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Settling an IRS Tax Debt: Step by Step Guide

Settling an IRS Tax Debt: Step by Step Guide

By on Oct 31, 2018 in blog | 0 comments

While the Internal Revenue Service (IRS) doesn’t act like a debt collector for Americans, it can certainly be a beast to deal with. Since the IRS acts on behalf of Uncle Sam, they have a good deal of authority that regular collection agencies don’t. Even though they’re not going to harass you all the time, they’re more than capable of garnishing your wages! Fortunately, the following steps can go a long way toward settling your debt for good.   File for Monthly Installments   If you can’t pay off your debt in the foreseeable future, then consider filing for monthly installments to help you pay off what you owe the IRS. While you might balk at the application fee, you get the option of paying a fixed regular bill if you’re approved. You might not think that you’re making a huge dent in your total burden, but you’d be doing more than enough to help pay things down. A tax professional can help you prepare the necessary IRS forms to file for an installment agreement.   Determine Your Reasonable Collection Potential   By providing detailed information about your current financial situation to the IRS, you can help them to determine your reasonable collection potential or RCP. Your total RCP includes things like possible future income and any investments or credit lines you might have. If your RCP is low enough, then you might be able to negotiate an offer and settle a compromise. When the IRS approves this kind of offer, they agree to accept less money than you owe overall.   Request Relief for Married Couples   If you’re married and filing a joint return, then the IRS has three special relief programs that can help. Innocent spouse relief can cut any additional taxes you might owe because your spouse or former spouse didn’t report some earned income. You may qualify for equitable relief if your return was filed properly but taxes weren’t paid with the return. Separation of liability relief could apply if you’re legally separated from your spouse. In all three cases, these programs will take away any tax debt that’s not legally yours.   File for Penalty Abatement   Part of your debt more than...

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IRS Tax Brackets Under the New Tax Bill

IRS Tax Brackets Under the New Tax Bill

By on Oct 25, 2018 in blog | 0 comments

When the new tax bill was signed into law in December 2017, it seemed like it made instant headlines. Taxpayers who were used to the bracket they may have been in for years were suddenly unsure of how the following year’s worth of income was going to be taxed. Fortunately, there are now a number of certified documents from the IRS that help to explain the current situation.   Perhaps some of the biggest news was that the bracket realignment also changed the standard deduction in the process.   Standard Deduction Amounts in 2018   Individuals who file single returns will now receive a standard deduction of $12,000 while those who are married filing jointly will receive one twice that. At the same time, there won’t be personal exemptions for 2018 the same way that there were just a year ago. This confused some taxpayers, because the IRS originally provided different information for them that is now been superseded by the new tax bill. This also applies to the bracket values themselves.   Guide to the New 2018 Tax Brackets   Under the new law, people who both kinds of returns can fall into one of seven different brackets. While this might sound complex, it’s too not much different from the way things were done before even if some of the percentages have been changed around. This adjusted the withholding tables in the process. There’s also a zero rate, though anyone who is taxed at zero percent on some income still has to report that income. click here.   Individual taxpayers are looking at the following brackets:   10 percent for the first $9,525 12 percent between $9,525 & $38,700 22 percent between $38,700 & $82,500 24 percent between $82,500 & $157,500 32 percent between $157,500 & $200,000 35 percent between $200,000 & $500,000 37 for everything over that   If you’re married filing a joint return, then you’ll be looking at the following picture instead:   10 percent for the first $19,050 12 percent between $19,050 & $77,400 22 percent between $77,400 & $165,000 24 percent between $165,000 & $315,000 32 percent between $315,000 & $400,000 35 percent between $400,000 & $600,000 37 percent for everything over that...

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4 Ways to Know How Much You Owe the IRS

