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Federal Income Tax Rate in Texas: 2019

Federal Income Tax Rate in Texas: 2019

By on Oct 8, 2019 in blog, Consultation | 0 comments

Everyone must pay their federal taxes in the United States. Some states, however, offer more leeway than others do. The state of Texas, for example, does not charge an additional income tax; you will have to pay a .375% franchise tax if you run a business. You also do not have to pay estate or inheritance taxes, and counties determine if you have to do so for real estate or personal property.  Every state will see some changes with the 2018 tax legislation. People will have to pay differing amounts due to what the can and cannot write off in their return. Your income will determine part of that, of which tax bracket you will fill.  Your 2019 federal tax return will be due on April 1, 2020. If you get an extension, you will have to turn it in by October 1, 2020. Rates have slightly changed, so we’ll discuss the basics for what you need to know.   Federal Income Tax Brackets How do tax brackets work? They work on dividing your income into taxable amounts so that you are not paying the same rate uniformly. Instead, you pay the amount by which the maximum in each bracket. The brackets are as follows: 10% for $9700, 12% for $39,475, 22% for $84200, 24% for $160,725, 32% for $204,100, 35% for $510,300 and 37% for any amount above $510,300. The more income you earn, the more brackets you fill.   Confused? Maybe a concrete example will help. Let’s say that you earn 10,000 a year in USD. That puts you in the first marginalized bracket, which pays a ten percent margin rate. You only pay ten percent, however, on $9700 of that income, or $970. The remaining $300 is taxed 12%, or $360. Your total thus is $1360 to pay in taxes.    For salaried employees, the good news is that employers automatically deduct taxes from your paycheck. You then have that withheld amount to assist with paying taxes for the following year. In some cases, you may even get a refund if your income is below a certain amount.  Freelancers, business owners, and entrepreneurs are a different story. If you are freelancing, that must mean you do the withholding for...

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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 Penalties & Interest Rates: A Complete Guide from the Tax Relief Experts

IRS Penalties & Interest Rates: A Complete Guide from the Tax Relief Experts

By on Sep 20, 2017 in Consultation, IRS | 0 comments

When it comes to taking care of taxes, to make it simple, they’re broken up in two ways: individual taxes and corporate taxes. The penalties and interest for both of these differ. However, we’re not expecting corporations to look in their search engines for information about the Internal Revenue Service’s (IRS) interests and penalty rates. They typically have a team of corporate lawyers to help them along in that area. At Success Tax Relief, a tax relief firm based in Houston, Texas, we get a lot of questions about penalties and interests. So, we have decided to compose a quick go-to guide that will give you the basic run-down on penalties and interest rates for individual taxpayers.  Late Filing and Payment Penalty Many taxpayers may already know about the late filing penalty, but are often caught by surprises when they see the late payment penalty. That is because the IRS expects you to pay whatever you owe with your filing. So, it stands to reason that if you’re late filing, you’re going to be late paying. Thus, the double one-two hit of the late filing and payment fee. The IRS states that the penalty for filing late is 5% for up to 5 months. After 5 months, the penalty increases by 1% of the unpaid tax balance. The good news is that it cannot exceed 25%. The bad news is that you’ll receive an Intent to Levy notice if you have not paid.  According to the IRS, “For returns due after 12/31/2008, the minimum penalty is the lesser of $135 or 100% of the tax due. For returns due after 12/31/2015, the minimum penalty is the lesser of $205 or 100% of the tax due.” Underpayment Penalty  Paying the partial amount of what you owe will not cut it if you haven’t officially worked out a payment arrangement with the IRS. If you have paid less than what you owe, then you will be charged an underpayment penalty.  As far as the IRS is concerned, according to your records, you did not pay what you owe.  Writing an insufficient check to the IRS is a really bad idea. Although, we understand that oftentimes, money in the checking account can...

