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Tax Tips

IRS Form Guide: Form 2210 – Underpayment of Estimated Tax 

IRS Form Guide: Form 2210 – Underpayment of Estimated Tax 

By on Dec 4, 2019 in Tax Tips | 0 comments

Certain forms of income require that you pay an estimated tax on them. These include rent, alimony, contest winnings such as the lottery, dividends, and interest on bonds, or self-employment income. Thus is you are divorced or an entrepreneur, you may need to determine your estimated tax payments if they are equal to or greater than $1000 USD.  You would have to pay estimated taxes four times a year. The due dates are the 15th of April, June, September, and January. Missing a payment is a bad idea because the government will note it and enact penalties. They will do the same if you underestimate your taxes and owe them more money.  While the IRS may allow for waivers on certain circumstances, a taxpayer should know what to do if they want to avoid underpayment penalties. You would rather take charge of the situation before it grows into an unpleasant amount due.  Checking If You Owe A Penalty For Underpaying Form 2210 is a document that you can use to check if you still owe estimated taxes to the IRS and to apply for a waiver. You can use the form as a proactive approach to pay the tax penalty on your next return. Otherwise, the IRS will contact you about the payment due and the extra amount you have to pay for underestimating these taxes.  You should file form 2210 to calculate the most precise amount that you will owe. Having that solid amount means that you can pin down what you need to pay and if you qualify for a waiver. You can also calculate how much of your refund that you will receive if the IRS uses it to pay for estimated taxes. Having a refund will not shield you from penalties. Thus, you must plan accordingly.  When will you owe penalties? When you fail to make a payment on a date that you and the government agreed upon at an earlier time. Consider this example: if you agreed to pay taxes by April 15 but failed to do so, you would have to pay a penalty for delivering the money on June 15.  Farmers and fishermen will also have to fill out the form because...

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How To Stop An IRS Tax Levy

How To Stop An IRS Tax Levy

By on Nov 27, 2019 in Tax Tips | 0 comments

The dreaded letter has arrived in the mail. Or several of them are piling up, and you know it’s a levy from the bank. You may lose your house or the money in your bank account. Time to act, and to prevent the bank from seizing your property.  Failing to pay your taxes tends to have consequences. Usually, you have to pay interest and penalties on missed payments. When you lose your property, it tends to be the last resort on the IRS’s part, when they don’t want to send you to jail. The IRS wants to get paid and would rather not put people in jail.  An IRS tax levy is never fun. It means that, in your case of failing to pay the amount owed on your federal tax return, the IRS is seizing your property or assets to pay the debt. Wage garnishment can ensue, as can losing your tax refund, the money in your bank account, or accounts receivable for small businesses.  The Levy And Notice Before the IRS seizes your property, they will often place a lien on it and give you a fair warning. The lien is a claim on your assets or property which will be used to pay off the debt. Usually, you get several letters and notices of the intent to levy, which is a fair warning.  There is one simple solution to avoiding a levy or a lien: pay off your tax debt if you can. Or set up a payment plan so that the installment agreement can buy you some time. If neither works, you still have options.  How To Handle The IRS Tax Levy Letter You need to act as soon as you receive the notice. Time becomes the essence. Once you get the final notice of intent, you have a narrow window of saving your assets.  If you have a solid case, one option is to request a Collection Due Process Hearing from the Collection Appeals Program. Then you have a smaller time window to make your case and argue to save your property. This is where having a professional will come in handy. They can help assemble your paperwork.  You can ask to arrange an...

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How to Successfully Get Out of Tax Debt in 1 Year!

How to Successfully Get Out of Tax Debt in 1 Year!

By on Nov 25, 2019 in Debt Relief, Tax Resolution, Tax Tips | 0 comments

If you realize that you owe a significant amount of money to the Internal Revenue Service (IRS) this year, your attention may quickly turn to how into getting out of debt as quickly as possible.  Thinking ahead and developing a specific plan about how you will settle your debt to the IRS is an important first step. Owing money to the IRS can be stressful as the IRS has the power to garnish wages and/or seize property in order to make sure that the debt is paid. As long as you have a legitimate tax return and have no intent to commit fraud, then you have a chance to reduce the amount that you owe. The IRS wants to get paid, and they would rather you do it as soon as possible and with legitimacy. Here are some tips for successfully getting out of your tax debt quickly in as little as one year: Request An Installment Agreement: An installment agreement can allow you to pay your tax debt to the IRS in monthly installments over a period of time.  This gives taxpayers more time to pay, rather than requiring a lump sum payment. You can set up a designated amount within your means.  Apply For An Offer In Compromise: In some cases, a taxpayer may be able to settle their tax debt for less than the full amount they owe. This is ideal for those whose tax debt exceeds what they can actually afford to pay.  If you qualify, you will be able to make a lump-sum payment or a short-term payment plan. Consider An Alternate Payment Method: If you owe a large sum of money to the IRS, you don’t have to rely on your bank account. It may be wise to think of other sources of payment such as forms of credit. A personal loan from a bank, opening a credit card at a low-interest rate, or even asking for a loan from a family member can be a way to pay the debt to the IRS. Such a choice eliminates the risk of wage garnishment and/or seizure of property. Declare Yourself Currently Not Collectible: There are instances in which you may be unable to pay...

