Learn About Tax Liability

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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.

Did Tim Geithner Use Turbo Tax to Determine the Detroit Employment Rate?

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The Obama administration has been pushing hard recently to receive the American public’s approval of the bailouts given to America’s top automakers. Started by the preceding White house administration, these bailouts have proved to be a failure in the current administration’s policy where taxpayers once again have to pick up the tab. Taxes 2010 accounted for a majority of what the last two White House administrations paid the top automakers in Detroit to increase jobs and spurt economic growth.

Treasury Secretary Tim Geithner recently claimed that the bailout led to an increase in jobs in the city of Detroit. When analyzing the unemployment figures for Detroit, the numbers show that since Obama took office the unemployment rate in Detroit has only fallen by one percentage point. This shows that Geithner’s claims sound a bit deceptive. When looking at the number of jobs in metropolitan Detroit, there were 713,390 jobs in Detroit when President Obama took office. As of April 2011, the figures state that there are 695,200 Detroit jobs. This is a decrease in jobs by 18,000. The results are the same for the wider Detroit area. There were 1.7822 million jobs in 2009. As of April 2011 there are 1.7398 million jobs in Detroit. This is a decrease of 43,000 jobs. If a comparison is done for statewide jobs then the results also show a decline.  Geithner previously claimed that TurboTax lead to his mis-filing of tax credits, therefore pundits are make  a similar joke of this accounting again.

What caused the jobless rate to fall so sharply? To reflect the nationwide trend, people have been removed from the Detroit workforce in such large numbers while at the same time the number of real jobs has decreased as well. Geithner deceptively cast the auto bailout in terms of jobs returning to Detroit. The actual numbers reflect differently in Detroit as well as the rest of the USA.