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Tax Laws

Chapter 7 Bankruptcy Forms: Everything You Need To Know

Chapter 7 Bankruptcy Forms: Everything You Need To Know

By on Jan 15, 2020 in Tax Laws | 0 comments

Bankruptcy is a word that nobody wants to hear regardless of their current financial situation or their occupation. The status can wreck your finances and credit, potentially ceding them to the courts. No matter what sort of condition you’re in at the moment, you probably don’t want to even consider the possibility of personal bankruptcy.   As a last resort, however, it can really help you to get back on your feet if you’ve suffered some kind of major loss. Not all bankruptcies are created equal, and some types can help you get back to normal much faster than others. People can use a fresh start when their finances go wrong.   Success Tax Relief agents have always recommended that people weigh all options before jumping into anything headfirst. Take a moment to think about whether or not Chapter 7 Bankruptcy would be right for you.   What Is Chapter 7 Bankruptcy? Although all bankruptcies stay on your record for years, a Chapter 7 bankruptcy usually only takes around 3-6 months from filing to relief from your unsecured debts. While you might lose some of your luxury possessions under this sort of arrangement if needed to help settle debts, you’ll be able to keep any salary or wages you earn after you file.   That means Chapter 7 allows you to retain any property you purchase after you’ve finished filing. Eventually, you’ll even be able to obtain new lines of credit. While you could get stuck with a higher interest rate, you could get a credit card or a bank loan within a year or two of filing.   How Does It Work? In most situations, you have to voluntarily apply for Chapter 7 since you can’t generally be forced into it. This is actually a good thing since it means you’ll be able to explain to future lenders that you worked to get out of debt as opposed to being forced into some sort of involuntary procedure.   You’ll need a form called a Voluntary Petition for Individuals Filing for Bankruptcy, which is number B 101 and only applies to individual debtors. Presuming this is accepted, you’ll then be asked to file 101 parts A and B, which...

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Can The IRS Collect Tax Debt After 10 Years?

Can The IRS Collect Tax Debt After 10 Years?

By on Mar 8, 2017 in IRS, Tax Laws, Taxes | 0 comments

The government has a reputation of going after people that fail to file their returns, whether that is true or not. We can attribute that to how stories of people jailed for evasion hit the news, from Lauryn Hill to Wesley Snipes. Gangster Al Capone is the uber example, with his failure to pay taxes being the reason he was eventually convicted. When Capone tried to hire tax experts to mount an appeal, he lost. If you are in a position of owing a tax bill to the Internal Revenue Service (IRS), you may wonder if you will ever get this monkey off of your back, so to speak. As a general rule, the IRS cannot collect back taxes forever—they have a maximum of 10 years to collect back taxes from a taxpayer. There is a 10-year statute of limitations on any tax debt, so after that time, the IRS must stop the collections process. Does this mean that you are off the hook? No. Everyone must pay their federal taxes, even with the limitations on collection.  With that said, you do have more options when realizing that the time to collect is coming nearer. You won’t go the way of Al Capone or any celebrity who has run afoul of the IRS or has deliberately lied on a return. For one, you are trying to pay back a debt and restore your credit. Details of Extending The Limitations Period of 10 Years If you are trying to calculate the exact date of the 10-year period, you should begin with the date of the actual IRS tax assessment. So, if you fail to pay taxes on time but file a return, you will receive a letter from the IRS (called a “written notice”) and the date of that first letter is the date that the 10-year clock starts. If you do not file a return or pay your taxes, then the IRS will create a substitute return for you and what is called a deficiency assessment, which also will start the 10-year clock. Generally, a deficiency assessment is an additional review that calculates a payment you must make along with regular taxes. While the assessment sounds intimidating, it is...

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Can I Claim My Pet On My Taxes? The New Loophole Pet Owners Love!

Can I Claim My Pet On My Taxes? The New Loophole Pet Owners Love!

By on Feb 16, 2017 in Tax Laws, Tax Tips | 0 comments

  Any pet owner will tell you that being a guardian of a dog, cat, bird, fish, rodent—basically any living thing is a huge responsibility, and it’s not cheap! In fact, these lovable little creatures arguably take just as much energy and effort as a child. So, when it comes to taxes, you’d think that you could write your pet off as a dependent. But you can’t. If that were the case, everyone might conveniently have a pet around the beginning of the year! You just can’t. That’s the law. The type of things that you can write off is more like a necessity for living or it somehow helps the environment or community. And while children are looked at as our future, they’re legally claimed as a dependent. The Internal Revenue Service (IRS) sees pets as a luxury. Therefore, you cannot claim them as a dependent. What About Medical Expenses? A good rule to remember is that if you can’t claim your pet as a dependent, then any other expense—including medical isn’t taxable either. However, there is a loophole for pet medical expenses! If you need a dog to serve the purpose of guiding or guarding you, then you can write the expenses related to this purpose off. Some people need a dog to guide and/or protect them due to being visually or hearing impaired. So this would include not only the medical expenses, but also everything needed to train and keep the dog healthy. Do Cats Get a Loophole? Of course! We can’t leave the cats out! You can reportedly write the expense of your feline friend off if he or she serves the purpose of contributing to pest control. If you can prove to the IRS that your kitty is help keeping your business property free of mice or any other kind of rodents, then you’ve got yourself a tax write-off! Hobbies  Since the IRS allows you to write off hobby expenses, pet show owners can certainly take advantage of this tax break. What this means for show owners is that you’ll be able to write off the expenses related to keeping the pet up for the show. If you’re fortunate to win a cash prize...