4 Ways to Know How Much You Owe the IRS

By on Oct 18, 2018 in blog | 0 comments

Not knowing how much you owe the IRS can be scary, but there’s a few easy ways to find out for certain. Don’t put off finding out. While you might dread the possibility of learning you owe much more than you though, waiting around won’t make things any easier. You can start to make preparations to settle the debt as soon as you know the amount.   Success Tax Relief put together this list so you can take that first step toward being free of your tax debt.   Four Ways to Find Out What You Owe   1) Use the View Your Tax Account App   An online browser-based app is available right on the IRS website that lets you view the balance for every tax year you owe. You can also use it to see the last 24 months of payment history as well as a decent amount of information from the current tax year. While you can only access it during certain hours since the site has to be monitored by human IRS agents, it’s easy enough for anyone to use. Regular taxpayers can create or view an account just by clicking a button. Since you won’t have to wait to speak with a person, this is usually the fastest way to find out. 2) Log on the IRS Get Transcript Site   You may find that you need additional information beyond simply the amount that you owe. If that’s the case, then access the Get Transcript app through your browser and request a full transcript from the IRS. Since you can have it sent to you digitally, you won’t have to wait nearly as long as you might if you were requesting a paper one. Keep in mind that the method you used to file influences the availability of your transcript, so there’s a small chance you won’t be able to get any information this way. 3) Make an Inquiry by Phone   If you need to know how much you owe and can’t wait, then you can call the IRS directly at 1-800-829-1040. While it seems a tad silly, their phone number for individuals really does end with the four digits for the 1040...

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Pros and Cons of IRS Payment Plans

Pros and Cons of IRS Payment Plans

By on Oct 11, 2018 in blog | 0 comments

IRS payment plans can be an excellent way to finally eliminate a tax debt you’ve been carrying for years. On the other hand, they could be more trouble than they’re worth. Just like with anything else, there are both pros and cons associated with filing for one of these programs. Experts from Success Tax Relief weighed both sides of the IRS payment plan equation to help taxpayers who aren’t sure whether one might be right for them.   Pros & Cons of Installment Agreements   When people say they’re filing for an IRS payment plan, they’re usually referring to a monthly Installment Agreement (IA). One of the biggest advantages of this method is that all taxpayers who owe less than $10,000 and haven’t had any brushes with the IRS in the past can get approved for one automatically. Around 90 percent of indebted taxpayers fit these criteria. Those who owe up to $25,000 may still qualify for an IA plan they can pay off in five years. Even if you owe more than this, the IRS can still negotiate with you under what they call good faith terms. However, those who opt for this kind of plan have to pay the balance in full within three years. Interest and penalties will continue add up while you’re making installment payments, and IRS agents will adjust these figures every quarter. Extra costs hold steady throughout, so they can add up to the equivalent of a 15 percent interest rate. Streamlined processing might be available to you if you’re dealing with a sizable burden. If you’re approved, then the IRS will put your case on the top of their list. Watch out, though, because their answer might still not be a good one. Contact Us if you’d like more information on whether this kind of plan is right for you.   Pros & Cons of Financial Disclosure   You can potentially reduce your overall tax debt with an Offer in Compromise or a Partial Payment Installment Agreement. Form 433-F will give you a chance to tell the IRS about your financial situation. They’ll then determine your ability to pay and possibly drop your burden as a result. Sharing financial data with the IRS...

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How an Underpayment Tax Penalty Can Be Waivered

How an Underpayment Tax Penalty Can Be Waivered

By on Sep 27, 2018 in Tax relief | 0 comments

If you pay estimated taxes and your estimates come up short, then you could get hit with a stiff financial penalty from the Internal Revenue Service (IRS). Taxpayers who collect income that’s not subject to withholding are supposed to pay estimated taxes. This kind of income includes everything from investment dividends and interest to alimony and lottery winnings. Even paychecks earned by self-employed entrepreneurs are potentially taxed under these rules because nothing gets taken out of them.   The good news is that any penalty you owe on an underpaid bill can be waived.   Calculating Underpayment Penalties   You need to submit IRS Form 2210 to see if you owe any underpayment penalties, which involves calculating your total liability. The IRS calculates penalties based on each individual payment period, and the form comes with two calculation methods to help you find out how much you potentially owe. Use the most recent version of this form because underpayment penalties change annually.   Legitimate Reasons to Request a Waiver   Properly establishing reasonable cause for the underpayment is key to getting it waived. The IRS will require you to meet certain criteria before they’ll wipe away any penalties you might owe. All taxpayers who want to claim a waiver have to prove that they didn’t neglect to make estimated payments on purpose. One or more of the following also has to be true:   A natural disaster, casualty, fire or other serious disturbance prevented you from making the payment on time You couldn’t receive records or other types of financial information needed to file; You became seriously ill or disabled before you had a chance to pay your estimated taxes After the age of 62 you decided to retire   Keep in mind that the IRS doesn’t consider insufficient funds to be a legitimate reason for failure to pay or file on time. However, the reason you didn’t have money at the time the estimated payments were due could meet the above criteria.     Requesting a Waiver from the IRS   Applying for a waiver can be as easy as including a written statement with Form 2210 that explains why you weren’t able to make the whole payment on time. You’ll also need to include the...

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