by Fresh Start Tax | Sep 11, 2013 | Tax Help
Unable to Pay IRS Taxes
If you are unable to pay your IRS taxes as a general rule you have three available tax options.
I know them all, I was a former IRS agent in teaching instructor.You may speak with us for a no cost consultation.
You should know that IRS will require that all your tax returns are filed and up-to-date and that you have enough withholding being taken out of your pay check so that you will not continue to incur more tax debt.
So before you do anything with the IRS, make sure you are in tax compliance with back filings and current withholding’s.
How the IRS will Deal with your Paying Back Taxes (unable to Pay IRS Taxes )
IRS deals with all tax debtors in the same way.
No matter where you live or who you are, there is one standard for every taxpayer.
IRS will require a current financial statement which will be on IRS form 433F.
That form will have to be submitted to the Internal Revenue Service with all documentation including pay stubs, bank statements, and proof of all income and expenses for the last six months.
IRS will then take that financial statement and compare that to the national and regional statistics in the area that you live for all allowable living expenses. IRS will then come to a determination based on your financial statements up against those of the national and regional standards.
After IRS carefully conducts that review you will fall in one of three categories based completely on that financial statement. Your case will either be put into;
- a non-collectible file which it will remain for anywhere from 1 to 3 years,
- IRS will insist on a monthly payment or installment plan, or
- you can be eligible for an offer in compromise or tax settlement
Question: I am unable to pay my delinquent taxes. Will the IRS accept an Offer in Compromise?
Answer:
You may qualify for an Offer in Compromise if you are unable to pay your taxes in full or if you are facing economic hardship or other special circumstances.
Note: Offer in Compromise Application Fee – Your offer must include the $150 application fee. If you are requesting a low-income exception of the fee, you must complete section 4 of the Form 656 (PDF), Offer in Compromise.
Offers received without the $150 fee or a completed section 4 of the Form 656 will not be accepted for processing. Please see Step 6 on Page 4 of the Form 656-B (PDF), Offer in Compromise Booklet, for more information on the application fee, and section 4 of the Form 656 to determine if you qualify for the low-income exception.
Please also see Steps 2 and 3 on Page 4 of the Form 656-B to determine whether your application must include either a completed Form 433-A (OIC) (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B (OIC) (PDF), Collection Information Statement for Businesses.
If you are not granted an Offer-in-Compromise and you are still unable to pay your delinquent taxes in full, you still may be eligible for an installment agreement.
File Form 433-D (PDF), Installment Agreement, and pay a $105 user fee, which we have the authority to deduct from your first payment(s) ($52 for direct debit).
If you default on your installment agreement, you must pay a $45 reinstatement fee if we reinstate the agreement.
You can call us today for more details.
We will give you a free tax assessment if you are unable to pay IRS taxes. We will review your financial statement and tell you that the exact way the Internal Revenue Service will deal with you. If you have back returns you need to file, we can prepare those before calling the Internal Revenue Service.
We are friendly, affordable and one of the most experienced tax firms in dealing with IRS resolution matters.
Unable to Pay IRS Taxes – Your Options Explained – Former IRS
by Fresh Start Tax | Sep 10, 2013 | Tax Help
It is bad enough that we have to pay the taxes that we do and what’s worse is paying the IRS penalties and interest.
You should know it’s possible to get abatement’s of IRS penalties and interest if reasonable cause exists.
To find out if you have reasonable cause you can go on our website click on abatement’s of penalties and interest and find out if you have a reason the IRS will except. If you do contact us today.
Question: What kinds of interest and penalties will I be charged for filing and paying my taxes late?
Answer: Interest is compounded daily and charged on any unpaid tax from the due date of the return (without regard to any extension of time to file) until the date of payment.
The interest rate is the federal short-term rate plus 3 percent.
That rate is determined every three months.
For current interest rates, go to News Release and Fact Sheet Archive and find the most recent Internal Revenue release entitled Quarterly Interest Rates or alternatively, search “quarterly interest rates” on our website, www.irs.gov.
Late payment penalty.
In addition, if you didn’t pay your tax on time, you’ll generally have to pay a late payment penalty.
The late payment penalty is one-half of one percent of the tax (0.5%) owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent.
You will not have to pay the penalty if you can show reasonable cause for the failure.
The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.
Currently, if you filed a timely return and are paying your tax via an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect.
If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause.
Did not file on time ??? This is a killer Penalty
The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%.
The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax payments.
After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid.
The total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed.
If your return was over 60 days late, however, the minimum failure-to-file penalty is the smaller of $135 ($100 for returns required to be filed before January 1, 2009) or 100% of the tax required to be shown on the return.
IRS Penalties and Interest – How much are IRS Penalties – Former IRS
by Fresh Start Tax | Sep 10, 2013 | Tax Help
Changing you Maiden Name – IRS, Social Security Purposes
Name Changes & Social Security Number Matching Issues
Question:
Do I need to change my maiden name to my married name on my Social Security card for us to file jointly?
Answer:
No.!!!
You can still file “Married Filing Jointly” without changing your name with the Social Security Administration.
Make sure that the name shown on your Social Security card matches the name you use on your tax return.
If you haven’t changed your name with the Social Security Administration you will need to show your maiden name on the tax return instead of your married name.
For information on changing a name on your Social Security card due to marriage, contact the Social Security Administration at 1-800-772-1213 (TTY 1-800-325-0778) or visit the Social Security Administration website.
Changing you Maiden Name – IRS, Social Security Purposes
by Fresh Start Tax | Sep 10, 2013 | Tax Help
Our firm gets calls from time to time regarding questions from spouses regarding the death of the other spouse and the signing of a tax return.
Here is your question and your answer
Signing the Return
Question:
My husband passed away last year, and I will be filing a joint return. Are there any special return notations required to indicate my husband is deceased?
Answer:
When you are a surviving spouse filing a joint return and no personal representative has been appointed, you should sign the return and write in the signature area below your signature, “filing as surviving spouse.”
The return should have the word “Deceased,” the decedent’s name, and the date of death written across the top of the return above the area where your address is entered.
Husband passed away last year, and I will be filing a joint return – Tax Answers
by Fresh Start Tax | Sep 10, 2013 | Tax Help
I know, the last thing you want to do is to notify the IRS that you moved however it is very important that you do.
Being a former IRS agent and teaching instructor it is critical you receive any documentation that the IRS is sending you.
As an example of this. I have known many taxpayers that have moved and the IRS conducted an audit investigation and made a new tax assessment against them.
Because they did not have current address after the assessments were made the IRS levied and filed tax liens them and the taxpayers had no idea this a taken place.
It is in your best interest to notify them.
Question:
Should I notify the IRS of my change of address?
Answer:
Yes, if you move, you need to notify the IRS of your new address. We need to change our records so that any tax refunds due to you or any other IRS communications will reach you in a timely manner.
If you filed a joint return, you should provide the same information and signatures for both spouses. If you filed a joint return and you and/or your spouse have since established separate residences, you both should notify the IRS of your new addresses.
There are several ways to notify the IRS of an address change:
- Tax Return: Update your address in the appropriate boxes on your tax return;
- Submit Form: Form 8822 (PDF), Change of Address, and/or Form 8822-B (PDF), Change of Address – Business;
- Written Notification: Mail a signed written statement to an appropriate Service address informing the Service that you wish that the address of record be changed to a new address. Generally, the appropriate Service address is the campus where you filed your last return. In addition to the new address, this notification must contain your full name and old address as well as your social security number, individual taxpayer identification number, or employer identification number;
- Oral Notification: Provide an oral statement in person or directly via telephone to a Service employee who has access to the Service Master File informing the Service employee of the address change. In addition to the new address, you must provide your full name and old address as well as your social security number, individual taxpayer identification number, or employee identification number;
- Electronic Notification: Submit your new address information through one of the secure applications found on the IRS website, such as Where’s My Refund?. In addition to the new address, you must also provide your social security number, individual taxpayer identification number, or employer identification number, as well as any additional information requested by the specific application. You cannot notify the IRS of an address change through other forms of electronic notification, such as electronic mail sent to an IRS email address.
Note:
The IRS may also update your address of record based on any new address you provide to the U.S. Postal Service (USPS) that the USPS retains in its National Change of Address (NCOA) database. However, even if you notify USPS of your new address, you should still notify the IRS directly.
Caution: If you are a representative signing on behalf of the taxpayer, you must attach to the written statement or to Forms 8822/8822-B a copy of your power of attorney. You can use Form 2848 (PDF), Power of Attorney and Declaration of Representative. The IRS will not complete an address change from an “unauthorized” third party.
Moving? IRS Requires You to Notify Them and For Good Reasons
by Fresh Start Tax | Sep 9, 2013 | Tax Help
Almost everybody living person has to be placed on a tax return along with their Social Security number.
A common question comes up regarding unmarried dependent students.
The question most often asked is, how much can they make before filing an income tax return?
Filing Requirements
Question:
How much does an unmarried dependent student have to make before he or she has to file an income tax return?
Answer:
If you are an unmarried dependent student, you must file a tax return if your earned and/or unearned income exceeds certain limits.
To find these limits refer to Dependents under Who Must File, in Publication 501,Exemptions, Standard Deduction and Filing Information.
Even if you do not have to file, you should file a federal income tax return if you can get money back (for example, you had income tax withheld from your pay; you qualify for the earned income credit; or you qualify for the additional child tax credit).
See Who Should File in Publication 501, Exemptions, Standard Deduction and Filing Information, for more examples.
Unmarried Dependent Student – Have to make before filing a income tax return?
