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Posts by Thelma

Are IRS Installment Tax Payments Deductible?

Are IRS Installment Tax Payments Deductible?

By on Jan 18, 2019 in Tax Deductions | 0 comments

Are IRS Installment Tax Payments Deductible? An installment agreement is one way to pay back taxes, interest, and penalties to the IRS over time if you are unable to pay in one lump sum. Like a credit card payment, you are paying back the debt (plus any interest and penalties accrued) over time, rather than paying the debt all at once. This is the most widely used payment plan offered by the IRS and one that they are likely to grant you. In addition, other instances to do with the IRS often seem like they are part of an installment plan. In this article, we parse some of the other common confusing claims you may or may not make associated with payments or fees. How Likely Are You to Be Granted an Installment Agreement? The IRS is actually fairly open to granting installment agreements to those who need them. For example, if you owe less than $50,000 and are current on your taxes, you should be granted an installment agreement (generally for 72 months) from the IRS automatically with just a simple request. If you owe more than $50,000, you will have to provide some detailed financial information, but still, have a good chance of it being granted. You should be aware that, like a credit card, you are paying back not only debt but interest and penalties that generally amount to approximately 8-10% as well. Depending on the size of your debt that can really add up fast. Another thing to note is that you also get a say in determining your monthly payment, so give that some thought as you go through the process. If your installment agreement is approved, the IRS will want you to pay via payroll deduction or direct debit. Are Taxes and Interest Deductible? One very common question asked by taxpayers who are currently paying an installment agreement or who are considering applying for one is whether any portion of the payment is tax deductible. NO – Unfortunately, the answer to this is no. Unlike tax breaks that you might get on your mortgage interest and property taxes, you are not allowed to deduct the interest or penalties that are part of an...

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Tax Debt and Divorce: Who Pays the Back Taxes?

Tax Debt and Divorce: Who Pays the Back Taxes?

By on Jan 11, 2019 in Tax Tips | 0 comments

A divorce is a complicated situation no matter how you look at it. Besides all the emotional issues you have to battle, you also have to sort through a laundry list of financial issues when trying to separate merged finances. Many married couples have joint accounts, own property that belong to both, and have been filing income taxes jointly for years. So, what happens when a couple owes back taxes and they decide to divorce? Tax Debt Generally Follows Other Debt and Property Divisions The general rule of thumb is that tax debt is seen in divorce proceedings as any other kind of debt. So, when your attorneys work on the divorce settlement and determine how much each party handles, tax debt is included, along with credit card bills, mortgage balances and any other debt. If property and debts are divided evenly between spouses, then your tax debt (including back taxes) is also divided evenly and each of you is required by law to pay your share. Settlements are not always equal, however, and sometimes one side will argue to pay more tax debt in order to also receive more of the share of the property. Exceptions to This Rule For the majority of states, property and debt are divided evenly in a divorce. However, you should note that if you happen to live in one of the following states – Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin – these states treat property and debt a little differently. In those states, the property and debt you acquire during marriage is considered “community property” and split evenly in a divorce, even if one spouse is unemployed. These states consider property and debt brought into marriage as “personal property” and this is assigned to the spouse who brought it into the marriage. Property left as inheritance or that were gifted to a spouse is not considered community property. So if back taxes were brought into the marriage in these states, the back taxes would remain the responsibility of the spouse who brought them to the marriage. If you are not in one of those states, then the rules are known as equitable distribution laws. Property acquired...

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How to Write a Letter of Explanation to the IRS (with samples)

How to Write a Letter of Explanation to the IRS (with samples)

