deadline is fast approachingIndividuals. Your deadline to file is October 15.
Business Owners. Your deadline to file is September 15. The IRS (and myself) have some news for you...Don't worry! I hear it at least twice a week, "Can you please help me? I haven't filed my taxes in years and I don't know what to do?"
Here's a word from the IRS themselves... File all tax returns that are due, regardless of whether or not you can pay in full. File your past due return the same way and to the same location where you would file an on-time return. If you have received a notice, make sure to send your past due return to the location indicated on the notice you received. Why you should file your past due return now? Avoid interest and penalties. File your past due return and pay now to limit interest charges and late payment penalties. Claim a refund. You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. The same rule applies to a right to claim tax credits such as the Earned Income Credit. We hold income tax refunds in cases where our records show that one or more income tax returns are past due. We hold them until we get the past due return or receive an acceptable reason for not filing a past due return. Protect Social Security benefits. If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits. Avoid issues obtaining loans. Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education. If you owe more than you can pay. If you cannot pay what you owe, you can request an additional 60-120 days to pay your account in full through the Online Payment Agreement application or by calling 800-829-1040; no user fee will be charged. If you need more time to pay, you can request an installment agreement or you may qualify for an offer in compromise. What if you don’t file voluntarily? Substitute Return. If you fail to file, we may file a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive. We will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment. You will have 90 days to file your past due tax return or file a petition in Tax Court. If you do neither, we will proceed with our proposed assessment. If you have received notice CP3219N you can not request an extension to file. If any of the income listed is incorrect, you may do the following:
Collection and enforcement actionsThe return we prepare for you (our proposed assessment) will lead to a tax bill, which, if unpaid, will trigger the collection process. This can include such actions as a levy on your wages or bank account or the filing of a notice of federal tax lien. If you repeatedly do not file, you could be subject to additional enforcement measures, such as additional penalties and/or criminal prosecution. So guys and gals, long story short, go ahead and file, Even if it is August. The longer you wait the worse it gets. Promise. Continuing on from yesterday, we refer back to the IRS to answer more What If's.
What if my employer goes out of business or into bankruptcy? Your employer must provide you with a Form W-2 showing your wages and withholdings for the year by January 31 of the following year. For example, if you were employed during 2013, your employer should provide you with a W-2 for 2013 by Jan. 31, 2014. You should keep up-to-date records or pay stubs until you receive your Form W-2. If your employer or its representatives fails to provide you with a Form W-2, contact the IRS and we can help by providing you with a substitute Form W-2. If your employer is liquidating your 401(k) plan, you have 60 days to roll it over to another qualified retirement plan or IRA. For more information, see Publication 4128, Tax Impact of Job Loss. What if I close my own business? If your business is no longer operating, you still are responsible for filing all required tax returns for your business by the due dates. In addition, if you had employees, you must file all required employment tax returns, including Forms 940, 941, 943 or 944. Both business and employment taxes should be paid when due. But, if you are not able to pay in full, contact the IRS immediately to discuss your options. For more information, see Starting, Operating or Closing a Business. What if I withdraw money from my IRA? Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty. There are exceptions to the 10 percent penalty, such as using IRA funds to pay your medical insurance premium after a job loss. For more information, see Publication 590, Individual Retirement Accounts. What if my 401(k) drops in value? Generally, you can not claim a capital gains loss on your retirement accounts that already are receiving favorable tax treatment. The only time you would have a loss is when you receive a distribution that had previously been taxed. For more information, see Publication 575, Pension and Annuity Income. Good morning, taxpayers. Over the next few days I want to focus on answering "what if" for all of you. We all have questions about taxes, IRS, government, scenarios, etc so I am going to cover topics on job, debt and tax what ifs. All of this information can also be found on the IRS website http://www.irs.gov/uac/The-“What-Ifs”-for-Struggling-Taxpayers
Let's start with your job related questions. What if I lose my job? The loss of a job may create new tax issues. Severance pay and unemployment compensation are taxable. Payments for any accumulated vacation or sick time also are taxable. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time. Public assistance and food stamps are not taxable. The IRS has updated a helpful publication which lists a number of job-loss related tax issues. For more information, see Publication 4128, Tax Impact of Job Loss. What if I receive unemployment compensation? Unemployment compensation you received under the unemployment compensation laws of the United States or of a state must be included in your income. It is taxable income. If you received unemployment compensation, you should receive Form 1099-G showing the amount you were paid and any federal income tax you elected to have withheld. For more information, see Publication 525, Taxable and Nontaxable Income. What if my income declines? There are many tax credits that are subject to income limitations. If you had a reduction in income this year you may be eligible for some credits or deductions. For example, the Earned Income Tax Credit is available for working families and individuals. Eligibility is determined by income and family size. You must file an income tax return in order to claim EITC. See 1040 Central for more information on EITC, other tax credits and tax law changes. What if I am searching for a job? You may be able to deduct certain expenses you incur while looking for a new job, even if you do not get a new job. Expenses may include travel, resume and outplacement agency fees. For more information, see Publication 529, Miscellaneous Deductions . Moving costs for a new job at least 50 miles away from your home may also be deductible. For further assistance or questions you may have, please reference the links included or contact us anytime. Don't be afraid to face your IRS debt head-on. With the new laws adopted by the IRS, taxpayers making offers to settle their debt for less than they owe are being accepted at a higher rate than in past years.
As described in a recent article by the Internal Revenue Service, an offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:
Ready to move on to sunny days without a cloud in the sky? A qualified tax preparer can assist you in determining your eligibility, help you file your offer, talk with you about payment options and will be with you through the acceptance or denial phase. If this post describes your situation, feel free to contact us for assistance. Thinking of starting your own business? Or already have? Here is one important thing to check off your To Do list.
Write a Business Plan. Here's why... If your company experiences a loss in revenue you may find that you are limited on the deductions you can claim due to the hobby loss rule. That's right, all your hard work and efforts to start your business can be viewed as a leisurely activity...unless you have a business plan that carefully and thoroughly documents your company's plan to increase profitability in the next 3-5 years. Do you have a documented Marketing Plan? Market Analysis? Mission Statement? Financial Projections? These are just a few things your Business Plan should include. For more information, visit: http://www.irs.gov/file_source/pub/irs-pdf/p535.pdf or contact us for assistance in writing your Business Plan. The IRS recently published a warning for all taxpayers, please read!
Alert of New Email Phishing Scam: "Update your IRS e-file" The IRS has been alerted to a new email phishing scam. The emails appear to be from the IRS and include a link to a bogus web site intended to mirror the official IRS web site. These emails contain the direction “you are to update your IRS e-file immediately.” The emails mention USA.gov and IRSgov, though notably, not IRS.gov (IRS-dot-gov). Don’t get scammed. These emails are not coming from the IRS. Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at [email protected]. For more information, visit the IRS's Report Phishing web page. The IRS does not initiate contact with taxpayers by email, texting or any social media. So you're receiving a nice refund from the IRS this year and instead of spending it on electronics, water toys, vacations, you want to be sure you invest it wisely? Here's a few questions to get you started...
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