Economics Finance

The work of preparing and filing your tax return is relatively easier than defending your return in the event of tax audits. Around 1.5 million taxpayers face tax audit every year. There is no ideal formula to avoid tax audit but you can look out for red flags.

Here are top 10 red flags which may trigger tax audits -

1. Unreasonable deductions for home office – If you operate your business from home, you are tempted to deduct most of your spending as business expenditure. There are specific rules published by IRS to classify business and personal expenditure. If you miss out on some of them, you are inviting a tax audit.

2. Mismatching your Federal and state tax returns – If there is a difference between the incomes declared on these two tax returns, it will be immediately picked up by IRS computers and you will soon get a notice for tax audit.

3. High earnings – If your annual income crosses $100,000, it may attract the attention of IRS.

4. Excessive charitable contributions – If your contributions to charity range between 5 to 10 percent of your income, IRS feel it is a good reason to ask you explanation.

5. Mess up in alternative minimum tax (AMT) – If you are subject to AMT, you should approach a tax professional in order to avoid calculation mistakes. Even if you feel to submit AMT schedule, you become prominent to attract attention of IRS. Continue reading ‘Top 10 Red Flags Which Show the Danger of Tax Audits’ »

If you’re interested in beginning to invest in tax sale property, here’s an insider tip that will save you a lot of time and money: skip the tax sale. There are other ways to go about getting tax delinquent property. The tax sale is a big mess, and will cause you more headaches than it’s worth.

First of all, you will need to have a lot of cash on hand if you want to bid and buy. If you’re a winning bidder, you’re required to pay for your new property or lien, in cash, right then and there. You can get started investing in tax sale property with only a few hundred dollars, if that’s all you have, and there’s no good reason to go the tax sale route. If you do have a big amount of cash, even better– but you still won’t want to bid at tax sale.

This is because you’ll frequently find yourself bidding against agents from large investment firms. These companies are simply better equipped and have more money to invest than the average investor– meaning that they can afford to bid a little more than you can, and take a smaller return on their investment than you. It’s rare for the average Joe to even be able to win the bid profitably at tax sale.

Not only that, but if you do somehow end up bidding and winning, it’ll be on a property you haven’t had a chance to inspect. You can’t legally go inside these tax properties beforehand, and anything and everything may be wrong with them. This is a risk few new investors should be willing to take. Nothing will sour you on property investing more quickly than ending up owning a money pit that costs you money rather than makes you money. Continue reading ‘Profit From Tax Sale Property While Avoiding the Tax Sale Altogether’ »

When people first start up their own businesses, they want to save money right from the start. They may not hire employees until they absolutely have to; they limit their inventory until the need for more arrives. Then they may do their own books and that includes paying their own taxes. Unless you have a lot of experiences with paying and filing business taxes, it would be a great idea to find a tax services company.

Tax services are created to help business owners avoid making some really big and costly mistakes. There are more taxes than you may be able to handle. While it may cost you money to hire a tax services company, in the long run, it will save you money. You may not think so now but think of it this way, are you 100% confident that you will be able to figure out how much value added taxes you have to pay and when you have to pay it?

There are corporation taxes and income taxes and value added taxes. In addition to employee taxes and many other taxes it can be confusing and time consuming. That is why you need to hire a tax services company even if they are just on a part time basis. Continue reading ‘Why Should I Hire a Tax Services Company?’ »

IRS selects around 1.5 million taxpayers in a year and ‘invites’ those to explain inconsistencies in their tax return. How does it select these taxpayers out of 135 million returns filed every year? Well most of the times it applies some criteria to pick a ‘deserving’ taxpayer. Here are some important ones.

1. Mathematical corrections – Usually IRS computers generate these audits. If you have made mistakes while filing your tax return, these computers are most likely to catch you. These are silly mathematical mistakes which you would have avoided easily. Some of these mistakes are – entering incorrect spelling of your name on your tax return, entering incorrect social security number, entering the incorrect status, making a wrong calculations about earned income credit and improper assessment of estimated tax.

Usually IRS assumes that your details are correct and makes the calculation of your tax figures based on them. If there is any additional tax liability, they will add interest and penalties to it and you will be sent a notice demanding such money.

You will have a period of 30 days to contact IRS and schedule an appointment to prove that your original data is correct. Continue reading ‘How You Enter the Cage of Tax Audit’ »

An IRS bank account levy is one of the harshest collection mechanisms used by the IRS to collect taxes. With a bank account levy the IRS can legally seize all of the funds in your bank account and use those funds to satisfy tax debt owed. This type of levy is so difficult to deal with because the IRS seizes large sums of money quicker than if they were to use wage garnishment or physical asset seizure. For this reason it is extremely important to act fast when you know you have received an IRS bank account levy.