By on Jan 4, 2019 in Taxes | 0 comments

If you have received a written notice from the IRS requesting an adjustment to a recent tax return, requesting additional documentation for your return, or if the IRS sends notice that your payment is late, you need to know how to respond appropriately.  Keeping the lines of communication open is key to a successful resolution of nearly all tax issues.  While putting your response in writing might sound like a daunting task, it is very likely to be the best and most effective way to respond to the IRS. There are several key things to remember when writing your letter of explanation to the IRS: (Template available at the bottom)   1. Understand Why You Are Receiving the Notice These notices or letters explain the reason for contact and give you instructions on how to handle the citation. If you have no reason to dispute the claim that has been made, then you won’t have to write a letter at all! However, if response is required, learn more by using the notice or letter number provided and enter it on this page. Here you will be provided with more information and related FAQ. You will find this notice (CP) or letter (LTR) number either on the top or the bottom right-hand corner of your correspondence. The IRS sends notices and letters for the following reasons: A due balance. A change in your refund amount. Questions regarding your tax return. To verify your identity. Additional information is required. A notification of processing delay.   2. Beware of Fake IRS Letters Never trust a letter just because it says ‘IRS’. Many tax scammers will design a notice to exactly like it came from the IRS in order to steal your personal information. With a social security number they could even steal your identity. The IRS does not ask for personal information via email or social media, but even if you receive a letter, it is safer to get in touch for confirmation of its validity. Keep the letter or notice for future reference in case a second fake IRS letter is sent. Here are some ways to tell if a notice from the IRS is fake news: It appears to be...

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IRS One Time Forgiveness: Does It Apply to You?

IRS One Time Forgiveness: Does It Apply to You?

By on Dec 26, 2018 in IRS, Tax Debt, Tax relief | 0 comments

Have you heard offers on TV or online promising to eliminate all of your tax debt? Have you wondered if these promises could be real or are they just too good to be true? In reality, while no formal debt forgiveness plan actually exists, you might actually qualify for significant assistance from the Internal Revenue Service (IRS) that can help you get a clean slate where your taxes are concerned. Success Tax Relief is a full-service tax firm that can help determine whether you meet these criteria. Here are some of the instances where taxpayers may be able to get out from under their tax debt for much less than they owe.   Can Your Tax Debt Be Forgiven   1. How old is the tax debt? If your tax debt is more than 10 years old and the IRS has not made attempts to collect, then the statute of limitations has passed and you will not have to pay your back taxes. That is correct—the IRS has up to 10 years to collect from taxpayers and if they exceed this timeframe, they are not legally allowed to collect.   2. Offer in Compromise The IRS understands that there are instances in which they will not be able to collect the full amount a taxpayer owes. If you have a low income or are experiencing a significant financial hardship, you may qualify for an offer in compromise, which allows you to settle your tax debt for less than what you actually owe. This does not preclude you from having to file; you still must file all required tax returns and also fill out the Offer in Compromise application, which will ask for documentation that proves that you are unable to pay the full amount due. The IRS publishes an entire booklet on the process, which we can help you better understand at Success Tax Relief. If your application is rejected for any reason there is an appeals process. A positive: an Offer in Compromise does not affect your credit history or score, so it is an avenue worth pursuing if you qualify. The recent IRS Fresh Start Initiative has made the application process easier for struggling taxpayers.   3. Non-collectible...

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How to File an IRS Audit Reconsideration Request

How to File an IRS Audit Reconsideration Request

By on Dec 20, 2018 in IRS Audit | 0 comments

An audit reconsideration request is the process by which a taxpayer is allowed to dispute the results of a recent audit of their tax return. If you disagree with audit results that prompted the IRS to assess additional taxes to you or a tax credit was reversed, the IRS may very well agree to take a second look at your case.   Do You Qualify for an IRS Audit Reconsideration? You might be eligible to request an audit reconsideration if the following four conditions are met: The tax return in question must already be filed. The taxpayer must have new or additional information that was not part of the original audit process. The taxpayer cannot have already paid the taxes assessed. The taxpayer needs to be able to communicate which portion of the audit is in dispute. How To File If you have determined that you are eligible for an IRS reconsideration request, your next step is to file your request with the IRS. Keep in mind that the IRS is not required to review or accept your request; they have full discretion over how they handle each reconsideration request. You must take the following steps to ensure that the IRS will actually review and potentially accept your information.   Communication:The IRS itself states there is no official form for a request for reconsideration, so it’s up to how you phrase your letter and to include copies of any documents you need to prove your points. Your letter should outline the reason for the reconsideration request, a summary of your situation, documentation. Include details about new information that you would like reviewed since the audit took place. The more detailed information and documentation that you can provide, the better. The IRS does suggest that you include the Disputed Issue Verification Form 12661. Tax Return:You should submit a copy of the submitted tax return in question, even if you have previously included this information. Audit Report:You should also include a copy of the audit report you received if possible. Submission:You should submit the reconsideration request to the tax office that you have been in communication with. Again, there is no special form required for this request, however Form 12661 is...

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