by Fresh Start Tax | Feb 2, 2017 | Tax Help
Original Review:
My initial problem lies in a potential IRS tax lien in the total amount of $33,000. I had no idea that I would ever have this kind of problem and after some thought decided that I was going to need professional help.
I tend to be procrastinator and had put this off for some time so that when I finally emailed Fresh Start Tax I had put it off until it was almost too late. I was contacted by at the beginning of October of 2016 by Fresh Start Tax and at that time the IRS was leaving me with little time to get things fixed.
The people at Fresh Start Tax were positive that they could help me get things straightened out.
Although I was really short on funds they were great about working with me to get things done without costing more than I could afford.
They even offered me payment options that I never would have thought this kind of a company would have offered.
Within one months time they were able to provide me with an amended return sent to the IRS and just today I received the wonderful news that I owe the IRS nothing (0) and will be getting a refund in a couple of weeks.
How awesome is that! I would recommend Fresh Start Tax LLC to anyone who needs help with any kind of tax problem.
by Fresh Start Tax | Feb 1, 2017 | Tax Help
Choosing the Correct IRS Filing Status
When taxpayers file their tax return, it’s important they use the right filing status because it can affect the amount of tax they owe for the year.
It may even determine if they must file a tax return at all.
Taxpayers should keep in mind that their marital status on Dec. 31 is their status for the whole year.
Sometimes more than one filing status may apply to taxpayers. When that happens, taxpayers should choose the one that allows them to pay the least amount of tax.
When filing their tax return, taxpayers have IRS e-file as the easiest and most accurate way to file. Its tax software helps them choose the right filing status.
Most people can use tax software and e-file for free with IRS Free File. This is a free service only available on the IRS website. Visit IRS.gov and click “Free File” on the home page.
Here’s a list of the five filing statuses:
1. Single.
Normally this status is for taxpayers who aren’t married, or who are divorced or legally separated under state law.
2. Married Filing Jointly.
If taxpayers are married, they can file a joint tax return. If a spouse died in 2016, the widowed spouse can often file a joint return for that year.
3. Married Filing Separately.
A married couple can choose to file two separate tax returns. This may benefit them if it results in less tax owed than if they file a joint tax return. Taxpayers may want to prepare their taxes both ways before they choose. They can also use this status if each wants to be responsible only for their own tax.
4. Head of Household.
In most cases, this status applies to a taxpayer who is not married, but there are some special rules. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person.
Don’t choose this status by mistake. Be sure to check all the rules.
5. Qualifying Widow(er) with Dependent Child.
This status may apply to a taxpayer if their spouse died during 2014 or 2015 and they have a dependent child. Other conditions also apply.
The “Filing” tab on IRS.gov can help with many taxpayers’ federal income tax filing needs. The Interactive Tax Assistant tool can help taxpayers choose the right filing status.
More on this topic is in Publication 501, Exemptions, Standard Deduction and Filing Information. On IRS.gov/forms, people can view, download or print the tax products they need.
All taxpayers should keep a copy of their tax return.
Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Jan 31, 2017 | Tax Help
Exemptions and Dependents Can Reduce Taxable Income
Most taxpayers can claim an exemption for themselves and reduce their taxable income on their tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2016 tax return.
Here are key points to keep in mind on dependents and exemptions:
1. Personal Exemptions.
Taxpayers can usually claim exemptions for themselves and their spouses on a jointly filed tax return.
For married taxpayers filing separate returns, an exemption can only be claimed for a spouse if that spouse:
• Had no gross income,
• Is not filing a tax return, and
• Was not the dependent of another taxpayer.
2. Exemptions for Dependents.
A dependent is either a child or a relative who meets a set of tests. Taxpayers can normally claim dependents as exemptions.
List a Social Security number for each dependent. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction and Filing Information.
3. No Exemption on Dependent’s Return.
If a taxpayer can claim a person as a dependent, then that dependent cannot claim a personal exemption on his or her own tax return. This is true even if no one claims that person on a tax return.
4. Dependents May Have to File.
A dependent may have to file a tax return. This depends on certain factors like total income, whether they are married and if they owe certain taxes.
5. Exemption Phase-Out.
Taxpayers earning above a certain amount will lose part or all the $4,050 exemption. See Publication 501 for details.
6. E-file Your Tax Return.
The IRS urges taxpayers to kick the paper habit. IRS E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.
7. Try the IRS Online Tool.
Get questions answered by using the Interactive Tax Assistant tool on IRS.gov.