How a Bank Account Levy Works

The IRS will send you a notice of final intent to levy. This notice says that you have 30 days to pay the IRS or make some other arrangements. If you fail to do so in these 30 days then the IRS will decide which type of levy is most appropriate for you. If they choose to use a bank levy they will contact your bank directly and notify them that they intend to levy your bank account. Even when the IRS does this, you still have time to come to a resolution before they seize your money. Once the bank receives notice they will freeze your account. You will not receive any word that your funds will be seized, you will only know from your account being frozen. The bank will not send the funds to the IRS for 21 days. It is important to act prior to these 21 days are up or you will lose your funds forever. There are many different ways to approach this and since you don’t have the time to figure out which is best for you it is highly suggested you work with a tax relief professional to help you find the best solution. Continue reading ‘IRS Bank Account Levy – Why Use a Tax Professional to Release a Levy’ »

Even if you make a decent salary, if you have filed your taxes incorrectly for the past few years and are just finding out that you owe thousands of dollars then you can’t be too impressed. We’ve all been at that point where we despise seeing tax papers. There is a way to solve this tax debt if you really can’t afford to pay them. You can do it through applying to make a settlement with the IRS. In doing this you will be telling them that although you are unable to pay the balance in full, you are offering them another amount that you can afford to pay. If you can prove that you can’t afford to pay the original balance they will make a compromise with you.

There are a couple of ways that you can go through these proceedings. You can do it yourself if you wish by following the instructions that you will find on the internet on the IRS or Federal Government website. You can also hire a professional to do it for you. Read all the fine print before signing with a lawyer or agent and ask careful questions. You do not want to be burned by these individuals so make sure they are legitimate. Check their qualifications, their backgrounds, and any affiliations that they may have. Also ask when they expect to be paid. Continue reading ‘Ease the Burden of Tax Debt and Settle With the IRS!’ »

The IRS has many programs in place to assist taxpayers with back tax problems. The options largely consist of an Installment Agreement, Offer in Compromise (“OIC”), and Currently Not Collectible status.

Bankruptcy can be an option. But you must analyze the age and the type of the back income taxes. For the most part, recent federal income tax assessments cannot be discharged. This is also true for unpaid payroll taxes.

An OIC is another choice for you to consider. You will be required to disclose sensitive financial information. Rejection rates for OICs are high, but your chances for success will increase if you work with a tax professional. Should your OIC be rejected, there is an appeals process. Continue reading ‘IRS Tax Problem? Your Solutions to Back Tax Issues By Paul Sundin’ »

Assuming that paying your tax bill in full is not an option, there are many options available if you need IRS tax help. You may actually find that you don’t need to do anything to resolve your back tax situation. This is because the IRS has only ten years to collect back taxes starting with the date on which the taxes were assessed. As a result, if you know that you have unpaid taxes that are older than ten years, the IRS may not be able to collect those taxes anymore.

Fortunately, for those that can’t afford to pay, there are other options available. The options consist of an Offer in Compromise, Installment Agreement, bankruptcy (under certain conditions), and Currently Not Collectible status.

There are many issues that need to be considered before back taxes can be discharged in bankruptcy. You must examine the age and type of the back taxes. Generally, recent federal tax assessments cannot be discharged. The same is true with back payroll taxes.

An Offer in Compromise can be complex. It requires disclosure of all of your financial information and will more often than not be rejected. But if you still need IRS tax help there are other available remedies if your offer is rejected. Continue reading ‘Need IRS Tax Help? The Solution to Your Tax Problem’ »

When you are looking for help with settling your taxes with the IRS it is hard not to find something questionable. The truth is that the more people hear about various ways the government and its agencies are assisting citizens, the more con artists there are trying to trap potential victims. Some of the things to look for are those that promise to have the IRS forgive all of your debt. No firm can guarantee this because they haven’t consulted with the IRS until they have your case. If their price quote seems lower than it should be, that is an indication as well. Either they will charge extra at the end, or you will see no results. That is what happens a lot in these cases.

If you are looking for general information you will be able to find some on those article and information bases that have sprung up all over the net. Many of those also give web addresses that you can follow to more information. If you are looking for more specific facts then checking out the Federal Government and the IRS sites are a great start. Looking for lawyers over the net is a little more difficult, but if you check out their credentials, history, and affiliations then you will find out if you are dealing with a professional or not. Continue reading ‘Researching Tax Settlements With IRS For Correct Directions and Information!’ »

There are skeptics for everything – grants, loans, business tactics, and of course, tax debt settlement. If we thought that this one would get past the eye of the critic, then we thought wrong. Tax debt settlement can be an excellent source for saving a tax ridden neck. For those who have thousands of dollars in back taxes, no matter how it happened, they may simply not have the funds to pay them and could end up in deep trouble with other debt collectors because of it. That is why they need to apply to the IRS to compromise on the amount. The IRS is usually happy to see those in such positions offering them a portion of the amount. It shows that the person actually cares enough to deal with it rather than running away. If you try to avoid it, the IRS won’t have so much pity on you.

There may be various reasons why the skeptics have shown such criticism, and some of the stories are true. You have to look at the other side as well though. There are always at least two sides for every story. There are also reasons why such things happened. If someone didn’t get approved or didn’t have as much taken off as they thought they would have then it was for a reason. It could be there was a mistake on the form, information missing, inaccurate information, or even an issue with the lawyer. The IRS knows the real cases and if you have one, you won’t have to be nervous. Continue reading ‘Skeptics Judge Tax Settlement With IRS Too Harshly!’ »