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How to Settle a Tax Debt with a Chapter 13 Bankruptcy

How to Settle a Tax Debt with a Chapter 13 Bankruptcy

By on Sep 15, 2017 in Consultation, IRS, Tax Problems, Tax Tips | 0 comments

Bankruptcy shouldn’t ever be considered the “get out of debt” free option. Major consequences follow behind a bankruptcy filing. You could be restricting yourself from financial opportunities through this type of solution. Let’s first review exactly what it means to file for bankruptcy.  Bankruptcy. What Does it Actually Mean for You? Filing for bankruptcy is officially reporting to the government that you acknowledge that you have outstanding debts to pay to various companies and agencies and you do not have the financial means to pay the debt. A bankruptcy filing will clear you of these debts, but at a price. Your credit score will take a major hit that will make it almost impossible for you to pull a line of credit with any bank or to even purchase a vehicle. You’ll Pay More in Interest with a Bankruptcy Filing Any line of credit that you do manage to get with a bankruptcy filing on your credit report will come with a hefty interest rate. Financial institutions that charge high-interest rates are merely trying to get as much money from you up front because your credit report shows that you have a history of not pay what you owe.     Bankruptcy filings can stay on your credit report for at least seven years.   Bankruptcy is a Solution, But Not Always the Best One What most taxpayers don’t realize is that your tax debt may not go away with a bankruptcy filing. Certain stipulations have to come into play in order for your tax debt to be wiped away with a bankruptcy filing. There are different types of bankruptcy filings, but the most common one is Chapter 13 for individual taxpayers and sole proprietors. Corporations typically file under Chapter 7 or Chapter 11. For the purpose this article, we’ll focus on Chapter 13. When it comes to filing a Chapter 13 bankruptcy, the Internal Revenue Service (IRS) states that you must qualify for the following:   4 Things The IRS Wants You to Know About Chapter 13 Bankruptcy Filing   You must file all required tax returns for tax periods ending within four years of your bankruptcy filing. During your bankruptcy you must continue to file, or get...

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Homeowner? Find Out What You Can Deduct from Your Taxes

Homeowner? Find Out What You Can Deduct from Your Taxes

By on May 25, 2017 in Consultation, Homeowners, Tax Deductions, Taxes | 0 comments

Typically, many new homeowners aren’t aware of all of their newfound tax deductions and credits. It’s certainly something to take advantage of as owning a new home will require a grand amount of financial responsibility. Here a list of things homeowners can deduct from their next tax filing:  Property Taxes – You should get a statement from your county that states how much you owe in property taxes. However, if you’ve taken out a loan, many banks design home loans so that the homeowner has an escrow account where a percentage of your monthly mortgage is placed in that account to pay for property taxes. At the end of the year, if the amount of taxes stored in escrow exceed the amount owed, then the remaining amount is mailed back to the homeowner. It will only be the amount paid toward property taxes that can be written off on your taxes. Energy Efficient Tax Credit – The money spent on any type of energy efficient appliance can be written off. Depending on the type of appliance, oftentimes only a percentage of the money spent can be written off. Different terms apply. Other than appliances, other energy-efficient equipment such as solar panels, energy-efficient windows, metal roofs, insulation, and the like all apply. Additionally, renewable energy like sun and solar powered wind make you eligible for a tax credit. It’s highly advised to consult a tax professional for the specifics. Ground Rent— There are instances where you may have purchased the dwelling of the home, but not own the property. In such cases, you’d be obligated to pay the owner of the land rent, commonly referred to as ‘ground rent’. If you are in a mortgage or land contract where you’re obligated to pay ground rent for approximately 15 years, you will be able to write that full amount off. It’s very similar to renting a house or apartment and being able to write your monthly rent expenses off. In the case of ground rent, you wouldn’t be able to write off the principle that you paid toward the dwelling. Mortgage Interest – Whatever amount of money you’re paying in interest on your mortgage loan is the amount that you’ll be...

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