The Blog

Tax Refunds May Be Delayed This Year

The IRS website “Where’s My Refund” for checking refunds is up again after being down for the better part of a week. The website was back in action about midday last Wednesday after being out of service since Feb. 15. Taxpayers who had received IRS acknowledgment that their tax returns were being processed were startled when they visited the website during the week and got a message that the IRS had no information regarding their return. The IRS said it was an error message and that if the IRS said the filing had been received, it was being processed. With the “Where’s My Refund” site back up, you can now check the website 72 hours after your e-filed return has been accepted to see the … Continue reading

Tips on Saver’s Credit with an IRA

IRA owners have until April 17, 2012 to make a 2011 contribution to their IRA. This year, it is not too late to get a Saver’s Credit for IRA contributions. A number of IRA owners may qualify for the Saver’s Credit of up to $1,000 ($2,000 if filing jointly) on their 2011 tax return for 2011 IRA contributions. The Saver’s Credit reduces the amount of income tax that may be owed dollar-for-dollar, but not less than zero. Who is eligible for the Saver’s Credit? To qualify for the Saver’s Credit (Retirement Savings Contributions Credit) for eligible IRA contributions, the IRA owner’s 2011 adjusted gross income cannot be more than: • $56,500 when filing status is married, filing jointly • $42,375 when filing status is head … Continue reading

Mortgage Debt Forgiveness Act Set to Expire in 2012

Under ordinary United States tax law, the forgiveness of mortgage debt results in a tax liability for the taxpayer whose debt is either entirely or partially forgiven. When a lender forecloses or agrees to accept a short sale or a loan refinance agreement to a lower loan amount, the amount of mortgage debt forgiven is considered to be income for the borrower and is therefore subject to taxation by the IRS. However, since the passage of the Mortgage Forgiveness Act in 2007, homeowners have been protected from this potential burden to their tax settlement. The Mortgage Debt Forgiveness Act excludes forgiven mortgage debt from becoming a tax liability in the following specific instances: • Short Sales There is no tax on the difference between the … Continue reading

IRS Back Tax Tips – Help with Late Tax Bills – Pay Your Tax Debt

Did you receive an IRS notice that you owe back taxes? While owing money can be a big worry, ignoring the problem will only make things worse. There are options to pay your tax debt, even if you can’t do it all at once. If you need help with tax resolution because you owe back taxes, you can take advantage of different methods of payment or request that the payments be broken up into installments. Here are some tips: A late tax bill from the IRS is expected to be paid promptly, including the taxes owed, penalties, and interest. You may want to get a loan so you can pay it in full to avoid making installment payments if you do not already have the money … Continue reading

Tax Tips for 2011 – 6 Last Minute Tax Saving Tips

This time of year, clients call for last minute tax guidance that will help them maximize their returns. While we advise our clients on a year round basis – not just at tax time – here are a few last minute tips you might find helpful. Here are a few things you can do in the next couple of days that may save you some 2011 tax dollars: 1) Make a charitable contribution. If the last minute contribution is for more than $250, it must be documented by a contemporaneous acknowledgement from the donor organization. 2) Make a contribution to an IRA, 401(k) or other retirement account. Most retirement plans actually give you up until April 15, 2012 to make a contribution as long as you designate that … Continue reading

IRS Tax Code and Money Earned Abroad – Could it Change?

Money earned abroad by American corporations is free from U.S. taxes until it is returned to the United States. However, once these foreign earnings are repatriated, they are taxed at a rate of 35%. The current tax code allows multinational companies to avoid this tax, but only if they invest in certain domestic assets such as bank deposits, stocks and bonds. If the foreign earnings are reinvested into the companies themselves, they are taxed at the corporate tax rate of 35%. Currently, a group of multinational companies who have joined together to form what is called the Win America Coalition, is lobbying Congress to reduce the tax rate on earnings they bring home from overseas. This group of companies, which consists mainly of the Silicon … Continue reading

IRS Innocent Spouse Relief – A $1,200,000 Tax Settlement Success Story

Mrs. M. was referred to us by a local attorney. Her husband had recently passed away and, shortly after his death, she became aware of an outstanding IRS tax liability in the amount of an astonishing $1,200,000. Mrs. M. had had no knowledge of this tax debt before her husband’s death.  A few months later in our initial meeting with her, we learned that her personal tragedy was even worse than the death of her husband and realization of this massive IRS debt.  She informed us that she had hired a very large tax settlement firm to resolve the issue and had already paid them a whopping $25,000.  She came to us after six months, when she had no indication that the tax settlement company … Continue reading

IRS Tax Debt – Don’t Just Ignore It – Resolve Tax Debt Before the IRS Collects

Most people who have IRS debt do not find themselves in that situation due to an unwillingness to pay their fair share of taxes. It is much more common that taxpayers find themselves owing the IRS either due to a mistake on a previously filed income tax return or some unavoidable circumstance such as a lost job, a decrease in earned income or an illness. While the initial IRS debt may have been the result of an unfortunate turn of events or a simple mistake or unreported item, it has often been compounded over time by the addition further taxes, penalties and interest. It is not uncommon for penalties and interest, which are often applied retroactively when the IRS or state tax agency makes an … Continue reading

IRS Tax Tips for the Unemployed – What to Know When Money is Tight

If you are unemployed you are probably worried about many other things but there are some tax consequences and conversely some tax breaks that result from being unemployed. Here are some facts that unemployed taxpayers will need to know when filing a 2011 tax return on April 15 2012. 1. Severance packages, Accumulated sick leave, Vacation, and Holiday pay are all taxable income. It is another terrible reality of being terminated. These amounts will have taxes deducted and be declared on your W2 as income. 2. Unemployment benefits are also considered taxable income. At tax time you will have to pay taxes on this income even though it was not deducted at the time the checks were issued to you. 3. You can be proactive and ask the government to … Continue reading

If You Have Unreported Income You May Get a Letter from the IRS

Understanding The IRS “Soft Notice” Pilot Program to Encourage Income Reporting Compliance In 2007, the IRS launched a pilot program designed to decrease the tax gap by identifying unreported income. Under this pilot program, which is still in effect, IRS notices are issued to taxpayers when there is a discrepancy between the income reported on their tax returns and the income reported directly to the IRS by various financial institutions and employers. These “soft notices” do not identify specific discrepancies or calculate amounts due. They simply ask taxpayers to review their returns and to file amended returns if errors are found.  In spite of the fact that these “soft notices” do not require any specific response or action on the part of the taxpayers who receive them, … Continue reading

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