Keep Your Passport by Paying your Taxes

Summer officially started this week and many of you may be planning on taking a vacation or two. And you should! You deserve it. But if you’re looking to travel internationally, you should double-check that your taxes have been paid in full or that you have an appropriate installment agreement with the IRS established. Otherwise, your passport could be at risk.

That’s the message the IRS delivered in January when it announced implementation of new procedures affecting individuals with “seriously delinquent tax debts.” According to an IRS press release, the new enforcement policy impacts primarily those owing $51,000 or more in unpaid back taxes for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired – or the IRS has issued a levy.

“This enforcement action has been in the works for a number of years and is the result of legislation passed in 2015 that requires the IRS to notify the State Department of taxpayers owing a seriously delinquent tax debt,” said Brian Biffle, president of 20/20 Tax Resolution. “However, many taxpayers impacted by this legislation may not be aware of it or may not understand the serious implications of it.”

Failure to pay unpaid taxes or create a payment plan could lead to denial of a passport application or even denial to renew a passport, according to the IRS. In some extreme cases, the FAST Act – which was signed into law under the Obama Administration in December 2015 – requires the State Department to revoke a passport for unpaid taxes.

“This is very serious for those who travel internationally, especially for a person whose business depends upon international travel,” Biffle said. “To be absolutely certain you are safeguarded from these enforcement actions, taxpayers that owe unpaid taxes should be certain to come forward and deal with any debt they might owe.”

This same legislation, known as the “FAST Act” (for “Fixing America’s Surface Transportation” Act), details the ways travelers can avoid the new passport constraints:

  • Pay any unpaid tax debt in full
  • Pay the tax debt under an approved installment agreement
  • Pay the tax debt under an accepted offer in compromise
  • Pay the tax debt under the terms of a settlement agreement with the Department of Justice
  • Having requested or have a pending collection due process appeal with a levy
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief

According to the IRS press release on the matter, the following taxpayers won’t be at risk of this new enforcement program:

  • Any taxpayer who is in bankruptcy
  • Any taxpayer identified by the IRS as a victim of tax-related identity theft
  • Any taxpayer whose account the IRS has determined is currently not collectible due to hardship
  • Any taxpayer located within a federally declared disaster area
  • Any taxpayer who has a request pending with the IRS for an installment agreement
  • Any taxpayer who has a pending offer in compromise with the IRS
  • Any taxpayer who has an IRS accepted adjustment that will satisfy the debt in full

To review the full IRS press release, visit the IRS website.

The Tax Specialists at Professional Tax Resolution are available to discuss any issues you may be facing with the IRS that are impeding your freedom to travel. Give us a call at 949-596-4143 or email info@protaxres.com to schedule a free consultation today.

How & When to Use Home Tax Deductions

Tax deductions are hidden all over the place, and the keen-eyed citizen can take advantage of them with ease. When selling a home (or any other investment) you should find out when is the right time to sell, to make the maximum profit. But no matter when you sell, there may be deductions available to you, even if you made a profit on your home. Following are a few tips and points of attention to maximize the value of your potential deduction.

Period of Residence
If you have been residing in the house for at least two of the five years before the sale date, you can exclude part of, or all the gains that you made from the sale, if you made a gain when selling your home.

Gain Exclusion
You can normally exclude up to $250,000 of the profit that you made from the sale of your home from your declared income ($500,000 on a joint tax filing). Do not be deterred by the new “Net Investment Income Tax” that came into effect in 2013. The excluded profit does not come under this new tax, and you can still receive a deduction.

Non Declaration
If you are eligible for exclusion of the profit from the sale of the house, you may not have to report the sale when filing your return. Make sure to take the advice of an expert to make sure that you are eligible. (That’s what we’re here for!)

Form 1099-S
If you are not eligible for the exclusion, you will have to report the sale of the home when filing. If you have received a Form 1099-S, Proceeds from Real Estate Transactions, then too, you will need to report the sale of the house when filing your returns.

*Deduction Will be Restricted to One Home
Even if you split time between residences, the exclusion can only be claimed once in a two-year period. This exclusion extends solely to your “Main Home,” the home in which you have spent most of the year.

First Time Homebuyer Credit
This one is pretty straightforward. However, if you used this credit to purchase the home you’re now selling, special rules apply for the sale of the home.

 

It’s always good idea to consult an expert when selling your home to make sure that you are eligible for any tax deductions. And don’t forget, when you sell your home and move to a new home it is important to make sure that you update your address with the IRS and the U.S. Postal Service. The form to be filled is called the File Form 8822, Change of Address, and this should be sent to the IRS.

