax relief are outlined below.

Penalty Relief

  • What is the failure-to-pay penalty? The failure-to-pay penalty is an amount assessed by the IRS on any tax amount owed that is not paid by the filing deadline. It is usually assessed at the rate of one half of one percent per month with a maximum assessment of 25%. The failure-to-pay penalty is charged in addition to interest on the tax amount owed, which is usually three percent per year.
  • What are the provisions of the expanded penalty relief initiative? The expanded penalty relief initiative grants a six month grace period on failure-to-file penalties for two specific categories of taxpayers provided all tax amounts, penalties, and interest are paid in full by October 15, 2012. The groups of taxpayers covered by this provision are workers who were unemployed for 30 consecutive days at any time during 2011 up until the April 17th filing deadline and self-employed individuals who experienced a decrease in income of 25% or more due to the downturn in the economy.
  • What are the restrictions on the expanded penalty relief initiative? In order to be eligible for expanded penalty relief, a taxpayer who is married filing jointly must not have an income in excess of $200,000 and must not have a tax debt greater than $50,000. The income of a taxpayer who is filing as single or head of household must not exceed $100,000.

Installment Agreements

  • What is an Installment Agreement? An Installment Agreement allows a taxpayer to pay the balance of a tax amount due in installments rather than paying the entire balance of the tax debt by the due date. While interest continues to accrue until the balance of the tax debt is paid in full, penalties are generally reduced during the payment period.
  • What are the provisions of the expanded Installment Agreement initiative? The expanded Installment Agreement initiative reduces taxpayer burden by easing the restrictions placed on qualifying for a streamlined Installment Agreement. The streamlined Installment Agreement has the taxpayer advantage of not requiring a financial statement. Under the provisions of the expanded Fresh Start tax settlement initiative, the maximum tax debt allowable for a streamlined Installment Agreement is raised from $25,000 to $50,000, and the maximum term of the payment period is extended from 60 months to 72 months.

Offers in Compromise

  • What is an Offer in Compromise? An Offer in Compromise is a tax settlement option that allows a taxpayer to settle a tax debt for less than the full amount owed.
  • What are the provisions of the expanded Offer in Compromise initiative? The guidelines outlined by the expanded Offer in Compromise initiative make this tax settlement option available to a much larger group of taxpayers. Taxpayers with an annual income of up to $100,000 can now qualify for an Offer in Compromise. In addition, the maximum tax debt ceiling allowed for qualification has been raised from $25,000 to $50,000.
  • What are the restrictions on the expanded Offer in Compromise initiative? While the recent expansion of the Fresh Start Program makes the Offer in Compromise tax settlement option available to a larger group of taxpayers, the IRS will generally not accept an Offer in Compromise if they believe the entire amount of the tax debt can be collected.

If you have an outstanding tax debt, we can help you determine whether you qualify for tax relief under the provisions of the Fresh Start Program. Following that determination, our experienced tax settlement professionals can help you submit your tax settlement request according to established IRS guidelines. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.