Tag Archives: tax help

Gift and Estate Tax Changes Expected to Occur at the End of 2012

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The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act which was signed into law in 2010 increased the amounts of the estate, gift and generation skipping tax exemptions and, at the same time, lowered the tax rates for each of these taxes. However, unless Congress takes some action before the end of the year, the estate tax benefit benefits provided by this law will expire on December 31, 2012. The major provisions of the 2010 Tax Relief Act are outlined below together the changes that will take place on January 1, 2013 if Congress does not take further action.

Gift Tax

  • Current

The gift tax exemption is $13,000 per year for gifts made by any one person to any number of people. There is a lifetime gift tax exemption of $5,120,000 for gifts made above the $13,000 limit.

  • January 1, 2013

The gift tax exemption will remain at $13,000 per year (with a possible increase for inflation) for gifts made by any one person to any number of people. The lifetime gift tax exemption for gifts made above the $13,000 limit is scheduled to revert to $1,000,000.

Generation Skipping Tax

  • Current

The GST exemption is $5,120,000 with a tax rate of 35% on amounts above the exemption limit.

  • January 1, 2013

The GST exemption is scheduled revert to $1,390,000 per year (with a possible increase for inflation) with a tax rate of 55% on amounts above the exemption limit.

Estate Tax

  • Current

The estate tax exemption is $5,120,000 with a tax rate of 35% on amounts above the exemption limit. Portability of unused estate tax exemptions of one spouse to the surviving spouse is allowed.

  • January 1, 2013

The estate tax exemption is scheduled revert to $1,000,000 per year with a tax rate of 55% on amounts above the exemption limit. Portability of unused estate tax exemptions of one spouse to the surviving spouse will no longer be allowed.

With January 1, 2103 fast approaching, taxpayers are anxious to see what, if any, action will be taken by Congress. If Congress does nothing, the exemptions for gift, generation skipping and estate taxes will revert to their 2009 levels and the tax rates for amounts above the designated exemption levels will increase to 55%. On the other hand, if Congress votes to extend the Tax Relief Act, the exemption limit for these taxes will remain at $5,120,00 with a possible inflation adjustment and the tax rate for amounts above the exemption limits will be held at the current 35%. Barring a full repeal of the estate tax, the third alternative would be the passage of some sort of compromise law that would place exemption limits and tax rates somewhere in the middle of the 2009 levels and those set by the Tax Relief Act of 2010.

If you owe back taxes due to a gift or inheritance, we can help you determine whether the assessed amounts are accurate based on past and current estate tax laws. Very often, the process of accurately interpreting the law and making use of tax benefits the law provides can result in a significant reduction in the tax amount owed. Following this analysis, our experienced tax settlement professionals will resolve any existing tax debt in the most effective way available. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

3 Ways to Start Eliminating Your Tax Debt

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If you have a large IRS tax debt, the amount you owe can be daunting. To avoid being charged additional fees and making the debt larger, it is important to act and begin the tax settlement process quickly. Even if you cannot pay it off all at once, there are options you can pursue to eliminate your tax debt. Here are three methods that can help you to settle or eliminate your tax debts.

Offer in Compromise It is possible to reach a tax settlement with the IRS that is less than the full amount you owe. This plan is called an Offer in Compromise. Although filing an Offer in Compromise can be time consuming and complicated because the qualifications are very specific, this is a powerful option because it allows for the resolution of all your outstanding tax balances at the same time, plus the suspension of collection activities while your offer is being considered.

Installment Agreements An Installment Agreement is a payment plan that is negotiated with the IRS or a State Tax Agency. Instead of paying one lump sum, the taxpayer agrees to pay a tax debt over a specified period of time. The terms of an agreement will be contingent on the tax liability amount and the taxpayer’s current and projected financial status (income and assets).

Uncollectible Status If you do not have sufficient income or assets to pay your tax debt, you may be eligible for the temporary designation of Uncollectible. If you have been granted this status, all collection activity stops until your situation is reevaluated, and the IRS determines that you have the ability to pay your debt. This can give you more time to work on paying off your debt without accruing additional fees and penalties.

Since the IRS prefers to receive the full amount of tax debt that you owe, they may not give you the best advice when you are seeking to use one of the tax debt elimination options above. A licensed tax professional can negotiate with the IRS on your behalf and help you to get reach the best possible tax settlement based on your situation.

If you need help with an outstanding tax debt, our experienced tax settlement professionals can help. We can also work with you if you need help filing your taxes. Please visit professionaltaxresolution.com for more information on our tax resolution services. You may also call us at (877) 889-6527 or email info@protaxres.com to receive a free, no obligation consultation.

Amending Prior Returns Can Lower Your Taxes

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The first step in resolving an outstanding tax liability should be to verify that the amount of the tax debt being reported by the IRS or State Tax Agency is correct. Because tax law is so complex, important tax deductions or tax credits are often missed when returns are completed by individuals who lack the professional knowledge and experience to determine which ones apply. Often a missed deduction, a missed tax credit, a change in filing status or an overlooked income adjustment will result in a tax amount owed that is greater than it would have been if the item had been claimed on the return. That being the case, the filing of an amended return is sometimes the simplest and most cost effective way to substantially reduce an outstanding tax liability. By law, a return can be amended within three years from the date of the original return or within two years from the date a tax was paid, whichever is later.