Taxpayers should keep a copy of their tax return.
Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Jan 25, 2017 | Tax Help
Five Tips on Whether to File a 2016 Tax Return
Most people file a tax return because they have to. Even if a taxpayer doesn’t have to file, there are times they should. They may be eligible for a tax refund and not know it.
Here are five tips on whether to file a tax return:
1. General Filing Rules.
In most cases, income, filing status and age determine if a taxpayer must file a tax return.
Other rules may apply if the taxpayer is self-employed or a dependent of another person. For example, if a taxpayer is single and under age 65, they must file if their income was at least $10,350.
There are other instances when a taxpayer must file. Go to IRS.gov/filing for more information.
2. Tax Withheld or Paid.
Did the taxpayer’s employer withhold federal income tax from their pay? Did the taxpayer make estimated tax payments?
Did they overpay last year and have it applied to this year’s tax? If the answer is “yes” to any of these questions, they could be due a refund.
They have to file a tax return to get it.
3. Earned Income Tax Credit.
A taxpayer who worked and earned less than $53,505 last year could receive the EITC as a tax refund.
They must qualify and may do so with or without a qualifying child. They may be eligible for up to $6,269. Use the 2016 EITC Assistant tool on IRS.gov to find out.
Taxpayers need to file a tax return to claim the EITC.
4. Additional Child Tax Credit.
Did the taxpayer have at least one child that qualifies for the Child Tax Credit? If they do not qualify for the full credit amount, they may be eligible for the Additional Child Tax Credit.
Beginning in January 2017, by law, the IRS must hold refunds for any tax return claiming either the EITC or the Additional Child Tax Credit until Feb. 15. This means the entire refund, not just the part related to either credit.
5. American Opportunity Tax Credit. To claim the AOTC, the taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify.
The credit is available for four years of post-secondary education. It can be worth up to $2,500 per eligible student. Even if the taxpayer doesn’t owe any taxes, they may still qualify. Complete Form 8863, Education Credits, and file it with the tax return.
Instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov.
They should look for “Do I need to file a return?” under general topics. The tool is available 24/7 to answer many tax questions.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Jan 11, 2017 | Tax Help
What is Form 1099-K?
Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions.
You should get a 1099-K by the end of January if, in the prior calendar year, you received payments:
• from payment card transactions (e.g., debit, credit or stored-value cards)
• in settlement of third-party payment network transactions above the minimum reporting thresholds of
◦ gross payments that exceed $20,000, AND
◦ more than 200 such transactions
Collectively, all payment card transactions and all third-party payment network transactions (once the threshold amounts have been met) are referred to as reportable payments or transactions.
NOTE: The thresholds of greater than $20,000 and more than 200 transactions apply only to payments settled through a third-party network; there is no threshold for payment card transactions.
Did you receive a 1099-K?
If you received a 1099-K, use it to assist you to correctly file your income tax return. Also be sure to retain it for your records.
Remember, you must report all income you receive from your business on your tax return. In most cases, your business income will be in the form of cash, checks, and debit and credit card payments.
Therefore, you should consider the amounts shown on Form 1099-K along with all other amounts received when calculating gross receipts for your income tax return.
Refer to Publication 583, Starting a Business and Keeping Records, for more detailed information and assistance regarding proper record keeping.
Did you receive a letter related to 1099-K from the IRS?
You received one or more of these letters because you may have underreported your gross receipts. This is based on a comparison of your tax return and the Form(s) 1099-K furnished to you that shows an unusually high portion of receipts from 1099-K reportable transactions. It is very important that you respond to the IRS.
The current versions of the letters are reflected on the left side of this page and contain active links to each document. These are periodically updated.
Following are some tips to help you with the inquiry.
• Read the letter thoroughly and complete any worksheets.
• Gather your tax records, including the Forms 1099-K that you received, and determine if you agree with the letter about underreporting your gross receipts.
• Respond to the letter in a timely manner.
• If you have questions or need more time to respond, contact the person listed in the letter.
• If appropriate, consult your tax professional for assistance.
How is the IRS going to use this information?
The IRS uses the information reported from third parties to ensure individuals and businesses meet their tax obligations.
The IRS is integrating the new information supplied on the Form 1099-K into a variety of areas, including its compliance efforts, to ensure fairness and address non-compliance.
All 1099-K activities respect taxpayer rights and provide opportunities for taxpayers and tax practitioners to offer explanations or corrections if they receive a letter, a notice or audit.
