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Posts by Thelma

Removing A Tax Lien From Your Credit Report in 5 Steps

Removing A Tax Lien From Your Credit Report in 5 Steps

By on Nov 15, 2018 in Tax lien | 0 comments

One black mark on your credit report can ruin your chances of owning a home or getting a car for years. You shouldn’t have to carry a tax lien on your credit report after you’ve already settled your problems with the IRS. Unfortunately, many credit agencies will continue to carry a strike against you after everything is said and done.   The good news is that following these steps can go a long way toward restoring your good name.   Removing Liens from Your Report in 5 Steps    1. Make All Payments to the IRS   Make sure you’ve sent in all relevant payments to the IRS. Assuming that you’ve been on an installment plan you’ll need to have paid it all off before you’re able to proceed. Once you’ve paid it off, the IRS will automatically send you forms 668(Z) and 668(Y) so you can prove everything has been paid off. If you’ve entered into a payment agreement and are now in relatively good standing with the IRS, then you can even have a federal lien removed before the debt is paid off in full.    2. Make a Lien Withdrawal Request   Fill out Form 12277 and check the box that reads the withdrawal of the lien is in the best interest of both the taxpayer and the government. You’ll need to file this form with a brief explanation for the basis of the withdrawal request. You’ll also want to write a cover letter that includes all the important information in regards to your request for the lien to be withdrawn. If the lien shows up on your spouse’s credit report too, then you’ll want to include both of your taxpayer ID numbers.    3. Confirm that Your Request has been Granted   The IRS will notify you in a couple of weeks or so if the lien has been withdrawn. Assuming that all went well, your information will now be removed from county records. In some cases, the credit bureaus will pull information from these records and automatically remove it. If you get IRS form 10916(c) in the mail, then you’ll want to make copies of it just in case.    4. Dispute the Lien...

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Separation of Liability Relief: Who Qualifies?

Separation of Liability Relief: Who Qualifies?

By on Nov 8, 2018 in Tax relief | 0 comments

If you’re dealing with a difficult time in your life, then any added tax burden can just make things worse. Relief by Separation of Liability is a technique offered by the IRS to allocate tax understatement, interest and penalties from a joint return between you and your spouse or former spouse. While you can’t use it to divvy up a refund, this kind of relief can be an excellent way to sort out unpaid liabilities.   There’s no such thing a free lunch when dealing with taxes, however. Only certain taxpayers qualify for relief under this rule.   Separation Relief Requirements   To request separation of liability relief from the IRS, you need to have filed a joint return in the past. If you didn’t file jointly, then chances are that you don’t have too much in the way of this kind of liability anyway. Otherwise, you have to fulfill one of two requirements at the time you send in your IRS Form 8857.   Scenarios that meet those requirements include:   You have not been a member of the same household as your spouse during the last 12 month period ending on the day you sent in Form 8857. You are either legally separated from your spouse or are no longer married to them.   While it’s easy to know the exact date you legally separated from your spouse, taxpayers trying to claim they weren’t a member of the same household are dealing with a slightly more complicated situation.   Proving You’re Not Members of the Same Household   Estranged spouses who aren’t legally separated aren’t part of the same household if they live in physically different locations. However, the IRS has some very specific rules about what constitutes living in a different location. If you were in the same dwelling during the last year, then you’re considered members of the same household. Keep in mind that the IRS might consider a shared apartment to be the same dwelling. The same might even go for a trailer in some cases.   Even if you didn’t live in the same dwelling, you have to prove beyond reasonable doubt that neither of you planned to move back in together. IRS...

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Offer in Compromise: 5 Tips to Increase Your Approval Chances

