debt relief – SMALL BIZ TAX LADY

Business Strategies, business taxes, General Information, notary, RUNNING YOUR BUSINESS, Self Employed, signing agent, TAX DEBT RELIEF, Tax Reduction, TAXES

HUGE WIN FOR NOTARY SIGNING AGENTS

August 11, 2019August 11, 2019 Howard Tax Prep LLC

Author Trudy M. Howard

In our South Loop Chicago Tax Preparation office , Howard Tax Prep LLC works with entrepreneurs from various industries; however, there are 2 industries that give entrepreneurs a built in self-employment tax deduction. To take advantage of built in self employment tax reductions, one must be employed as a minister, or a notary. While this article will deal with notary signing agents, the same concept can also be applied to ministers.

Per IRS publication 17: “Notary public. Report payments for these services on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). These payments aren’t subject to self-employment tax.” ees received for services performed as a notary public. Also, the instructions for IRS schedule SE reads: “if you had no other income subject to SE tax, enter “Exempt—Notary” on Schedule 4 (Form 1040), line 57. Don’t file Schedule SE.”

So how do you know what part of your loan signing agent payments are for notary services only? It’s simple, you count the # of stamps that you made, and exclude your travel, printing, and shipping/faxing cost. For example, let’s say that you have a 30 page loan document, and you charge $80 for the the total signing, $30 of which is strictly for the notary stamps. Using the above example, if you properly DOCUMENT your job, you can exclude the $30 (the charge for each stamp) from self-employment taxes (the 15.3% Medicare & Social Security taxes aka FICA).

Although I’m pretty sure that you probably don’t want to do anymore documentation, the IRS requires documentation for deductions, and this is a HUGE deduction! Don’t let the lack of documentation, or lack of tax preparers knowledge keep you from taking advantage of the self employment tax reduction for notaries/signing agents (& ministers). While most tax reduction strategies require the use entities, retirement vehicles, and state laws, this simple yet effective tax deduction only requires you to itemize your notary fees, & document your work. Below, please find a basic example of the potential savings.

$80,000 Signing agent income.
-$20,000 expenses
$60,000 in taxable income.
$60,000 in taxable for self-employment taxes.
Self-employment taxes on $60,00=$8,478
Income taxes assuming single person no children=$4,013 TOTAL TAX BILL=$12,491

$80,000 Signing agent income.
-$20,000 expenses
$60,000 in taxable income.
$30,000 taxable income for self-employment taxes
Self-employment taxes on $30,000=$4,239 EASY TAX SAVINGS OF $4,239.
Income taxes assuming single person no children=$4,013. TOTAL TAX BILL=$8,252

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

Business Strategies, business taxes, Family Tax Issues, General Information, RUNNING YOUR BUSINESS, Self Employed, TAX DEBT RELIEF, Tax Reduction, TAXES

IRS PUBLISHES SUMMERTIME TAX TIPS.

July 22, 2019 Howard Tax Prep LLC

Buying a home? Working a summer job? Volunteering? Activities that are common in the summer often qualify for tax credits or deductions. And, while summertime and part-time workers may not earn enough to owe federal income tax, they should remember to file a return to get a refund for taxes withheld early next year.

Here are some summertime tax tips from the IRS that can help taxpayers during tax season next year:

Marital tax bliss. Newlyweds should report any name change to the Social Security Administration before filing next year’s tax return. Then, report any address change to the United States Postal Service, employers and the IRS to ensure receipt of tax-related items.

Cash back for summer day camp. Unlike overnight camps, the cost of summer day camp may count as an expense towards the Child and Dependent Care Credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information.

Part-time and summer work. Employers usually must withhold Social Security and Medicare taxes from pay for part-time and season workers even if the employees don’t earn enough to meet the federal income tax filing threshold. Self-employed workers or independent contractors need to pay their own Social Security and Medicare taxes, even if they have no income tax liability.

Worker classification matters. Business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.

Though the higher standard deduction means fewer taxpayers are itemizing their deductions, those that still plan to itemize next year should keep these tips in mind:

Deducting state and local income, sales and property taxes. The total deduction that taxpayers can deduct for state and local income, sales and property taxes is limited to a combined, total deduction of $10,000 or $5,000 if married filing separately. Any state and local taxes paid above this amount cannot be deducted.