Professional Tax Resolution is dedicated to finding the individual approach to tax planning that is best for you, if you have tax question or a tax debt you are unable to pay, our experienced 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. Our CPAs, Enrolled Agents and other skilled accountants have a thorough understanding of tax law together with the experience necessary to know which tax settlement optionwill be the best fit for your specific set of circumstances.

Avoid IRS Collection Scammers and Cons

The Internal Revenue Service recently delivered an Information Release on their website  (irs.gov) to help guide taxpayers in determining whether someone claiming to an Agent or Collector is truly that or is an impostor. At their website, they have a handy printable infographic to help.

There has been a rash of impostors attempting to take advantage of unwitting taxpayers and the IRS wants taxpayers to understand the methods in which IRS gets ahold of those owing back taxes or requiring amendments in an effort to help them breathe easy when confronted with many of these conmen. THe IRS will typically make first contact with taxpayers through the US Postal Service and an appearance by a casework at your home will never be without an attempt being made by mail. In-person calls to the taxpayer will generally fall into these categories:

  • Delinquent Returns / Back Taxes: An IRS Agent, may in certain instances visit those owing back taxes or those with delinquent tax returns at their home or office simply to talk about what’s owed to or needed by the IRS. They will never demand payment in the moment to anywhere other that the United States Treasury.
  • Audits: IRS revenue agents may visit those taxpayers who are under audit. It’s likely that an IRS Agent will call to set up an appointment to discuss the matters surrounding an audit, but never before contact is made or attempted by mail.
  • Criminal Investigation: Federal investigators from the IRS may visit unannounced through the course of the investigation. These investigators will never ask for payment and will carry the credentials (like a badge) of a law enforcement agent.
  • Official IRS Docs: If you’re visited by a representative of the IRS, you will be provided with two forms of official credentials. These are called a “pocket commission” and an HSPD-12 card. The latter is a governmental standard of secure and safe ID for employees and contractors of the federal government.

IRS Agents Will Never do the Following:

  • Demand a specific type of payment.
  • Ask for debit or gift cards numbers by phone.
  • Demand payment without allowing the opportunity to argue the true price owed to the IRS.
  • Threaten arrest or calling other law enforcement.
  • Revoke a taxpayer’s driver’s license, business license, or immigration status.

Private Debt Collectors:

The IRS is beginning to use more private debt collection agencies. However, the IRS will provide written notice of transference of debt to a private collection agency. Like the IRS, private collection agencies will never require payment via debit of gift card. You can learn about accepted methods of payments by visiting irs.gov/payments. Check payment must be made out to the United States Treasury and never in the name of the agency or any other organization.
irs.gov/businesses/small-businesses-self-employed/private-debt-collection

AI and the Future of Professional Tax Preparers

In the past week, we’ve seen two titans of tech, Elon Musk and Mark Zuckerberg spar on Twitter over the continued emergence of Artificial Intelligence (AI) and its eventual impact on our lives. From watering one’s garden to automated trading, AI has become a buzz-term and holds importance in understanding our future. Without having visited the future, not even the masters of the futures two giant companies can be sure of what’s to come as we choose to rely more and more heavily on computer-powered systems.

H&R Block partnered with IBM Watson (the bodiless AI program of Jeopardy fame) last year to spread its computational capabilities and powerful algorithms in 10,000 of its U.S. locations. The system, of course, is not the full-fledged Watson system and was simply utilized to help H&R Block employees to find and recommend tax credits and deductions, so there is little fear of a full world takeover by these tax robots. But we still ask, how far will AI go? Who’s to say companies like H&R Block or Turbo Tax won’t build the technology to completely replace the need for your local tax preparer? A recent Price Waterhouse Cooper report suggests AI tools could potentially replace basic capabilities performed by new or semi-new tax associates.

The report suggests AI will be able to discover the best tax outcome and method of tax preparation for large company taxes, individual tax returns, or even partnership tax prep. These systems can take advantage of any available data and use it to optimize effective tax rates (ETR) and tax efficient preparations.

Will tax preparers be a thing of the past? Will your tax resolution issues be resolved in near identical ways to the building of your car? We don’t think so. AI can do a lot but here are some things it can’t do:

  • Provide taxpayer representation to the Internal Revenue Service
  • Provide the personal and emotional answers that tax payers have
  • Provide the human, simple english description
  • Provide personalized customer service

What are the benefits of adding AI to a Tax Preparer’s arsenal?

