How to Effectively Settle Your Tax Debt

Life can be a lot easier if you do not have to worry of everything such as settling tax debt. Tax debt has been the problem of many people since they have received some notice form the IRS. Whatever the reasons in not settling the tax debt, the fact still remains that this is a debt that needs to be paid. In order to settle IRS tax debt, you have to do some necessary actions in order for your salary paycheck and house to be auctioned. This can be possible if they see that are not willing or you are showing negligence. Therefore, you got do something in order for the IRS to see that you are willing to do your part.

If you have received letters from the IRS, it is necessary that you call them and not vice versa. Do not wait for the moment where the IRS agents will call you. This only means that you are not showing interest in settling your tax debt. You can negotiate with them to know the terms and conditions which you think you can be able to meet. Do not sign any legal documents if you are not sure that you can be able to meet them. If you think that the agreement is in your favor, then you can sign it but be sure to follow religiously what is agreed upon. Because if not, the penalties and interest will increase tremendously. For people who have lost their job or have physical disabilities, the penalties and interest are removed. This case does not apply to everybody.

It is highly recommended that you have to educate yourself with the laws and regulations governing tax debt. If you have zero knowledge then you can search online and be familiar with the terms and conditions as well as the favors which you can avail of. Another thing that you can do in order to gain more information is to visit the local attorney in your place. Lawyers are the perfect source of information so you can visit one of them to know learn the laws and regulations of IRS regarding tax debt.

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The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to … Read the rest

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to shell out precious money that would have otherwise been spent on stuff you wanted.

Even minor errors can lead to payment of increased taxes and might possibly lead to delayed or eliminated refunds. As is true of everything else in life, being systematic and extremely careful in arranging paperwork related to tax returns all through the year will ensure a smooth filing of tax returns when the time comes. Be sure that you don’t lose or accidentally throw away any bills, receipts or vouchers related to your tax return. The next step you need to take is to educate yourself about the IRS’ rules and regulations. Do no blindly believe other people’s opinions. Look up the facts for yourself.

Making tax return errors is very common, even CEOs of companies, VPs and professors are no exceptions. Read on to know some common mistakes which should be avoided at all costs.

  1. Mistakes are often made in the context of benefits claimed for dependent children. Not being fully aware of the allowed exemptions might lead to failure in making a correct claim or cause an erroneous claim. The IRS, in an attempt to clear common confusions, specified the definition of ‘child’ in 2006, with the details available at http://www.bankrate.com/brm/itax/tips/20010208a.asp. If this does not answer your question, refer to a dependable source before proceeding with filing your tax returns.
  2. The most common types of mistakes that occur in tax return filing are calculation based ones, caused by mistakes made while entering the digits. Cross check to make sure the full stops and the commas are in the right places. Stay patient while dealing with the figures and check the total on two separate days. Requesting a family member or friend to check the total might be a good idea. Usage of tax software programs might make things easy for you. It should be noted that the IRS compulsorily checks entries against W-2, 1099 and other statements relevant to your tax. Make sure that your return does not have a discrepancy because they would spot it and that would lead to problems and delays.
  3. If you forget to sign the tax return and insert the date, the IRS will not process your tax return. Once you are done filling, run through it carefully to see that you have not missed any minute details on any page. Also, make sure that you have written your social security numbers or tax ID numbers correctly.
  4. Another common mistake is forgetting to submit all the relevant forms, for example, W-2, 1040, or 07, or 16. It is important to check the relevant schedule for each claim and to make sure that all the required and supporting forms are attached with the tax return.
  5. Taxpayers often fail to keep track of investments, interests they have paid or earned, allowed deductions etc. it is vital to maintain records of your investments, dividends you have paid, taxes deducted on maturity (if any), taxes paid previously, capital gains etc. Keeping a thorough track of taxes paid would prevent you from paying taxes on the same amount more than once. One should be very careful and systematic while making these calculations to avoid mistakes.
  6. A lot of taxpayers utilize the long form when actually the 1040Ez is more suitable for them. The 1040Ez is enough, and the long form not necessary, for people whose income, expenses and related things are simple and straightforward. Many of us are not aware of the amount it is possible for us to save in taxes. The long form has provisions for deductions from taxable income in lieu of student loan interest, contributions to charities, alimony paid etc.
  7. A lot of taxpayers fail to submit by the deadline and ask for an extension. This attracts penalties along with interest. In cases due to unavoidable circumstances, where you fail to submit your tax filing by April, you need to submit form 4868 by the April deadline in order to be allowed an extension.
  8. Many taxpayers end up using the wrong table for calculations. One needs to be very careful about two things in particular: using the appropriate tax tables and filing status. If you use the wrong tables or file under an inappropriate status, you may find yourself to be in hot soup. The error could even translate to paying extra taxes on income derived from investments. Be very careful and calculate your taxes through the use of the worksheet at the back of the booklet.
  9. Two very common mistakes taxpayers end up making while filling their tax returns are; entering the wrong details in the check and forgetting to sign the check. A lot of taxpayers also post the forms without attaching the proper postage on the return package. It is also mandatory to use the printed label and envelope that the IRS provides.

