Learn About Tax Liability

Tax liability can have you make wrong choices. However, the IRS has been helpful to some people in difficulties such as these. For example, the unemployed and people running small business will benefit from the ‘fresh start’ initiative. In fact, their installment agreement will ensure that there is easier and rational payments made.

Doug Shulman, the IRS commissioner stated that the agency has a duty to work with troubled taxpayers to meet their tax liabilities. Taxpayers have to understand the penalties against defaults arising out of failure to pay taxes on time. For example, 5% of unpaid taxes will be imposed against returns filed late on a monthly basis.

» The analysis for such failures is done at a lower limit of 0.5% and upper limit of 25% each month.

Therefore, if you are unemployed or self-employed, you will have about six months delay for you to pay your taxes. This will only apply to taxes due in 2011 and only if you had requested for an extension through IRS form 4868.

This form however does not excuse you from paying due taxes.

The initiative permits the delay to run up to 15th of October. You will need to show that you have been unemployed for more than 30 days continuously in 2011 or before the 17th of April 2012. Incase of self employment, show that your business earnings has dropped for more than 25% because of the economy.

Form 1127-A can be found at the IRS website: IRS.gov, should help you apply for the program and is due in April 17th.

You should be aware of a couple of things. For example, the earning and time limits that will accrue penalties.

Another thing to be aware about is the compounding interest payable on unpaid taxes.

If you do not have a financial statement then you should know that the threshold for the part payment has been increased by the agency. The fines are lowered, the interest will still be compounding.

In such cases, the IRS will increase the time for your part payment when you owe $50,000. The time can be increased to 72 months. This extended time can only be permitted if you consent to a monthly direct–debit payment.

This agreement can be set up online. To get an approval, you will need to have filed your returns and avail your personal details.

It is necessary that you file your tax returns even if you may accrue tax liability. Try not to make decisions that are irrational. Consult with the IRS through their websites and understand their conditions to qualify for the initiative.

Last Minute Tax Tips For Those Filing 2010 Taxes

The deadline for filing taxes for 2010 is fast approaching. Following are ten last minute tax tips that are provided courtesy of the Internal Revenue Service. These tips can make last minute tax filing a lot easier.

1. File via e-file. It is secure and simple. Most people use this form of filing as opposed to filing out a paper tax form. The IRS has estimated that this form of filing has been used almost a billion times since its inception two decades ago. Nearly seventy percent of tax payers file via e-file.

2. Check ID numbers carefully. These numbers are extremely important and it is very easy to accidentally make a mistake with any one number. A person that gets a SS number or other figure wrong will face delays in getting a tax refund.

3. When using a paper copy of the tax form, be sure everything is legible. Not everyone has great handwriting. It is important to fill out the form clearly; if the IRS cannot understand it, then  there will be problems.

4. Make sure the right figures are placed in the right places. Tax forms are not the easiest forms to understand and it is all too easy to make a mistake.

5. Sign the form. If it is a joint return, then both parties should sign, even if the form only lists income made by one party. Date the form too.

6. Double check the mailing address. It can be found on the IRS website. Make sure to write the address out clearly and properly.

7. When mailing a payment via snail mail, the check should be made out to the US Treasury. It should not be stapled to the tax form. It should include a person’s SS number and the phone number that he or she can be reached at during working hours.

8. Using electronic payment methods is not only safe but also quite simple. One can use a debit card or credit card.

9. One can file for an extension of time. This gives a person a few more days to file. However, the payment deadline will not change even if an extension is granted.

10. For more information, be sure to check out the IRS website.

Filing Your Taxes – Helpful IRS Advice

Six Easy Tax Filing Tips

Income tax season does not have to be the worst time of year. The Internal Revenue Service has provided six easy tips that will help people file their taxes this season.

1) Do not leave your taxes until the last minute. Many people avoid filing their tax return until the end of tax season. People who wait until the deadline are more likely to make tax filing mistakes and miss tax savings opportunities. Early filers are less likely to make costly mistakes and the earlier you file your 2010 taxes the sooner you will receive your tax refund.

2) Take advantage of the tax filing information that the IRS is offering via their official website at www.irs.gov. The site lists helpful information, including any recent tax news.

3) Use the tax software and online forms that are available at the www.irs.gov website to make the filing process easier. People who earn under $58,000 per year are eligible for free income tax software access, and anyone can use the e-file service to file their tax return online for free.

4) Nearly 100 million Americans used e-file last year. The online service has become the most popular tax return filing method because it is safe, quick and highly effective. If you want to receive a quick tax refund this year, e-file is the best tax filing option.

5) Do not worry about paying the full income tax amount owed by the April deadline. You can still file your income tax on time, paying as much money as possible. If you do not have enough money to pay your full taxes you should call the IRS at 800-829-1040 to set up a payment system that you can afford. Many people pay their income tax in convenient installments.

6) Those who do not pay their taxes owed by the April due date may have to pay a tax penalty. To avoid the penalty people should request a filing extension by filling out the Form 4868 and sending it to the IRS. To find out more about tax filing extensions you can call the IRS at 800-829-3676 or visit the IRS website.