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What is a Tax Lien and Can You Prevent Getting One on Your Assets?

What is a Tax Lien and Can You Prevent Getting One on Your Assets?

By on Apr 16, 2018 in IRS, Tax lien, Tax relief | 0 comments

If you are in the unfortunate situation of being unable to pay your tax debt to the Internal Revenue Service (IRS), it is possible that they can make a legal claim against your property.  This is called a tax lien. A tax lien does not mean that the IRS will actually seize your property. It simply ensures that the IRS gets the first right to your property before any other creditors. You should be aware that a tax lien can show up as a public record on your credit report, which can (as you might imagine) hurt your credit score. Once a tax lien has been filed, it can be very difficult to remove.  While the IRS will release the lien within 30 days of a fully paid tax debt, it may take much longer for the credit bureau to remove it from your credit report. How to Avoid a Tax Lien The best way to prevent a tax lien is to pay your tax debt off to the IRS in full as soon as possible. Here is a detailed list of options that could help you avoid a tax lien. Installment Agreement:  An installment agreement allows you to pay your debt to the IRS over time rather than in one large lump sum. This works very much like a credit card where you pay a monthly amount to the IRS over the course of several years.  In addition to the actual tax debt owed, you will also be responsible to pay interest and penalties, but the bottom line is that this agreement will give you more time to pay the total amount you owe. Offer in Compromise:  An Offer in Compromise (OIC) can be granted from the IRS if you are unable to pay the full amount due. You will have to present your case to the IRS proving that you are unable to pay. You’ll need to produce financial documents and submitting a detailed application.  If granted, an Offer in Compromise can allow you to settle your tax debt for less than you owe. Tax Support: It is very important to understand that you should never ignore letters or other correspondence from the IRS about your tax debt....

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How an Underpayment Tax Penalty Can Be Waivered

How an Underpayment Tax Penalty Can Be Waivered

By on Mar 29, 2018 in IRS, Tax Penalties, Tax relief | 0 comments

Do you pay estimated taxes? The Internal Revenue Service (IRS) actually requires that taxpayers pay estimated taxes on certain types of income that is not subject to withholdings, such as income from self-employment, dividends and interest, rent, alimony, and prizes or other winnings. What happens if your estimated taxes do not cover the amount that you actually owe the IRS in a given year? It is possible that you can actually be penalized by the IRS for underpayment of your taxes, causing another tax headache. Penalties for Underpayment of Taxes If you are concerned that you may be penalized for underpayment by the IRS, you should know that it is possible that you may qualify for this penalty to be waived.  The penalty for underpaying your taxes can change from year to year and in the vast majority of instances, the amount of penalty depends on your circumstances.  You should be aware that the penalty is calculated for each individual payment period for your estimated taxes. To make this calculation accurate, you should plan to submit the IRS Form 2210, which has two different methods for calculating your penalty.  The first step is always to determine the exact amount of taxes that you underpaid. The Form 2210 will also help you make the calculation for your potential penalty. Criteria for Waiving Underpayment Penalty This underpayment penalty can be waived if you meet the following criteria: If you were unable to make your estimated payment because of disaster, death or other unusual situation; If you retired after the age of 62 If you became disabled If you had a reasonable cause for not making the payment AND, You did not purposefully neglect to make the payment. How to Request a Waiver In order to request a waiver for your underpayment, you should do so by filing IRS Form 2210 and include a written statement detailing why you were unable to make the entire payment. This statement should also include a specific time period of which you are requesting the waiver.  You should also plan to include any supporting documentation (proof of disaster, death, retirement notice, disability date, etc.) that supports your position so that the IRS can review this information...

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IRS One Time Forgiveness: Does It Apply to You?

IRS One Time Forgiveness: Does It Apply to You?

By on Mar 22, 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 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. 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 have 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.  There is an application process for this and you must be able to prove that you are unable to pay the full amount due, but the recent IRS Fresh Start Initiative has made the application process much easier. Non-collectible status: This is another program for those who cannot afford to pay their tax debt.  If the IRS agrees that you cannot pay your living expenses and your tax debt, it could place your account in non-collectible status, meaning you will not receive letters and they will not place levies on your property for a certain period of time. Bankruptcy: If you have filed Chapter 7 bankruptcy, then the IRS is also not allowed to pursue collection. Other IRS Fresh Start Programs: As previously...