H&R Block may have a small advantage in being first to market, but dozens of companies, extant and upstart alike, are learning from IBM and H&R Block and building strong tax preparation and resolution tools that can be utilized by tax professionals. And it doesn’t mean all hope is lost for smaller tax preparation firms.

Simply from data made available to the IRS through these systems, tax codes and tax reform could become an easier and more manageable topic of discussion. From personal, historical data from individual tax returns, IRS Customer Service stands to increase, as well as the department’s ability to efficiently and accurately provide tax advice.

Price Waterhouse Cooper’s tech lead Michael Shehab states, “What has been missing in this industry for a long time, and what we’re really focused on, is not just delivering a tax return but delivering the analytics associated with the tax return. We’re trying to make the tax return preparation process more efficient, but we’re also trying to make it higher value added rather than simply delivering a tax return.”

Second, there’s a lot of time that could be saved with AI as your tax assistant. Categorizing and processing information that has different formats, statistical modeling, tax research, generating K-1 schedules, etc. Using AI to automate repetitive tasks could help tax preparers elevate themselves to do more reviewing rather than being bogged down with data and paperwork each season. This could have huge impacts at the corporate level when there’s a lot more data to deal with.

 

While we wait to see what the future of Tax Technologies can create, and how our tax firm can help you to benefit them, Professional Tax Resolution is dedicated to finding the individual approach to tax planning that is best for you, if you have tax question or a tax debt you are unable to pay, our experienced 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. Our CPAs, Enrolled Agents and other skilled accountants have a thorough understanding of tax law together with the experience necessary to know which tax settlement optionwill be the best fit for your specific set of circumstances.

Quarterly Estimated Taxes & The Self-Employed

Everyone’s talking about entrepreneurship or starting a side-hustle or new business these days. With the potential for believed freedom, flexible hours, personal goal achievement, and no more bosses, who can blame them? Having done diligent research would direct future small-business creators to see the needs placed on them through the IRS.

 

However, for as popular as self-employment is the ideas behind quarterly estimated taxes aren’t as understood as they ought to be. After all, if you’re supposed to be paying these taxes, there are gonna be penalties if you don’t comply. Follow our bullet points below to learn more about these important taxes for small business owners.

What are quarterly estimated taxes?

As most people are employees of someone other than her or himself, they have not been made aware that their taxes are paid every three months by their employer. Taxes withheld from paychecks are typically withheld per each paycheck and then submitted through their company’s Tax ID. The only person responsible for paying the taxes of the self-employed individual is that entrepreneur herself.

Over- or under-paying will generate an IRS refund or more taxes to be owed. This is all reported and compiled in your yearly tax return.

What Should You Pay?

Find out how much to pay by looking at the 2017 Tax Rate Schedules to calculate what you owe using the Estimated Tax Worksheet. These are all available in the IRS.gov PDF for Form 1040-ES.

If you’re expecting to owe more than $1000 in taxes from your business for the year, you should pay every quarter. For the minimum example above, you should pay $250 each quarter. If you’re expecting to ow $4000 for the year, you’ll pay $1000 every three months.

When Should You Pay?

Quarterly estimated taxes are in April, June, September, and January, and falls on the fifteenth of the particular month unless the fifteenth is a weekend or Holiday, in which case taxes are owed on the next business day.

Due Dates for 2017 Quarterly Estimated Taxes:

  • April 18
  • June 15
  • September 15
  • January 16, 2018

Now let’s say January 18 comes around, and you’ve got everything you need to file your 2017 return and pay whatever’s left in taxes for the year. If that’s the case and you can file and pay by January 31, don’t worry about the estimated tax deadline in January for that final quarter. Your estimated taxes can be included in what you pay for the entire year when you file your 2017 return.

How to pay

Paying online is the simplest and most effective way to pay your Estimated Quarterly Taxes. You can use IRS Direct Pay to send the money directly from your bank account, or you could choose to pay with a card. Other options include same-day wires and check or money orders. Check out all your tax payment options on IRS.gov.

Keep Records (Always)

While you’ve kept up-to-date quartlery, you need to record your payments on your tax return when you file it for the year, so be sure to keep copies of all your Forms 1040-ES. Working with a professional firm like Professional Tax Resolution will ensure your records are kept safe and secure.

Professional Tax Resolution is dedicated to finding the individual approach to tax planning that is best for you, if you have tax questions or a tax debt you are unable to pay, our experienced 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. Our CPAs, Enrolled Agents and other skilled accountants have a thorough understanding of tax law together with the experience necessary to know which tax settlement option will be the best fit for your specific set of circumstances.