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How And When to Pay Your Estimated Federal Taxes

How And When to Pay Your Estimated Federal Taxes

By on Sep 4, 2019 in Tax Tips, Taxes | 0 comments

Did you know that the IRS can penalize you even if you do pay your taxes at the end of the year? You could file every form correctly and still get charged! That’s because people who don’t have their taxes withheld still get stuck with the same tax burdens that everyone else does. At Success Tax Relief, we’re often asked when the right time to make these payments is. As you might have guessed, that’s a slightly tricky question. Know if You Need to Make Estimated Payments Relatively few people actually have to make estimated tax payments. Individuals and partners generally have to make them if they expect to owe more than around $1,000 or so when they set out to file their taxes before April 15. Sole proprietors of businesses who own their own company have to do the same if they meet this requirement. Shareholders in so-called S corporations that owe a burden of $1,000 or more will also have to make these payments. Since corporations are technically persons from a certain point of view, they’re held to a somewhat similar standard. If you run a business that’s registered as a corporation without gaining that little S stamp from the IRS, then you’ll need to make estimated payments if you expect to owe tax of $500 or more. This raises the question of who can reasonably expect to owe that much money. If you’ve owed it in the past, then the IRS will expect that you know you to pay estimated payments next time. There’s some leeway on this since it’s rather difficult to prove that a taxpayer was sure they were going to have to make them, but it’s much better to err on the safe side because there’s no penalty for making estimated payments when you didn’t need them. In fact, those who end up paying slightly too much will get all that money refunded to them when they file at the beginning of next year. Do none of these situations sound like they apply to you? Good; that means you won’t have to make these payments. Otherwise, there’s some forms to fill. How to Pay Estimated Tax As with nearly everything else involved with...

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Hiring a Professional to Negotiate with the IRS on Your Behalf

Hiring a Professional to Negotiate with the IRS on Your Behalf

By on Feb 12, 2019 in Debt Relief, Tax relief, Tax Tips | 0 comments

In some cases doing things yourself is often the best way to yield quick results. Yet, when it comes time to handle situations like tax filing and debt, it’s often a good idea to bring in a third party that knows the tax laws and has successfully dealt with your special kind of tax case. The Internal Revenue Service (IRS) might respond better to someone who has had experience dealing with various kinds of tax matters. Knowing what kinds of solutions to ask for can go fairly quickly than asking an IRS representative what can be done to help them. While it’s true that IRS representatives are there to assist you, they can only do so much on their end. Bear in mind that they’re not working for you; they’re working for the United States government. Their job is to make sure that they are taking the necessary steps to ensure that taxpayers are paying their debt. They will do what they can to help you but to put it plainly, they’re not going to hold your hand or provide consultation services to you at any time of the day. The IRS is there for you Monday-Friday, 9 am to 4:30pm-and every other taxpayer in the country! That’s a lot of people! In fact, when you consider that many people have to send in separate returns for every business they run, you can start to see that it’s theoretically possible that they’d be dealing with more forms than there are people in the USA. While it’s never gotten quite that bad yet, they do estimate that slightly over 151 million returns were processed last year alone. How Resolving Tax Debt Issues Yourself Might Affect Your Life No wonder you’re on hold waiting for a representative! It’s not uncommon to sit on hold for an hour with the IRS. Not everyone has the luxury of sitting on hold for that long, especially during the weekday. When you finally get a live operator, you may only have a few minutes to talk! As you might imagine, IRS agents are very often backlogged with tax files from dozens if not hundreds of people. They might not know what’s best for your particular...

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Tax Debt and Divorce: Who Pays the Back Taxes?

Tax Debt and Divorce: Who Pays the Back Taxes?

By on Jan 11, 2019 in Tax Tips | 0 comments

A divorce is a complicated situation no matter how you look at it. Besides all the emotional issues you have to battle, you also have to sort through a laundry list of financial issues when trying to separate merged finances. Many married couples have joint accounts, own property that belong to both, and have been filing income taxes jointly for years. So, what happens when a couple owes back taxes and they decide to divorce? Tax Debt Generally Follows Other Debt and Property Divisions The general rule of thumb is that tax debt is seen in divorce proceedings as any other kind of debt. So, when your attorneys work on the divorce settlement and determine how much each party handles, tax debt is included, along with credit card bills, mortgage balances and any other debt. If property and debts are divided evenly between spouses, then your tax debt (including back taxes) is also divided evenly and each of you is required by law to pay your share. Settlements are not always equal, however, and sometimes one side will argue to pay more tax debt in order to also receive more of the share of the property. Exceptions to This Rule For the majority of states, property and debt are divided evenly in a divorce. However, you should note that if you happen to live in one of the following states – Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin – these states treat property and debt a little differently. In those states, the property and debt you acquire during marriage is considered “community property” and split evenly in a divorce, even if one spouse is unemployed. These states consider property and debt brought into marriage as “personal property” and this is assigned to the spouse who brought it into the marriage. Property left as inheritance or that were gifted to a spouse is not considered community property. So if back taxes were brought into the marriage in these states, the back taxes would remain the responsibility of the spouse who brought them to the marriage. If you are not in one of those states, then the rules are known as equitable distribution laws. Property acquired...

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