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How to Avoid Tax Return Identity Theft from Happening to You

How to Avoid Tax Return Identity Theft from Happening to You

By on Mar 8, 2018 in Filing Taxes, Identity Theft, IRS | 0 comments

Getting a tax refund is often a welcome surprise that can help you pay an upcoming bill, get ahead on a credit card payment, take a mini-vacation or simply increase your family’s emergency fund.  However, over the last several years, tax return identity theft has become increasingly common and many Americans are finding that their refunds have already been claimed when they file their taxes.  How can you prevent this from happening?  Here are some tips for protecting yourself from tax return identity theft. 1. Protect Your Social Security Number Identity thieves generally use social security numbers to claim annual tax returns.  They steal other people’s social security number to file a fraudulent return very early in the tax season, generally before most taxpayers would be able to file.  As a rule, you should be very careful with your social security number and avoid carrying it with you on a daily basis. Keep your social security card in a safe place at home so that it does not fall into the wrong hands.  Also, do not provide your social security number unless it is absolutely necessary. 2. Choose Strong Passwords Identify thieves also work hard to access their online information.  When you set passwords, especially for all accounts related to your finances, make sure that they are strong, so that they cannot easily be accessed.  Change passwords regularly and avoid automatically saving your passwords. 3. Beware of Phone and Email Scams If you receive a phone call or email that asks for your personal information, assume it is a scam.  The Internal Revenue Service (IRS), credit card companies, banks and other legitimate businesses will not contact you by phone or email and request personal information like social security numbers.  The bottom line is that if you have not initiated contact, do not share your personal information. 4. Shred-It Shred all financial and personal documents and paperwork that you are ready to discard. Do not simply throw this information in the trash. Also, shred all of those credit card offers you get in the mail. This is another source of identity theft. 5. Keep a Close Eye on Your Credit Information If you notice that something is amiss when it comes...

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Getting Help with State and Federal Tax Debt

Getting Help with State and Federal Tax Debt

By on Feb 28, 2018 in IRS, Tax Debt, Tax relief | 0 comments

Are you concerned about owing money to the IRS? Do you have tax debt that you are unable to pay? You may have options for getting help with your state and federal tax debt without ruining your credit and overall financial outlook.  The Internal Revenue Service (IRS) has put some new programs in place to help taxpayers manage their debt effectively and avoid tax liens. The Fresh Start Initiative was first introduced several years ago with the goal of helping struggling taxpayers. Here are some of the key components of the program and how it might help you: Installment Agreements:  The IRS has made installment agreements available to more taxpayers who owe back taxes to the IRS. So, instead of having to pay your debt off in one (large) lump sum, this program allows you to pay that debt off in lower monthly payments, over the course of several years.  You can request an installment agreement for up to $50,000 without having to provide the IRS with a detailed financial statement, and you will now have longer to pay the debt off when you are approved for one of these streamlined installment agreement (72 months instead of 60 months).  While you are still responsible for penalties and interest, an installment agreement is exactly what many taxpayers need to get out from under the burden of tax debt. Offer in Compromise:  If you are under financial hardship and are unable to pay the full amount that you owe the IRS, you can also apply for what is known as an Offer in Compromise.  This program settles your debt with the IRS for less than you actually owe, based on what you can actually afford to pay.  The Fresh Start Program still requires a significant amount of financial information in order to grant an OIC, but this has become a bit easier as the threshold has become more flexible overall. Unemployed Penalty Relief:  If you are without a job, you may be able to have some of your penalties waived that have been added to your actual tax debt.  To assist those most in need, the IRS now provides a six-month grace period on failure-to-pay penalties that can be made available...

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Back Tax Debt Relief Under the New Tax Law

Back Tax Debt Relief Under the New Tax Law

By on Feb 22, 2018 in Debt Relief, IRS, Tax | 0 comments

While specifics about the new tax laws are being reviewed and analyzed, you may be wondering how this will impact the back taxes that you already owe the Internal Revenue Service (IRS).  The tax bill that was signed into law in December of 2017 will impact all of us over the course of the next several months to a year. You may have heard that the tax law benefits the wealthy and/or corporations.  The fact is that you can also expect to see your monthly income rise a bit, as the government will take out less each month for taxes, which will be disproportionately low for lower income families.  The new tax bill will impact how you file your taxes in the coming years, but if you already owe back taxes to the government, you can consider one of the following options to resolve your debt and move forward once and for all. How to Settle Tax Debt Consider alternative payment options:  Interest and penalties add daily to your tax debt, so you may want to consider alternative ways to pay off debt if possible.  Look into no interest credit card options, low-interest loans from your local bank or even a family member or friend to help pay off your tax debt. Bankruptcy is another option for individuals that have exhausted other options. Government programs:  The Fresh Start Initiative was designed and implemented specifically to help those with back tax debt. If you are not able to pay off your debt in one lump sum, you can request what is known as an installment agreement that allows you to pay your debt over time. So, instead of paying the full amount you owe now, you can make monthly payments over the course of 3-5 years.  Additionally, if you are under significant financial hardship, you may qualify for an Offer in Compromise (OIC), an agreement that settles your debt for less than you owe. Tax Support: If you owe back taxes to the IRS, your tax situation is likely complicated and perhaps even overwhelming.  A reputable tax firm can help review your current tax situation and help you decide the best path forward, given your past returns and the new...

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