by Fresh Start Tax | Apr 2, 2014 | Tax Help
The Internal Revenue Service today reminded taxpayers who turned 70½ during 2013 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Tuesday, April 1, 2014.
The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs.
Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans.
The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31.
So, for example, a taxpayer who turned 70½ in 2013 and receives the first required payment on April 1, 2014 must still receive the second RMD by Dec. 31, 2014.
Affected taxpayers who turned 70½ during 2013 must figure the RMD for the first year using their life expectancy on Dec. 31, 2013 and their account balance on Dec. 31, 2012. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the Appendices to Publication 590.
Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who turned 71 in 2013, for example, the first required distribution would be based on a life expectancy of 26.5 years.
A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary.
Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulations in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.
The IRS encourages taxpayers to begin planning now for any distributions required during 2014. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner.
Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2014 RMD, this amount would be on the 2013 Form 5498 that is normally issued in January 2014.
by Fresh Start Tax | Apr 2, 2014 | Tax Help
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by Fresh Start Tax | Apr 2, 2014 | Tax Help
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Do you need a immediate Release of a Tax Levy
If you need an immediate release of an IRS tax Levy you will need to fill out a 433-F and you can find that IRS financial statement directly on our website.
You will need to completely document the financial statement.
IRS will want the last six months worth the bank statements, and a copy of your last pay stub. You’ll need to make sure all your tax returns are filed, current, and up-to-date.
As a general rule, we can get levies released within 24 hours once we have our clients fully documented financial statement. We can also work out a tax settlement at the same time.
Tax settlements usually come in three forms.
IRS will generally after reviewing the current financial statement will place you into an economic tax hardship, enter into a monthly installment agreement, or recommend a tax settlement called an offer in compromise.
To learn more about the offer in compromise simply review that section of our website.
Do you need IRS audit representation
The Internal Revenue Service audits less than 1% of all taxpayers.
However if you have won the audit lottery contact us today and speak directly to a former IRS agent who can review the request made by IRS and set up your best possible tax defense to minimize any damage in IRS tax audit could possibly do.
Offer in Compromise/Tax Settlements
An offer in compromise allows you to settle your tax debt for less than the full amount you owe.
It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:
1. Ability to pay;
2. Income;
3. Expenses; and
4. Asset equity.
IRS generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
Make sure you are eligible for a tax settlements
Before we can consider your offer, you must be current with all filing and payment requirements.
You are not eligible if you are in an open bankruptcy proceeding.
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by Fresh Start Tax | Apr 2, 2014 | Tax Help
Tax Mistakes to Avoid
CHECK THESE OUT TO HELP STOP COMMON MISTAKES.
You can avoid most tax return errors by using IRS e-file.
People who do their taxes on paper are about 20 times more likely to make an error than e-filers. IRS e-file is the most accurate way to file your tax return.
Common tax-filing errors to avoid:
1. Wrong or missing Social Security numbers.
Be sure you enter all SSNs on your tax return exactly as they are on the Social Security cards.
2. Wrong names.
Be sure you spell the names of everyone on your tax return exactly as they are on their Social Security cards.
3. Filing status errors. HEAD OF HOUSEHOLD, MOST COMMON.
Some people use the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help you choose the right one. Tax software helps e-filers choose.
4. Math mistakes.
Double-check your math. For example, be careful when you add or subtract or figure items on a form or worksheet. Tax preparation software does all the math for e-filers.
5. Errors in figuring credits or deductions.
Many filers make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, and the standard deduction.
If you’re not e-filing, follow the instructions carefully when figuring credits and deductions.
6. Wrong bank account numbers.
You should choose to get your refund by direct deposit. But it’s important that you use the right bank and account numbers on your return.
The fastest and safest way to get a tax refund is to combine e-file with direct deposit.
7. Forms not signed or dated.
An unsigned tax return is like an unsigned check – it’s not valid.
Remember that both spouses must sign a joint return.
8. Electronic filing PIN errors.
When you e-file, you sign your return electronically with a Personal Identification Number. If you know last year’s e-file PIN, you can use that.
If not, you’ll need to enter the Adjusted Gross Income from your originally-filed 2012 federal tax return.
DO NOT use the AGI amount from an amended 2012 return or a 2012 return that the IRS corrected.
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by Fresh Start Tax | Apr 2, 2014 | Tax Help
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Dealing with the IRS
If you need any type of IRS help contact us today for free initial tax consultation.
If the IRS is sent to your bank a notice of levy to your employer or a wage garnishment notice, you will need to fill out an IRS financial statement, a 433-F that you can find directly on our website. IRS will not release any levy until they have reviewed your current financial statement and make a determination on how they wish to take case off the collection computer.
Once we are received or documented financial statement as a general rule we can get your levy release within 24 hours.
IRS tax audits.
If the Internal Revenue Service sent you a notice of tax audit or you are going through an audit and need a second opinion contact us today and speak directly to a former IRS agent who was a tax audit manager.
You have the option also speaking to a former IRS appeals officer on more complicated cases.
IRS tax settlements are called offers in compromise.
You can go to our site, click on the offer in compromise, and learn everything you need to know about the current offer in compromise program.
Right now the Internal Revenue Service accepts 38% of all offers in compromise filed.
If you will back taxes to the Internal Revenue Service, you will need a current financial statement as well. As a general rule after IRS review your financial statement they will place you in one of three categories. Either your case will be put into an economic tax hardship, you will be asked to make monthly installment payments, or the IRS may recommend you file for offer in compromise to settle your back tax debt.
It is important for everyone to understand that IRS will require all your tax returns be filed, current and up-to-date.
We are IRS tax experts and can help you in anything from a simple IRS notice/ letter to going to Tax Court.
We are comprised of tax attorneys, tax lawyers, certified public accountants, and former IRS agents, managers. and tax instructors.
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