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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 to Calculate Underpayment Penalty

How to Calculate Underpayment Penalty

By on Sep 6, 2018 in blog, Tax relief | 0 comments

If you underpaid your federal taxes in the past, then you might be looking at a penalty from the IRS. Taxes are generally withheld by your employer, but self-employed entrepreneurs don’t get income taken out of their payment. You may have accidentally underestimated how much money you were going to make over the next quarter and, therefore owe the IRS additional taxes plus a fee. Fortunately, calculating the underpayment penalty you owe shouldn’t be that difficult. You simply need to get your hands on the right IRS form to do it. Using IRS Form 2210 to Calculate An Underpayment Penalty IRS Form 2210 is known as the Underpayment of Estimated Tax by Individuals, Estates and Trusts form. You can easily acquire it from the federal agency and features a flowchart designed to help you calculate the penalty. Part I of underpayment form 2210 will ask you to enter your total tax responsibility after credits from your normal 1040. You’ll also need to add any other relevant taxes such as the self-employment tax as well as any refundable sums, like the premium tax credit. It should then ask you to add these values together and multiply them by 90 percent. You’ll then need to subtract your withholding taxes from this new number and figure out the required annual payment. It might sound like a job and a half to get through, but doing it correctly can save you plenty of money. The bottom of this form provides a small chart that should help you figure out the total penalty you owe based on the number you’ve come up with. It gets multiplied by a small fraction, so don’t get caught up on how large the value looks right now. This isn’t the amount you need to pay in the end. Zap Away Your Underpayment Penalty You may be able to eliminate the underpayment penalty altogether. If you owe less than $1,000 after subtracting any relevant credits or previously withheld money, then you’re not responsible for the underpayment penalty. You also won’t owe the IRS any additional money if you’ve already paid at least 90 percent of the taxes due for the year. Those who have paid all of their taxes...

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5 Common Questions about Tax Relief, Answered

5 Common Questions about Tax Relief, Answered

By on Jul 11, 2018 in blog, IRS, Tax relief | 0 comments

When it comes to taxes, we understand that you have a heap of questions to ask. That is why Success Tax Relief offers free consultations. Over the past 30 years that we have been helping Americans get out of tax debt, we’ve discovered there are some common questions asked. We want to answer them right here so that you can get the most out of your free consultation with us. We hope these answers will guide you on the right path to complete tax relief:     Do I need to claim a child in order to file Head of Household? In order to file Head of Household, you can claim a child or dependent. There are two types of dependents: Child – A child doesn’t necessarily have to be related to you. If the child in your household is a stepchild, foster child, sibling, stepsibling, niece or nephew, he or she can be claimed on your taxes. However, the child must also meet the age requirement. He or she must be at least 19 years old. If he or she is a full-time student, then you are able to claim that person up until the age of 24. Your dependent must also live with you, and he or she can also have a job, but if the income provides more than half of his or her support, then you cannot claim that child. Qualifying Relative- A qualifying relative is for aging parents. They must live with you and make less than $4,050. Of course, you must be financially supporting them. Here, only one child can claim a qualifying relative. Do I have to pay taxes on my social security payments? This will all depend on how much money you make. If you have a significant taxable income, then you might have to pay up to 85% of your social security benefits. To get a better understanding of where you stand in the social security tax tier, visit the Internal Revenue Services’ website. What should I do if I receive a letter from the IRS? The first thing you should do is call an IRS representative to verify that the letter is valid. Once you have done that, then...

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