Tax Debt of 100k Settled for $13,150

Posted on January 13, 2015 by Kursti Nakagawa

Ms. H, a single mother, had suffered extreme misfortune in several areas. As a real estate agent, her income flat lined when the housing market crashed, making it difficult for her to meet her monthly financial obligations. To make matters worse, her son was involved in a car accident in which he suffered major head injuries. Then, while she was juggling medical bills as well as managing the care of her injured son, Ms. H received an official IRS Notice informing her of an outstanding tax liability. She had not filed tax returns for ten years and, according to IRS calculations, owed over $100,000 in back taxes. As would be expected, she was panic stricken about her dire financial situation.

When Ms. H contacted Professional Tax Resolution for help with back taxes, she was immediately placed in contact with a tax expert who set up a face to face meeting in order to determine the best solution for her specific situation. Following this meeting, our tax professionals got to work preparing and submitting the ten years of back tax returns. Although the returns showed that Ms. H owed a back tax balance in excess of $40,000, our tax team was not deterred. They promptly launched into the next phase of the tax resolution process which was to do a financial and demographical analysis of Ms. H’s situation. The analysis documented her financial hardship, making her an ideal candidate for an Offer in Compromise.

Once it was determined that Ms. H met the eligibility criteria for an IRS Offer in Compromise, our professionals promptly prepared and submitted the application. Within a short time, the IRS accepted the offer, successfully settling her federal tax debt of almost 100k for $6,150. In addition, the tax experts at Professional Tax Resolution negotiated an Installment Agreement with the California Tax Franchise Board whereby Ms. H was able to pay off the $7000 back tax balance owed to them in monthly installments of $110. Overall, her tax debt, which was originally recorded as over $100,000, was settled for $13,150!

The members of the Professional Tax Resolution team are devoted to their clientele and are always focused on negotiating the most beneficial tax settlement agreement possible. We sympathize with our clients and understand that each situation is unique. Please contact our office to see how our professionals can assist you. Our tax experts are experienced at communicating with the IRS and guarantee to follow your particular tax settlement process though to a final resolution. 

Tax Liability of 49k Reduced to Settlement Amount of 1K Using IRS Offer in Compromise

Posted on January 12, 2015 by Kursti Nakagawa

Tax Liability of 49k Reduced to Settlement Amount of 1K Using IRS Offer in Compromise

Ms. Y, a single woman who works as a medical assistant, was already having trouble meeting her monthly expenses when unforeseen circumstances increased her financial burden. She was unexpectedly given temporary custody of her granddaughter when her daughter was unable to care for the child herself. This placed Ms. Y in the position of being a low income middle aged woman with the added financial responsibility of caring for someone else. In order to make ends meet, she reduced her tax withholdings. Although this decision helped in the short run, her underpayment of withholding taxes resulted in in the accumulation of a $49,000 tax debt.

When Ms. Y contacted Professional Tax Resolution she had not she had not filed tax returns for five years because she feared the consequences of not being able to pay the tax amounts owed. Prior to calling our firm, she had shopped around for a tax resolution company but always felt pressured by the sales people who took her calls. She was asked to pay thousands of dollars up front like and was treated like she was closing a business deal. When Ms. Y called us, she was promptly placed in contact with a certified tax professional. This staff member, who comforted her and assessed her situation, was the same professional who assisted her through the entire tax resolution process.

As usual, the Professional Tax Resolution team went to work immediately. Our first step was to file the past five years of back of tax returns which showed that Ms. Y owed a back balance of $49,000. We then completed a thorough analysis of her financial situation and determined that she was an ideal candidate for an Offer in Compromise. After filing the necessary paperwork requesting this tax settlement option and negotiating with the IRS on her behalf, the Offer in Compromise petition was accepted. The end result was that Ms. Y was able to settle her $49,000 tax debt by paying only $1,000 dollars!