The IRS has made its tax filing systems modern and a number of the errors mentioned above can be prevented by opting for electronic tax filing. It was calculated that last year over half of the tax returns were filed using e-filing. There are many advantages of pursuing electronic filing. The forms that you would use for the purpose are on tab, the software provides you with a step by step guidance to complete the filling process, the electronic calculator minimizes the chance of errors and most importantly, the e-filing forms take a short time to be processed, the turnaround time being 14 days. For details, visit http://www.irs.gov. In case you are not sure about the process, you can request the help of an authorized tax professional.

Make sure that you file your taxes on time and accurately. This will prevent heartburn and hypertension.

The Government Retiree Tax Credit

The Government Retiree Tax Credit

If you are a government retiree and received a pension during 2009, you could be eligible to the Government Retiree Tax Credit. An extra $250 in tax credits is available to federal, state and local government retirees. This credit was created with the ARRA bill passed early in the current presidential administration’s tenure.

If you have a pension or annuity outside of the social security system, this credit is available to you. This credit and the Making Work Pay credit cannot both be claimed. Therefore your Making Work Pay credit is reduced if you worked … Read the rest

The Government Retiree Tax Credit

If you are a government retiree and received a pension during 2009, you could be eligible to the Government Retiree Tax Credit. An extra $250 in tax credits is available to federal, state and local government retirees. This credit was created with the ARRA bill passed early in the current presidential administration’s tenure.

If you have a pension or annuity outside of the social security system, this credit is available to you. This credit and the Making Work Pay credit cannot both be claimed. Therefore your Making Work Pay credit is reduced if you worked while receiving the Government Retiree Credit. Couples can get a full $500 if both spouses qualify.

The really good news is, this is a refundable credit which means you can get the refund even if you have not paid taxes into the system. Complete the Schedule M to claim the tax credit when you file your taxes this year.

Benefits of e-Filing Your Return

Benefits of e-Filing Your Return

Last year nearly 67% of federal tax returns were submitted to the IRS by electronic transfer, or e-file. The IRS likes tax returns to come in electronic format as it is easier for them to process and recently provided a list of benefits for you to consider.

The speed with which your return can be sent, processed, and a refund sent to you is much better when you file your federal return electronically. The IRS is also able to correct your information if there happens to be a missed calculation on the return. Ten days … Read the rest

Benefits of e-Filing Your Return

Last year nearly 67% of federal tax returns were submitted to the IRS by electronic transfer, or e-file. The IRS likes tax returns to come in electronic format as it is easier for them to process and recently provided a list of benefits for you to consider.

The speed with which your return can be sent, processed, and a refund sent to you is much better when you file your federal return electronically. The IRS is also able to correct your information if there happens to be a missed calculation on the return. Ten days is a standard turn-around if you file this way and request direct deposit into a checking account.

The IRS maintains strict security on their transferred communications and feels your information is entirely safe filing electronically. And once your return is received by the IRS your tax preparer or tax preparation software, like TurboTax or TaxAct, will let you know it was received. Then you can monitor its progress to know when your refund will be coming.

