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This major news release is indicative of the climate of the Federal government taking stepped up enforced collection activity on everyone owing the FEDS tax.
Here are some tips on this year’s tax laws.
When you prepare to file your income tax return for 2009, here are two factors regarding your tax situation: Dependents and Exemptions.
If someone else claims you as a dependent, you may still be required to file your own tax return. Whether or not you must file a return depends on several factors, including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and, any advance Earned Income Tax Credit payments you received.
Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2009 tax return. Exemption amounts are reduced for taxpayers whose adjusted gross income is above certain levels, depending on your filing status. If you are a dependent, you may not claim an exemption. If someone else ? such as your parent ? claims you as a dependent, you may not claim your personal exemption on your own tax return.
Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you?re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.
Sometimes taxpayers are unsure of their status. Call us and we will be more than happy to help.
Collection Issues. From the National Tax Payers Advocates Office.
The report contains a detailed assessment of the IRS examination and collection practices, concluding that many practices have been developed piecemeal and that the IRS lacks an effective overarching strategy to maximize voluntary compliance. The report also concludes that IRS collection practices often harm taxpayers without producing revenue.
In particular, the report cites the IRS lien filing policies as the second most serious problem facing taxpayers. The IRS uses automated systems to file liens against taxpayers in a variety of situations, even when the taxpayer possesses minimal or no property and the lien will do little more than damage the taxpayers financial viability and access to credit. A study conducted by Olson?s office found no obvious causal relationship between the number of lien notices filed and the amount of overall revenue collected. Over the past decade, the IRS increased its lien filings by nearly 475 percent ? from about 168,000 in FY 1999 to nearly 966,000 in FY 2009, yet overall inflation-adjusted collection revenue declined by 7.4 percent during this period.
A second study found that the IRS procedures for determining a taxpayers ability to pay outstanding tax liabilities may be driving some taxpayers into long-term noncompliance because the IRS fails to consider other debts such as credit card balances, school loans, and actual hospital or medical bills. Other tax systems, including Sweden’s, consider the taxpayers overall financial picture.
?Any taxpayer with these debts will tell you that these creditors don’t go away,? Olson said. Taxpayers are placed in the intolerable position of agreeing to pay the IRS more than they can actually afford (given their other debts) and then defaulting on the IRS payment arrangements when they channel payments to unsecured creditors in order to get some peace. Thus, the IRS itself fosters noncompliance by its failure to take a holistic approach to the taxpayers debt situation.?
“The National Taxpayer Advocate recommends that Congress require the IRS, before imposing a lien, to make a determination that the benefits of filing the lien outweigh the harm to the taxpayer and will not jeopardize the taxpayers ability to comply with future tax obligations”.
The report of this practice has been going on for years and it is about time the IRS fixes it. What do you think?
Many people ask a common question to Fresh Start Tax professionals regarding their filing status. Here are the most common facts you should know:
Everyone who files a Federal Income Tax return must determine which filing status applies to them. It’s important you choose your correct filing status as it determines your standard deduction, the amount of tax you owe and ultimately, any refund owed to you.
Here are some facts about the five filing status options you should know in order to choose the correct filing status for your personal situation.
Your marital status on the last day of the year determines your marital status for the entire year.
If more than one filing status applies to you, choose the one that gives you the lowest tax obligation. Have someone review this if you are not sure.
Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to their state law.
A married couple may file a joint return together. The couple?s filing status would be Married Filing Jointly.
If your spouse died during the year and you did not remarry during 2009, you may still file a joint return with that spouse for the year of death, provided the joint return election is not revoked by a personal representative for the deceased spouse.
A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
You may be able to choose Qualifying Widow(er) with dependent child as your filing status if your spouse died during 2007 or 2008, you have a dependent child and you meet certain other conditions.
Let Fresh Start Tax help you if you are not clear about these choices.
The IRS has recently been sending out tax levies to the Cities that the taxpayers live in. Why? If the taxpayers have had deposit on file with the City and received interest income, that becomes a levy source for the IRS. The IRS will send a levy out because the computer believes it may be a source of income. Very bad!!!!!!!!!!!!!!!
The Internal Revenue Service has just released their enforcement statistics for fiscal year 2009. These statistics are evidence that the Internal Revenue Service and the Federal Government are stepping up their efforts to seize the assets of millions of Americans. A record number of taxpayers experienced Federal Tax Liens, Federal bank levies and tax levies on their bank accounts. The statistics are as follows:
2009 Federal Tax Levies 3,478,118 2008 Federal Tax Levies 2,631,038 Increase of 32%
2009 Federal Tax Liens 965,618 2008 Federal Tax Liens 768,168 Increase of 26%
It is clear that the IRS is going to step up their enforcement action and try and collect the taxes to pay off this huge American deficit. This is the largest jump in enforcement action that we have seen in the past years and there is no evidence that the IRS plans to slow down.
Fresh Start Tax believes the increases will continue if not grow significantly for the fiscal year 2010. Our projections with the economic problems and the lost jobs, are that more and more Americans will continue to struggle. Fresh Start Tax will not be surprised if that Federal Tax Levy does not jump to a whooping 5 million tax levies next year.
The Fresh Start Tax Professionals believe several things can stop these enforcement actions from effecting all taxpayers including;
* if applicable, file an Offer in Compromise
* let a ” tax professional” handle your situation. they know the ins and outs.
* contact the IRS when you are in receipt of notices and letters
* be prepared to show the IRS that you may be experiencing a hardship
Individuals of Fresh Start Tax have been serving the professional community and taxpayers for over 60 years and are experts in the matters of Offers in Compromise, the removal of the Federal Tax Liens and the removal and release of the Federal Tax Levies. The Fresh Start Tax team consists of Tax Attorneys, Certified Professional Accountants, Enrolled Agents and former IRS employees.