Have a Tax Problem?

Filling out tax forms is a lot more complicated than it should be. Most organizations that are taking your money try to make things as easy as possible; however, the IRS is a little bit different than most organizations. Can you imagine Wal-Mart asking you to fill out a whole bunch of paperwork before taking your money?! If you find yourself in a bind with taxes, you really only have one solution: professional help.

Unfortunately there aren’t really any resources out there that can help you work through some of the most challenging tax problems. This is the case for several reasons: (1) tax laws change every year so anything you find could be outdated, (2) people are nervous about offering free advice on this subject because of the potential litigation issues, and (3)the tax code can be down-right boring and difficult to understand. With a changing environment and a chance to be sued or prosecuted by the IRS, CPA’s and tax attorneys are not willing to offer free information. For the simplest of issues you can find free help, but for a complicated tax problem you’ll likely need to work with a professional.

Depending on the issue you could work with a CPA, tax attorney, or both. If you decide to work with a CPA, and you have a serious problem, make sure that the CPA is registered in the state in which you have a problem. In addition, you’ll want to ensure that the CPA knows a thing or two about tax. It turns out that not all accountants are tax experts; they have other areas of expertise like auditing or managing.

A tax attorney is usually a safe bet, but chances are you will have to pay a bit more when lawyers get involved (plus who likes working with a lawyer?)

Now, let’s talk about some common tax problems that you may face.

One of the most common types of tax problem encountered deals with filing late. Turns out that filing late can result in a fine. You’ll want to work with an attorney, CPA, or some form of tax consultant to know what to do.

Probably the scariest type of tax problem that is encountered deals with being audited by the IRS. Note that just because you are being audited, doesn’t necessarily mean you have done something wrong. Think of an audit as more of just assuring what you have said is correct. If you have all of the supporting documentation you should be fine. Note that you might still want a CPA or attorney to walk you through the audit.

The IRS cannot audit every taxpayer so it looks at some common characteristics of people or businesses who do not deduct the proper amounts. Once it has those common characteristics, it run some form of equation/lottery and if your name pops out, then you are on the audit list. It has been said that people who are self-employed have a higher chance of being audited.

In summary, filling out tax forms can be complicated and even if you did your best to be honest and fill them out correctly, there may be a chance that you still have a tax problem. You’ll want to consider either using a Tax CPA or attorney if you have a problem. Attorneys cost more, but they may be able to do a better job depending on your circumstance. Finally, remember that being audited doesn’t mean you did something wrong, but even so you still may want a professional to guide you through the process.

Tax Benefits for Education

Tax Benefits for Education

The IRS has a number of different tax credits that you can take to help pay for college tuition and expenses. The first is the Tuition and Fees deduction. This deduction reduces your taxable income up to $4,000 and is usually taken when a family does not qualify for the other tax credits available.

The American Opportunity Credit, this credit will pay for a student during the first four years of college. The credit was developed last year and expanded the Hope Credit. $1,000 or the $2,500 tax credit is refundable. Therefore, you can receive … Read more at 2010 Tax.

Tax Benefits for Education

The IRS has a number of different tax credits that you can take to help pay for college tuition and expenses. The first is the Tuition and Fees deduction. This deduction reduces your taxable income up to $4,000 and is usually taken when a family does not qualify for the other tax credits available.

The American Opportunity Credit, this credit will pay for a student during the first four years of college. The credit was developed last year and expanded the Hope Credit. $1,000 or the $2,500 tax credit is refundable. Therefore, you can receive a refund when you did not owe taxes during the year.

The Lifetime Learning Credit is available to older students including job training classes, undergraduate, and post-graduate coursework. The credit is for $2,000. There is an enhancement of an additional $2,000 if you reside in a Midwest disaster area. One of the fun changes to the tax code congress has given us.

The Hope Credit is for only the first two years of college is phased out after 2008 except for a Midwestern disaster area. Those attending college in this designated area can take up to $3,600 in tax credits to help pay for tuition and fees.

529 College Savings Plans have been expanded to include computer equipment and Internet access. Non of the credits can be claimed at the same time for the same student. And students cannot claim the credits if they are dependents of their parents for the year.

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What to Do With Your Taxes In Case You Can’t Pay Them?

What to Do With Your Taxes In Case You Can’t Pay Them?

The extension on filing your taxes is almost coming to an end. Is there anything you can do in case you can’t pay your taxes? It is important for you to pay whatever you can and do your return filing by the scheduled date. We discuss some additional steps here which might be helpful for you.

Credit Cards

The taxes can be charged on your MasterCard, American Express card, Discover card, or Visa card. Going in this direction, you can use one out of two sources mentioned below:… Read more at 2010 Tax.

What to Do With Your Taxes In Case You Can’t Pay Them?

The extension on filing your taxes is almost coming to an end. Is there anything you can do in case you can’t pay your taxes? It is important for you to pay whatever you can and do your return filing by the scheduled date. We discuss some additional steps here which might be helpful for you.

Credit Cards

The taxes can be charged on your MasterCard, American Express card, Discover card, or Visa card. Going in this direction, you can use one out of two sources mentioned below:

Official Payments Corporation

Pay tax by calling 1-800-2PAY-TAX (toll free: 1-800-272-9829)

Visit the web site: www.officialpayments.com

Link2Gov Corporation

Pay tax by calling 1-888-PAY-1040 (toll free: 1-888-729-1040)

Visit the web site: www.pay1040.com

In case you can’t pay using your credit card, then you can make an installment agreement, in which you can pay the balance in the form of monthly installments. There is also the option of reducing your tax amount by participating in a compromise program offered.

Form 9465 needs to be filled and attached with your return filing if you want the installment option of paying your taxes. For total taxes not exceeding $ 25,000 excluding interest and penalties and which can be paid within 5 years, the process of approval has been streamlined by the IRS. The proposed amount of monthly installment and the payment date should be specified correctly beforehand. You also must guarantee that the payments will be made.

For an installment agreement, a fee of $ 43 is charged by the IRS. On unpaid taxes, there will be an interest as well as a late payment charge. Normally 0.5 percent per month on unpaid tax is charged as late payment penalty but it is not fixed. This rate may be reduced to 0.25 percent for any month while your installment agreement is applicable and you file your returns on time taking your extensions into consideration. You may need to pay up to a maximum of 25 percent of penalty for late payment.

If you fail to file your returns by the due date after taking an extension, will result in a late payment charge being levied upon you. This charge is normally around 5 percent of the total unpaid tax per month. You may have to pay a maximum of 25 percent of penalty charges in case of failure to file your returns or pay taxes on time.

Summary

Even if you lack funds, the IRS expects you to adhere to the rules. You should file your returns on time by any means. If you’ve filed, the IRS will take care of the payment issues. You don’t worry. Remember that the majority of Americans face the same problem.

The ABC of Filing Tax Returns for the Deceased

The ABC of Filing Tax Returns for the Deceased

Death is an inevitable part of a human life. When a person dies, he leaves his mortal body but taxes may also remain attached to him or her. In fact after death, one final tax return needs to be filed for the deceased person.

After death, a person’s finances are immediately converted into something which is called an estate. The estate then has the responsibility of filing a tax return after covering the finances that include income and distributions to the heirs and other beneficiaries of the deceased.

When someone passes … Read more at 2010 Tax.

The ABC of Filing Tax Returns for the Deceased

Death is an inevitable part of a human life. When a person dies, he leaves his mortal body but taxes may also remain attached to him or her. In fact after death, one final tax return needs to be filed for the deceased person.

After death, a person’s finances are immediately converted into something which is called an estate. The estate then has the responsibility of filing a tax return after covering the finances that include income and distributions to the heirs and other beneficiaries of the deceased.

When someone passes away, an executor or trustee takes charge of the estate of that person. The exact designation depends on the type of estate they are intended to plan for. The executor or trustee will sign the tax return on behalf of the deceased person and will declare him or her as deceased.

For a deceased person, the final personal tax return is filed in Form 1040. Yes, the same tax form that is used for any personal tax return will work for filing a return for a deceased person.

The day of death of the deceased person is taken as the cut-off date to ascertain how much taxes are actually due by him or her. Whatever income the person may have made in that year before the date of his or her death is covered in the personal tax return. And, the income earned after the death is to be filed as the estate tax return, which is the responsibility of the estate.

In most cases deductions are certainly going to give a joy in case of tax returns for the deceased. You can claim a full deduction and any other expenses for the year that precedes the tax payer’s death not including the date on which the person passed away. In other words, you don’t have to worry about any calculations that are based off the days that come after death. For example, if a person passes away in the month of February, you are eligible for full write-offs for the rest of the year.

When the deceased is supposed to get tax refund, the IRS will consider releasing a refund if the deceased is reported as being married prior to his or her death. If the person was married, the spouse is entitled to receive the refund. If the person was not married, you need to file a Form 1310 to be eligible for the refund. This form is basically a declaration that states – you have the right to claim the refund and absolve the IRS of any involvement in any disputes that may arise in future.

The Process of Electronic Tax Preparation and Filing

The Process of Electronic Tax Preparation and Filing

Just when you are faced with the tax season, you may come across the latest editions of popular tax preparation programs claiming to make tax filing as easy as can be for any layman. It is important to know which one is the most suitable for you and which electronic tax filing solutions are the most popular. This write-up provides you with valuable information on tax preparation options and the popularity of electronic tax filing.

What is it that you pay attention to while choosing a tax preparation solution? Beginners should opt … Read more at 2010 Tax.

The Process of Electronic Tax Preparation and Filing

Just when you are faced with the tax season, you may come across the latest editions of popular tax preparation programs claiming to make tax filing as easy as can be for any layman. It is important to know which one is the most suitable for you and which electronic tax filing solutions are the most popular. This write-up provides you with valuable information on tax preparation options and the popularity of electronic tax filing.

What is it that you pay attention to while choosing a tax preparation solution? Beginners should opt for tax software that provides step by step guidance through the digital tax preparation interview and also includes interview topics which would not be difficult too understand or answer.

What makes the tax preparation software so useful is the fact that it allows the user to try out figures and hypothetical situations. Several of these programs are equipped with importing features that provides the scope for importing data from other programs into the tax preparation software directly.

As electronic tax preparation and filing are capable of carrying out extensive calculations and associated automatic checks, it has a negligible error rate, less than 1 percent. This implies that if you use the electronic tax preparation software, you can be almost fully ensure that you will have an error-free and complete tax return.

As high speed internet connections are becoming widespread and internet security is advancing at a tremendous speed, the number of tax preparations being done online is going up. This system of filing has been agreed unanimously to be safe, easy and error-free. With an overwhelming amount of online resources readily available, there is hardly any difference between the capabilities of the taxpayer and a professional.

Whatever it is, this much is certain that electronic tax preparation is the word of the day in terms of efficiency and popularity. It is owing to this popularity and reliability that taxpayers would resort to the use of tax software to file their tax returns. What a lot of taxpayers don’t know is that they can prepare and e-file their taxes every time they access the internet. The IRS Free File program has been designed to help those taxpayers who file their returns independently and still resort to filing paper returns. However, it should be noted that electronic filing is not allowed in the case of filing taxes for previous years.

Online tax filing allows you to prepare and e-file your income tax returns. And the process is wonderfully easy, speedy, error-free and safe, not very different from net banking. It might be a good idea to try out the electronic filing this year if you are willing to give it a shot. Being able to manage and file your taxes would definitely make you feel good and self sufficient.

It is very common for people to be scared of the idea of filing your taxes and you are probably wishing it would be easier this year. It is actually possible, with a fair amount of planning, to make tax preparation much easier and not be faced with any harsh surprises.

How to Acquire a Federal Income Tax Refund

How to Acquire a Federal Income Tax Refund

‘You are entitled to an income tax refund’ – these are words that would be music for any taxpayer’s ears. A taxpayer enjoys a federal income tax refund if the amount of the pending payable tax is smaller than the total of the refundable tax credits claimed and withholding paid. A lot of individual taxpayers can obtain federal income tax returns through earned Income credit, as refund of overpayment of tax for one or several years. However, not every taxpayer is happy with the concept of a large income tax … Read more at 2010 Tax.

How to Acquire a Federal Income Tax Refund

‘You are entitled to an income tax refund’ – these are words that would be music for any taxpayer’s ears. A taxpayer enjoys a federal income tax refund if the amount of the pending payable tax is smaller than the total of the refundable tax credits claimed and withholding paid. A lot of individual taxpayers can obtain federal income tax returns through earned Income credit, as refund of overpayment of tax for one or several years. However, not every taxpayer is happy with the concept of a large income tax refund. This is because income tax refund is looked upon as money borrowed by the Government and repaid, minus the interest. Some others look at income tax refund as a savings strategy, being happy to get income tax refunds every year. It should always be kept in mind that it is worse to owe money to the Government than to get IRS tax refunds.

Quite a few options are available when putting a tax refund in the taxpayer’s hands. Refund anticipation loans, standard paper filing, electronic filing with direct deposit, rapid tax refunds are the choices and the first and the last in the list are the most preferred choices by taxpayers.

Since we are in an advanced computer age, with an added bonus called the internet, the Internal Revenue Service (IRS) has fast reacted to the advantages of electronic filing. Thanks to the great inventions mentioned above, filing income tax returns, making tax refunds and amount due to the IRS have picked up considerable speed. Let us take a moment to review the varied IRS refund options, and the specific advantages each one has for the individual taxpayer.

The most common and familiar method of filing, the standard paper filing, is gradually becoming obsolete. It probably would not take very long for this ancient system of paper filing to be completely obliterated and the electronic tax filing methods to emerge as worthy substitutes. In case you happen to be one of the very few Americans who still rely on the method of paper filing, you would need to wait for around six weeks to receive your tax refunds. The speed that the internet has made the six week wait a considerably long time to obtain tax refunds.

Comparatively, the electronic method of filing federal income tax return, which is gaining fast popularity at the expense of the old paper filing system, brings you the tax returns in around 10-14 days. This is, of course, much less time than the six weeks required for paper filings to bring returns. What’s better, electronic filing does not involve any extra fees, and one can choose to file tax returns through several local public access facilities.

On the other hand, the refund anticipation loan works a little differently. The refund anticipation loan requires administration by a tax professional through a well-established connection with a financial and lending institution. A number of excellent options are available, as well as the number of qualified and competent tax professionals to help you file your income tax returns, though the taxpayer is entitled to shell out a loan fee or a nominal interest fee in lieu of obtaining the refund anticipation loan. A number of restrictions apply on the receipt of a refund application loan, some of which affect some individuals. For example, those who owe back tax, back child support, liens and judgment etc. do not qualify for the refund anticipation loan. Usually it so happens that individuals opting for the refund application loan receive earned income credit and have their income tax refunds reach up to thousands of dollars. All it takes for the refund anticipation loan to be processed is three hours and reaches the taxpayer within late afternoon, as long as everything goes according to plan.

Since the bank product providers charge higher interest rates and the tax preparers charge higher processing fees, it eats into the money obtained by the taxpayer; however, many of these taxpayers take the extra expenses in their stride as all they want is a quick tax refund. This phenomenon only goes to prove once again that our modern society thrives on the operation of instant gratification. Individuals who opt for electronic filing of tax returns and make the choice of having the amount deposited directly get their work done in not more than 10-15 days. It’s a common belief that two weeks is a pretty good turnaround time for many taxpayers, but usually the time taken for the return is inversely proportional to the amount of the federal income tax refund.

It might appear to be yet another strategy for the system to make money out of the poor; since normally it is the poor who are associated with the earned income credit tax refunds, which, especially in cases of families having two or three dependant members, could be considerably large. It is wise to avoid refund loans as much as possible. They involve high costs. It is a good idea to wait for your federal income tax refund so that the whole of it is for you to keep to yourself.