Finally, if you do happen to owe taxes, you can e-file immediately when your return is complete and wait until the end of the tax season to send the IRS the amount due. And state returns are often able to be transmitted with the same benefits you will enjoy from your federal tax electronic filing.

Selecting a Good Tax Preparer

Selecting a Good Tax Preparer

Maybe you have completed your tax return at home with one of the available tax preparation packages like TurboTax but you want a tax professional to personally review your return. The IRS wants to make sure you have the information you need to select the best tax preparer and has provided these tips to avoid issues with the quality of your filed return.

Availability. Make sure the preparer will be available for questions even after the return is filed. You want someone to assist you in the case of an IRS audit.

Background Check. Like … Read the rest

Selecting a Good Tax Preparer

Maybe you have completed your tax return at home with one of the available tax preparation packages like TurboTax but you want a tax professional to personally review your return. The IRS wants to make sure you have the information you need to select the best tax preparer and has provided these tips to avoid issues with the quality of your filed return.

Availability. Make sure the preparer will be available for questions even after the return is filed. You want someone to assist you in the case of an IRS audit.

Background Check. Like hiring anyone, background checks are useful. Check the Better Business Bureau, the state’s board of accountancy, or the state’s bar association depending on the perspective preparer’s license.

Check Qualifications. Many preparers are CPAs or Enrolled Agents and need to meet certain criteria to maintain the designation. Check for these and similar affiliations that require continuing education and ethical practices.

Fee Based Services. If the preparation fees are based on the amount of your return, the return could be prepared incorrectly to increase the fee. Avoid preparers that charge for income tax returns in this manner.

Records Request. If your preparer fails to request all the forms needed to complete your return or doesn’t ask the necessary questions to determine your tax situation, you should consider a different tax professional.

Signatures. Always wait until your return is ready to be mailed to sign it. Review all parts of the return before taking this final step. And make sure your preparer also signs the return in the appropriate location.

Top Ten Tax Tips for Early January

Top Ten Tax Tips for Early January 2010

The IRS has released their first tax tip of the season with the Top Ten Tax Time Tips. Their tips range from record gathering and filing options to Publication 17 review and contacting the IRS with your questions.

1. Get your records ready. Start gathering all the records you will need to prepare your tax return when all tax forms have arrived in the mail.

2. Watch the mailbox. Keep your eyes open for tax documents in the mail including mortgage interest and W2s from your employer. Some mortgage companies do not … Read the rest

Top Ten Tax Tips for Early January 2010

The IRS has released their first tax tip of the season with the Top Ten Tax Time Tips. Their tips range from record gathering and filing options to Publication 17 review and contacting the IRS with your questions.

1. Get your records ready. Start gathering all the records you will need to prepare your tax return when all tax forms have arrived in the mail.

2. Watch the mailbox. Keep your eyes open for tax documents in the mail including mortgage interest and W2s from your employer. Some mortgage companies do not send the forms separately but enclose them with your monthly statement.

3. eFile When Complete. File your return electronically when it is prepared. The majority of Americans are now filing their returns electronically and the process is much faster than the traditional method of mailing in a paper return.

4. Free File your Return. Many preparation software solutions have teamed up with the IRS to provide free filing options when your income is below certain levels. If you use TurboTax or TaxAct, try the free Federal version before paying for the service.

5. Consider Free Consultations. Many parts of the country now offer free filing consultations. Check with your local library or your local community center to see if they have experienced help for you tax preparation.

6. Direct Deposit is Faster. You can speed up your refund from the IRS if you have them directly deposit the funds into a bank account instead of sending you a check.

7. Watch IRS.gov. The government website has updates throughout the tax season with great advice when you need your questions answered.

8. Publication 17. This IRS document is the end all when it comes to information about your tax return. Check it for changes to the tax code that will affect your return in 2010.

9. Review your return. Mistakes and missing information are common when you send a return without it reviewing it first. Take your time to consider every part of your return for additional deductions and credits your might be eligible for.

10. Contact the IRS. If you have a question to hesitate to call 1-800-829-1040 toll free.