Offer in Compromise: 5 Tips to Increase Your Approval Chances

By on Dec 29, 2017 in Consultation | 0 comments

If you owe an extreme amount of debt to the IRS, it may seem that you will never be able to pay it off. You might be kept up at night thinking about how the IRS could collect the debt, including putting a levy or lien on your car, house, or other property. But you might be able to rest easy tonight because the IRS has an initiative that can settle your tax debt for less than the full amount. The Offer in Compromise is a solution that can help taxpayers who are unable to pay the total amount that they owe to IRS in the timeframe required, or if doing so would cause the taxpayer severe financial strain. Instead of letting your property become subject to IRS seizure, negotiate your bill down through the Offer in Compromise program. But to get approved, you have to be qualified, and below are five tips to increase your approval chances. Know which Forms to File To file an offer in compromise, you must complete Form 656 (Offer in Compromise), Form 433-A (Collection Information Statement) as well as 433-A Worksheet (Calculation Payment Worksheet). Have Backup Documents When you file an offer of compromise, you need to prove that you are unable to pay the full tax debt that you owe to the IRS. Make sure to have documents on hand that present your argument with data and credibility. Pay Application Fee To have your offer in compromise processed, you must pay the $186 fee. If you are unable to pay this amount, you can submit a request for a waiver. File all Required Tax Returns According to the IRS website, beginning with offer applications received on or after March 27th 2017, the IRS will return any newly filed offer in compromise application if the applicant has not filed all required tax returns. Any application fee included with the offer of compromise will also be returned. Any initial payment required with the returned application will be applied to reduce your balance. This policy does not apply to current year tax returns if there is a valid extension on file. Use the IRS Online Tool The IRS offers an online tool to help you...

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Expert Tips on Getting an Offer in Compromise Approved

Expert Tips on Getting an Offer in Compromise Approved

By on Dec 23, 2017 in Consultation | 0 comments

If you have tax debt that you feel you cannot afford to pay, then you may qualify for an Internal Revenue Service (IRS) program that requires you to pay less than the full amount due.  This is done through an Offer in Compromise. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that allows the taxpayer to pay less than the full amount owed.  The IRS generally approves up to 40% of OIC applications each year.  The biggest factor to consider when it comes to an OIC is that you must prove that you are not in a position to pay your full tax bill. There are many people who want a clean slate when it comes to their taxes. Ask yourself: “How should you make your case?” Tips for Getting Your Offer in Compromise Application Accepted Be thorough: The IRS will not grant an OIC to a taxpayer who does not show the need. You will be asked to provide detailed financial records, bank statements, paystubs and additional paperwork.  The more information that you can provide to strengthen your case, the better. Stay current on your tax returns: You cannot qualify for an OIC if you have not submitted previous tax returns. Deciding how much to offer: To submit an OIC, you will need to carefully follow the instructions on the IRS Form 433.  This worksheet will help you determine the amount you want to offer. This calculation is based on the net value of your assets plus your excess monthly income after you subtract all of your monthly expenses. Special circumstances: The IRS is known to give consideration to taxpayers with any special circumstances including physical or psychological hardship or those who are of advanced age.  The IRS will even take into account the mental illness of a close family member if it has impacted you financially, for example. Re-submit if necessary: If the IRS rejects your first application, consider applying again. The IRS will notify you of their decision in writing and will list a reason that the offer was rejected.  If you are told that the offer is too low (this is one of the most common reasons for rejection),...

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IRS Installment Agreement Interest Rates Guidelines

IRS Installment Agreement Interest Rates Guidelines

By on Dec 21, 2017 in IRS | 0 comments

If you are working to settle your tax debt with the Internal Revenue Service (IRS), you may see an installment agreement as a viable and appealing option for helping you repay your debt.  An installment agreement allows you to pay the IRS back over an extended period of time, rather than in one lump sum. It is similar to a credit card payment, in that you make monthly payments over the course of several years until the debt is eliminated.  Also, like a credit card, it is important to remember that you are still responsible for any penalties and interests that you have accrued, so you should factor that in when you are making decisions about repayment. Here are some facts about how the IRS calculates the interest on your tax debt: Interest (and penalties) are charged on any unpaid debt until the entire balance is paid back. Interest on your tax debt accrues each day. The interest rate used is calculated every three months, meaning it can change as time goes on. Interest stops accruing as soon as the balance is paid in full. Installment Agreement Payment Options So, not only are you responsible for paying the amount you originally owed the IRS in unpaid taxes depending on the total amount due, you could also be responsible for a sizable amount in interest and penalties, though you will not be subject to wage garnishments, levies and other collective actions. You’ll want to factor this in when you are making your appeal to the IRS for the installment agreement to be sure that the monthly payments you end up with are affordable for you and your family. The IRS essentially tries to let you set the monthly payments, provided the payment is high enough. Your goal is to establish a payment high enough to pay off the debt, but not so high that you have to default. In addition, the more you owe the IRS, the more financial information they will require from you in order to approve an installment agreement. For a frame of reference, if you owe less than $10,000, your installment plan will very likely be approved as a “guaranteed” installment agreement. Under this type of...

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