Some of the more common reasons for filing an amended return are outlined below:

  • Errors and omissions It is not uncommon for a tax return to be filed with calculation errors or omissions of data and/or required documentation. Although the IRS will normally correct simple math errors and will often request a missing form or schedule, this type of mistake can also be corrected by taxpayer through the use of an amended return.
  • Introduction of new information A return that is submitted to meet a filing deadline can be amended later if further examination of events and records of the previous year indicate that there would be a tax advantage to claiming different deductions or additional deductions.
  • Change in filing status If a return has been submitted but the filing deadline for the return has not passed, it is possible to use an amended return to switch the filing status from married filing jointly to married filing separately or vice versa. Amended returns are also used to undo joint filing status when there has been the annulment of a marriage.
  • Change in tax elections Tax returns allow for many elections whereby the taxpayer chooses how he or she wishes to be treated by the Internal Revenue Service for tax purposes. These elections include such things as treatment of foreign income, residency status, and income tax withholding, just to name a few of the many elections available. In certain instances, these elections can be changed through the use of an amended return when the introduction of new information indicates that there would be a tax advantage in doing so.
  • Carry back of losses Amended returns can be used to apply property losses from the current tax year to the previous year’s tax return. They are also commonly used by businesses to carry net operating losses back to the previous two tax years.

If you have an outstanding tax liability, our experienced tax resolution specialists can help you resolve it. The first step in this process will be to carefully examine previously filed returns and to file amended returns when necessary. This process can often result in a significant reduction in the tax amount owed by identifying available tax benefits that have not been utilized. For more information about our tax debt resolution and tax settlement services, visit us today at professionaltaxresolution.com. Contact us by email at info@protaxres.com or by phone at (877)-889-6527 to receive a free, no obligation consultation. 

Late Tax Return? What Happens Next

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It’s the day after taxes were due, April 18th, 2012. What do you do if you still haven’t filed your tax return?

The IRS has some guidelines for what happens with returns that are past due. If the IRS doesn’t hear from you and you don’t file a return:

  • The IRS will increase your taxes as they assess penalties and interest.
  • A substitute return will be filed for you from the IRS, based only on information they have from sources other than you. Therefore, you would not get any additional exemptions or deductions you could be entitled to and your tax liability could be overstated.
  • After the IRS assesses your taxes, the IRS will begin the collection process. They could place a levy, which is legal seizure of property to pay tax debt, on your wages or bank accounts. They could also file a federal tax lien, which is a claim used as security for a tax debt, against property you own.

While the IRS may have already filed a substitute return, you should still prepare and file your own return because the IRS can adjust your account for correctness. You can then take advantage of the allowed exemptions, credits, and deductions. To make sure your tax settlement makes the most of your deductions, it can be smart to consult a professional tax resolution specialist.

If you need help because you didn’t make the tax filing deadline or have an unresolved tax liability, our experienced tax resolution professionals can provide the tax settlement and tax preparation help you need. For more information about our tax preparation and tax settlement services, visit us today at professionaltaxresolution.com. Our staff has the knowledge and experience to help you file your late taxes in a timely manner.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

Refunds Down, Direct Deposit Up

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The IRS recently released statistics showing that while more taxpayers have filed earlier this year, the tax return refund amount they are getting back will be less on average and most likely received through direct deposit.

According to the IRS, 75.3 million Americans have already been sent their refunds as of March 30, 2012, compared to 75.2 million last year at the same date. While more taxpayers have filed early this year, the average refund has dropped from $2,922 in 2011 to $2,826 in 2012.

Last year, a payroll tax cut allowed workers to pay 2% less into Social Security and Medicare, which could partly explain the change. However, the total taxable income for these workers also increased.

More taxpayers are requesting direct deposit this year, 62.5 million versus 60.7 million. This means 88% of 2012 tax refunds have been deposited into taxpayers’ bank accounts compared to 86% last year. The average amount deposited also shows a drop, as the average refund was $3,120 in 2011 and is $3,006 in 2012.

If you still haven’t filed your taxes, the deadline is fast approaching. Because of a federal holiday and April 15th falling on a weekend, the due date for filing taxes this year is Tuesday, April 17th. If your procrastination is due to some confusion with the tax forms or because of a change in circumstances that makes your taxes different this year from last year, professional tax resolution may be the best option to ensure that you don’t make mistakes that could lead to an audit. (Klonopin)

If you need help meeting the tax filing deadline or have an unresolved tax liability, our experienced tax resolution professionals can provide the tax settlement and tax preparation help you need. For more information about our tax preparation and tax settlement services, visit us today at professionaltaxresolution.com. Our staff has the knowledge and experience necessary to help you file your taxes accurately and on time.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation.