by steve | Feb 8, 2012 | IRS Tax Advice, Tax News
This is one of the common questions we are asked at our Tax Firm. There is much misunderstanding about this issue. I hope these answers may help you.
By the way, if you are looking for former IRS Agents to prepare your tax returns call us today.
Top Tax Tips to Help You Determine if Your Social Security Benefits are Taxable
Many people may not realize the Social Security Benefits they received in 2011 may be taxable.
All Social Security recipients should receive a Form SSA-1099 from the Social Security Administration which shows the total amount of their benefits. You can use this information to help you determine if your benefits are taxable.
Top tips:
1. How much , if any , of your Social Security Benefits are taxable depends on your total income and marital status.
2. Generally, if Social Security benefits were your only income for 2011, your benefits are not taxable and you probably do not need to file a federal income tax return.
3. If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status (see below).
4. Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet. Your tax software program will also figure this for you.
5. You can do the following quick computation to determine whether some of your benefits may be taxable:
a. First, add one-half of the total Social Security benefits you received to all your other income, including any tax-exempt interest and other exclusions from income.
b. Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.
6. The 2011 base amounts are:
$32,000 for married couples filing jointly.
$25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouse at any time during the year.
$0 for married persons filing separately who lived together during the year.
Hope this helps. Call us for the finest tax prep services.
by steve | Feb 6, 2012 | Tax Help, Tax News
Are you Eligible for the Earned Income Tax Credit?
Find out right now by reading the information below or calling our firm today.
Check your Eligibility for Earned Income Tax Credit
The Earned Income Tax Credit is a financial boost for workers earning $49,078 or less in 2011.
Four of five eligible taxpayers filed for and received their EITC last year. The IRS wants you to get what you earned also, if you are eligible.
Here are the top things the IRS wants you to know about this valuable credit EITC, which has been making the lives of working people a little easier since 1975.
1. Always check the new tax law changes each year. As your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules to determine whether you qualify. Just because you did not qualify last year does not mean you won’t this year.
2. If you qualify, this credit could be worth up to $5,751.
EITC not only reduces the federal tax you owe, but could result in a large refund.
The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,240 last year.
3. If you are eligible for EITC, you must file a federal income tax return and specifically claim the credit – even if you are not otherwise required to file. Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.
4. You do not qualify for EITC if your filing status is Married Filing Separately.
5. You must have a valid Social Security number for yourself, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC.
6. You must have earned income.
You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.
7. Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements, as well as dependency rules.
8. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.
9. It’s easy to determine whether you qualify. The EITC Assistant, an interactive tool available on the IRS website, removes the guesswork from eligibility rules.
Just answer a few simple questions to find out if you qualify and estimate the amount of your EITC.
10. Free help is available at Volunteer Income Tax Assistance sites to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software will figure the credit for you. To find a VITA site near you, visit the IRS.gov website.
Contact our tax firm today for immediate tax help or tax preparation.
by steve | Jan 12, 2012 | Tax News
Stick it to us IRS.
Congress has shortcut the IRS making it harder to us normal taxpayers to fight fraud and collect monies from delinquent taxpayers.
As Nina Olson, National Taxpayers Advocate put it, there is a imbalance between its workload and its resources is becoming unmanageable.
Collections from IRS tax audits are down over $4 billion since last year with the exact same amounts of Agents working cases.There has been no explanation from the IRS why the decline of $4 Billion from last year.
Also tax fraud is at a all time high , up over 70% from last year. Most of the fraud comes from phony taxpayers filing fraudulent tax returns from taxpayers with stolen identities and social security numbers.IRS handled more than 226,000 cases of identity fraud in 2011, a 20 percent increase over 2010.
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by steve | Jan 9, 2012 | Tax Lawyer, Tax News
Having an issue, call is today, get professional tax help.
The IRS Offshore Programs was HUGE success, how big?
How about to the the tune of 4$.4 B, very large.
Offshore Voluntary Disclosure Program Reopens:
The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs. Expect much more of this to continue.
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by steve | Dec 20, 2011 | Tax News
Albert Pujols just signed a massive $250 million contract with the Los Angeles Angels, so it would take a pretty hefty tax lien to dent his wallet. This is not that tax lien.
According to documents filed in St. Louis County, Pujols had two separate tax liens filed against him by the Department of Revenue in Missouri in 2011. One is for $423.57, the other is for $306.37.
It’s unclear if Pujols has taken care of the liens yet, but seeing as he made enough money to pay them in the time it took you to read this post … we’re guessing he’ll be fine.
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by steve | Nov 16, 2011 | Tax Lawyer, Tax News
Fresh Start Tax LLC A Professional Tax Firm “A” Rated by the BBB Since 1982 1-866-700-1040 Free Consults
Background information from the IRS. This information is very revealing unto payment agreements.
A prior study done by Wage and Investment (W&I), Balance Due Taxpayers with High Risk of Becoming “Repeaters” Need Special Handling dated June 2010, shows that one-third to one-half of balance due taxpayers have a subsequent balance due and/or non filer account within two years.
Our own experience indicates too often taxpayers reduce the with holdings on their W-4 form or skip current year estimated payments so they have funds available to pay the installment agreement leaving them with a balance due on their current year taxes.
In today’s nations economy, we are seeing earlier withdrawals from pensions, unemployment benefits and other income without proper with holdings. It is not uncommon in today’s uncertain financial times for a taxpayer to accumulate several years of unpaid taxes. However, this creates a vicious circle where the taxpayer who is making payments for prior years now is also underpaying their current year’s taxes.
In general, all most all taxpayers can enter into a streamlined installment agreement if the balance owed is less than $25,000 and can be paid in five years or less. This dollar amount has been in place since 1999 and based on today’s economy should be increased. In FY 2010, 94 percent of all installment agreements were streamlined installment agreements.
The overall default rate for all installment agreements is 18.3 percent (non-streamline 23.2 percent and streamline 18 percent). Also, taxpayers who voluntarily make their payment by direct debit have a low default rate of 7.1 percent.
If the dollar limit is raised, there will be more taxpayers qualifying for the streamlined installment agreement. Currently, if the balance due is more than $25,000 then taxpayers must provide financial information, Form 433A or 433F, to qualify for an installment agreement. Also, if they owe taxes in the subsequent year, their installment agreement will default (in most situations) and a new installment agreement must be negotiated.
In FY 2010, the IRS sent out over 25 million reminder notices (CP521) to taxpayers who are on an installment agreement. After the taxpayer misses his/her second payment on an installment agreement, Letter 4458C, the Commissioner’s skip payment notice, is sent. About one million of these notices have been sent so far for FY 2011. After missing their third payment, Notice CP523, Intent to Terminate your Installment Agreement, is sent.
After the Notice CP523 is sent, the installment agreement may be reinstated if the taxpayer contacts the Service either by phone or in writing. There is a $45.00 reinstatement fee which may, in certain circumstances, be waived.
IRS allows 30 days while research is done to see if payment was received or the taxpayer responds. If neither the payment nor response is received, the case is sent to the Automated Collection System (ACS). Now the taxpayer is subject to liens on property and levy action on assets including bank accounts, salary, wages and even social security. The case may continue to be worked through ACS or it may be transferred to field Collection.
Recommendations
1. Increase the streamlined installment agreement to $50,000 if repayment can be five years or less for all taxpayers.
2. Periodically review any revised limits on streamlined installment agreements to assure that they meet the needs of the IRS and taxpayers.
3. Require the following in cases of either a taxpayer who accumulated two periods of unpaid taxes, if within the streamline amount, or a taxpayer who has defaulted an Installment Agreement for a second time:
a) Direct debit installment agreements (DDIA), allowing one skip in a 12-month period, or
b) Direct payroll installment agreements (DPIA) for the unbanked taxpayer.
c) An approved request for reinstated IA automatically if taxpayer agrees to DDIA/DPIA. Failure to agree to DDIA/DPIA would not, in and of itself, automatically disqualify the reinstatement, which could still be granted on other facts and circumstances.
d) Use of the “lock-in” letter that specifies the maximum number of withholding allowances permitted for the employee. This allows the taxpayer to be in compliance, breaking the repeater balance due cycle.
4. Provide sufficient resources, including a dedicated telephone line, to effectively resolve any direct debit issues or problems in a prompt, timely manner.
5. Mail Letter 4458C the first time a payment is missed. Do not wait until the second missed payment.
6. Add a voucher to Letter 4458C for taxpayers to remit with their payments.
7. Add a statement on Notice CP521 that a payment has been missed and the amount needed to bring the account current. The amount should include the current monthly payment and all missed payments (similar to letters sent from credit card companies).
8. Add a Truth in Lending paragraph showing current interest and length of time to pay off based on monthly payment.