Our team is dedicated to fighting for our clients and doing whatever it takes to get them the best tax settlement agreement possible. Although the Offer in Compromise tax settlement option discussed above has strict qualifying criteria, our staff will work to ensure that any client who qualifies is able to take advantage of the benefits it offers. Professional Tax Resolution clients have peace of mind because our staff is protecting them and working for them every step of the way. We follow each tax settlement case through from the initial consultation to the final resolution of the tax debt.

2015 Tax Filing Date Announced

Posted on December 31, 2014 by Kursti Nakagawa

2015 Tax Filing Date Announced

2015 Tax Filing Date Announced

2015 Tax Filing Date Announced – The tax filing date for the New Year has recently been announced by the IRS. Tax filing will begin on Tuesday, January 20th, 2015. In addition, as part of the tax extenders package which President Obama signed into effect on December 19, 2014, all taxpayers can file at the same time.

Although the tax extenders package was approved just weeks ago, the Internal Revenue Service has announced that the 2015 tax season will be begin in a timely fashion. The opening date is actually 10 to 11 days earlier than it was in previous tax seasons. In addition, rather that having a tiered tax season opening, the new legislation allows all taxpayers to begin filing at the same time.

In IRS Commissioner Koskinen’s remarks about the new tax extenders package, he said that, “[w]e have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems.” He went on to say that IRS employees would continue an aggressive schedule of testing over the next month in order to complete the final stages of preparation of their tax systems for the timely opening of the 2015 tax season.

Although the tax extenders legislation was passed by both houses of Congress and signed into effect by President Obama just weeks before the end of the year, it reinstates many valuable tax breaks that had expired at the end of 2013. Its tax saving provisions will allow both individual taxpayers and businesses owners to save valuable 2014 tax dollars. The bill, aptly named the Tax Increase Prevention Act of 2014, is certainly a welcome holiday treat for many!

If you have tax questions or a 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.

Happy New Year to All!

Tax Extenders Bill Passed

Posted on December 19, 2014 by Kursti Nakagawa

Tax Bill Passed By Congress

Tax Extenders Bill Passed – With time running out, Congress has passed the long awaited tax extenders bill. Although President Obama has not yet signed the legislation into effect, his signature is expected. The bill, officially identified as the Tax Increase Prevention Act of 2014 (HR 5771), extends some very significant tax breaks through the end of 2014 and makes them retroactive to January 1, 3013 when they originally expired. It important to note, however, that the new legislation only covers items that are put into effect before December 31, 2014. At his point, there are no plans to extend the bill’s tax benefits into 2015 and beyond.

Some of the tax saving provisions of HR 5771 are summarized below:

Mortgage Debt

The tax extenders bill allows homeowners to continue to take advantage of the provisions of the Mortgage Debt Relief Act of 2007 through end of the year. Prior to 2007, if a lender wrote off a mortgage debt, or any portion of it, the forgiven amount had to be reported to the IRS as income. With the passage of the Mortgage Debt Relief Act, qualifying homeowners were allowed an exclusion for forgiven mortgage debt, a tax benefit that has now been extended through the end of 2014.

Mortgage Insurance

The passage of the tax extenders bill will extend, through the end of 2014, the deduction for premiums paid for private mortgage insurance (PMI). This tax deduction, which is lumped with mortgage interest on the tax return, was established in 2007 and had been in effect though the end of 2013 when it expired. The tax extenders bill will reinstate this tax break by allowing a deduction for mortgage insurance premiums on a homeowner’s 2014 tax return.

Sales Tax

For taxpayers who itemize deductions, the ability to deduct state and local sales taxes paid in lieu of state and local income taxes has been extended through the end of 2014. This provision could potentially amount to a significant tax savings, especially for residents of certain states who have made large purchases during 2014. Like other provisions of the tax extenders bill, this tax break had expired on December 31, 2013.

Retirement Plan Distributions

The passage of the tax extender legislation will allow taxpayers who are 70 ½ and older to exclude from gross income up to $100,000 in IRA withdrawals, provided that the funds are transferred directly to an approved public charity. Without this extension, IRA withdrawals would be taxed as ordinary income even if they were contributed directly to charity. This income exclusion for IRA withdrawals is available even for those taxpayers who do not itemize their deductions.