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How the Affordable Care Act Can Affect Your Taxes

How the Affordable Care Act Can Affect Your Taxes

By on Apr 27, 2015 in Tax Laws, Taxes | 0 comments

 There is one question on all American taxpayers’ minds this year — how does the Affordable Care Act affect my taxes? As you may already know, the Affordable Care Act states that individuals living in the US must maintain health insurance throughout the year. If you choose to ignore this new law, you will be responsible for paying a penalty to the government, which starts fairly low in 2014 ($95 or 1% of your income per person), but will gradually increase in years to come. You are asked to disclose whether you have health insurance on your tax return for the first time this year. So, this leaves many questions for taxpayers looking to file their returns this spring. Will This Affect You? While this definitely is a big deal for many Americans, it should be noted up front that it will not significantly impact everyone. For example, if you have a job with employer-paid benefits and your entire family is on the same plan, you may not be impacted at all. All you will notice is that you need to check a box on your tax return indicating that you have health insurance. Things get more complicated if you are not on an employer-paid plan and/or your entire family is not covered by the same plan. If you are in compliance, you will have purchased health insurance from a market exchange and you will be asked to report the value of your health plan (rather than your employer reporting it). The IRS in turn evaluates your coverage to determine whether you could receive tax credits, or if you owe penalties to the IRS. Possible Tax Credits for Low Income Filers Part of the Affordable Care Act acknowledges that many Americans may not be able to afford health insurance. As a result, if you earn between 133% and 400% of the federal poverty level, you will likely be able to receive tax credits that will be able to help you pay for your required health insurance. There are certain circumstances that may prevent you from obtaining medical insurance, which may qualify you for a hardship exemption. If You Have Questions, Seek Support Significant changes to tax law yield many...

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Do Online Poker Players Have to Pay Taxes?

Do Online Poker Players Have to Pay Taxes?

By on Jul 9, 2014 in Tax Laws | 0 comments

Long gone are the days where you could play online poker and not worry about the tax consequences. Even until just a few years ago, many of the offshore websites hosting online poker were able to get around US tax law. But the IRS has caught up with technology and if you have big winnings this year, you should expect to pay a portion to the government in taxes. Times Have Changed, Be Ready to Pay Up! With an increase in tax regulations around online gambling, things have taken a turn. The IRS now has access to records of individuals participating on websites affiliated with the US, like newly created and popular UltimatePoker.com, RealGaming.com and WSOP.com. So, if you play poker on one of these sites, just like in a real casino, the IRS can access your information. This means they also know whether your winnings were above the $600 threshold (that should be reported on a W2-G tax form). How Is This Monitored? You may wonder how these websites track all of the individual winners. Here’s how it works…if you win $600 or more in a freeroll tournament or a net of $5,000 in a tournament, you will be emailed a request from the website and your winnings will be withheld by the company until you provide the requested information. Often, individuals prefer to have taxes taken out before they receive their winnings so that they do not have to worry about it later. You often have this choice. One additional thing to note – the IRS makes a distinction between professional gamblers and recreational gamblers. Professional gamblers have to actually pay income tax and self-employment taxes to the IRS, while recreational gamblers report their earnings as miscellaneous income. What Stays in Vegas?!? So, whether you go to Las Vegas and play the casinos or you hop online and try your hand playing poker on your own computer, the IRS sees it all as the same. The IRS has caught up with the online gambling market and will only likely get more serious about enforcing the payment of taxes on poker and other gambling winnings. Our advice is to get ahead of this and pay what you owe,...

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What You Should Know About Double Taxation

What You Should Know About Double Taxation

By on Mar 27, 2014 in Tax Laws | 0 comments

Double taxation is a fairly complicated tax topic that is defined as income taxes that are paid twice on the same source of income.  The most common example used to illustrate the principle of double taxation is the income tax imposed on corporate income and then taxed again when the dividends are distributed to shareholders of that corporation.  So, the government receives taxes on the same pot of money twice.  Is this fair?  Double Taxation:  The debate Historically, there has been significant debate about the fairness of double taxation – some arguing that the government via the IRS should only tax at either the corporate level or the personal level but not both.  These critics say that double taxation damages the economy and takes money away from those individuals who invest and save. Those who believe that the current double taxation concept is fair maintain that corporations are entirely separate from their stakeholders and without it wealthy individuals could benefit from both the dividends from owning many shares of stock while not having to pay tax on their personal income. Impact of double taxation in international business Double taxation can also come into play in some international financial transactions.  If a person who lives in one country does business in another country, it is possible that individual may be required to pay taxes in both the country in which they reside as well as the country in which the business transaction takes place.  Different countries have different rules about how this is handled, so if you are planning to do business internationally, the possibility of double taxation is definitely something that you should pay special attention to. Other questions?  Consult with an experienced tax firm Double taxation can be a complicated issue to understand and you want to be sure that you fully understand the possible implications in the event that your income can be impacted.  If you are concerned about double taxation or any other tax problems, you may want to considering consulting with a professional tax firm that can help you sort through the regulations, the nuances and help you come up with a solution that works well and even benefits you or your business. Success Tax...

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