Education

The passage of the new tax extenders legislation will reinstate the above-the-line deduction for tuition and related educational expenses that expired at the end of 2013. Any qualifying amounts that are paid before the end of the year, for an educational term that starts no later than March 31, 2015, are allowed. The maximum allowable deduction of $4000 has an income phase out, with no deduction allowed for individuals with incomes in excess of $80,000 ($160,000 for married couples).

Bonus Depreciation

The new tax extender bill allows businesses of any size to claim a 50% bonus depreciation allowance on property that is placed in service before the end of the year. In order to qualify, the newly acquired property must satisfy certain requirements and be placed in original use by the business claiming the tax deduction before December 31, 2014.

Expensing

One of the biggest benefits of the tax extenders legislation for business owners is the extension of the Section 179 expensing and investment ceiling limits that had originally expired at the end of 2103. The bill reinstates the $500,000 expensing limit and the $2.5 million investment ceiling limit that were in effect until the beginning of the year, replacing the much lower $25,000 limit and $200,000 ceiling which would otherwise have applied to 2014 purchases of qualified property.

Although it is coming in just under the wire, the tax extenders legislation recently passed by both houses of Congress reinstates many valuable tax breaks that had expired at the end of 2013. Once it is signed into law by President Obama, it will allow both individual taxpayers and businesses owners to save valuable 2014 tax dollars. (vallartainfo.com) The bill, aptly named the Tax Increase Prevention Act of 2014, is certainly a welcome holiday treat for many!

Year End Tax Considerations

Posted on December 2, 2014 by Kursti Nakagawa

Year End Tax Considerations

Important Year End Tax Considerations

Important Year End Tax Considerations – Although tax planning is important all year long, it is especially important at the end of the year. End of the year tax moves such as accelerating or postponing income, balancing capital gains and losses and placing funds in tax deferred accounts have the potential to produce significant tax savings. On the other hand, failing to consider such tax planning options could very well result in paying taxes in excess of what would otherwise be owed.

Consider deferring income into 2015. This tax planning strategy provides a tax advantage if you expect to have an equivalent or lower income in 2105 and the deferred amount will not push you into a higher tax bracket for that year. Self-employed individuals may have the option of deferring income by sending out billing statements late in 2014 so they are not paid until after the first of the year. Although employees have less flexibility, they may be able to defer the receipt of year-end bonuses.
Consider realizing capital losses. This tax planning strategy can be used to balance either capital gains or ordinary income. Capital losses can be used, dollar for dollar, to offset income up to a maximum of $3000 or to cancel capital gains that have been realized during the year, If not used, the losses can be carried forward to future tax years with no time limit.
Pay attention to the Alternative Minimum Tax. Pay attention to the income threshold for the Alternative Minimum Tax so that you do not cross it unnecessarily by accelerating deductions or deferring income. In addition, make sure that any tax planning strategies take into account the fact that certain deductions such as property taxes and local and state income taxes are not allowed under the Alternative Minimum Tax.
Consider increasing IRA and 401(k) contributions. One potentially significant year-end tax planning move is to reduce taxable income by increasing contributions to IRA and 401(k) plans. The maximum amounts allowed for 2014 are $17,500 for 401(k) plans and $5,500 for IRAs ($23,000 and $6,500 respectively for taxpayers over 60). IRA contributions for 2014 can be made through April 15, 2015.
Check the balances in flex spending accounts. Checking the balances in flex spending accounts is an important year-end tax planning task because the balances are often forfeited if not used before December 31^st. Because funds contributed to flex spending accounts are not taxed but are lost if they are not used, it is important to budget the amounts that will be placed in these accounts for 2015.
Take any required Regular Minimum Distributions. The IRS requires that taxpayers who are 70 ½ years old take required Regular Minimum Distributions from their IRAs beginning on April 1^st the year after they arrive at that age. Avoid the 50% excise tax penalty the will be imposed by taking required Regular Minimum Distributions before the December 31^st