Refinancing a home. The deduction for mortgage interest is limited to interest paid on a loan secured by the taxpayer’s main home or second home that they used to buy, build, or substantially improve their main home or second home.

Buying a home.

New homeowners buying after Dec. 15, 2017, can only deduct mortgage interest they pay on a total of $750,000, or $375,000 if married filing separately, in qualifying debt for a first and second home.

For existing mortgages if the loan originated on or before Dec. 15, 2017, taxpayers continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes.

Donate items. Deduct money. Those long-unused items in good condition found during a summer cleaning and donated to a qualified charity may qualify for a tax deduction. Taxpayers must itemize deductions to deduct charitable contributions and have proof of all donations.

Donate time. Deduct mileage. Driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2019.

Reporting gambling winnings and claiming gambling losses. Taxpayers who itemize can deduct gambling losses up to the amount of gambling winnings.

The last two tips are for taxpayers who have not yet filed but may be due a refund and those who may need to adjust their withholding.

Refunds require a tax return.

Although workers may not have earned enough money from a summer job to require filing a tax return, they may still want to file when tax time comes around.

It is essential to file a return to get a refund of any income tax withheld. There is no penalty for filing a late return for those receiving refunds, however, by law, a return must be filed within three years to get the refund. See the Interactive Tax Assistant, Do I need to file a tax return?

Check withholding. Newlyweds, summertime workers, homeowners and every taxpayer in between should take some time this summer to check their tax withholding to make sure they are paying the right amount of tax as they earn it throughout the year. Taxpayers should remember that, if needed, they should submit their new W-4 to their employer, not the IRS.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have questions, or need business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office at 855-743-5765. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

Business Strategies, business taxes, Family Tax Issues, General Information, RUNNING YOUR BUSINESS, Self Employed, TAX DEBT RELIEF, Tax Reduction, TAXES

HOW TO WRITE OFF YOUR 4TH OF JULY PARTY.

July 3, 2019July 3, 2019 Howard Tax Prep LLC

Author: Trudy M. Howard

In our Chicago South Loop Tax preparation office, everyone enjoys a BBQ, and a good party. While we enjoy having a good time, we LOVE saving clients money through effective tax planning. Below are a few tips on how you can reduce your taxable income with your 4th of July party.

INVITE ALL STAFF & FEW FRIENDS: Invite your ENTIRE STAFF to the 4th of July BBQ to get a tax deduction. NON EMPLOYEES WILL NOT give you a tax deduction. For example, if you invite 15 employees & their family to a 4th of July picnic, and you invite 5 of your friends & family members you have a total of 20 guest.If your party cost $2,500 you can write off 3/4 or 75% (20 guest total, 1/4 friends 5/20) of the expense at 100%. $2,500 x .75= $1,875 tax deduction.

Per IRS PUBLICATION 15-B: “Food or beverage expenses related to employee recreation, such as holiday parties or annual picnics, aren’t subject to the 50% limit on deductions when made primarily for the benefit of your employees other than employees who are officers, shareholders or other owners who own a 10% or greater interest in your business, or other highly compensated employees.”

INVITE POTENTIAL BUSINESS PROSPECTS: 1/2 of something is better than 0 of something. You can deduct 50% of the FOOD COST ONLY if you invite current or potential business customer, client, consultant, or similar business contact. Your food cost must be on SEPARATE RECEIPT to be tax deductible. You cannot deduct the cost of the fireworks display, chairs, DJ, etc.

Per IRS PUBLICATION 463: “As discussed above, entertainment expenses are generally nondeductible. However, you may continue to deduct 50% of the cost of business meals if you (or an employee) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.

Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.”

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

business taxes, Family Tax Issues, General Information, Self Employed, TAX DEBT RELIEF, Tax Reduction, TAXES

Fraud by Tax Preparer Creates Big Trouble for Client

June 1, 2019 Howard Tax Prep LLC

Is your tax preparer honest? You likely see indicators one way or the other. If your tax preparer commits fraud that benefits you, that can create trouble for you. In our Chicago South Loop tax preparation office, we see a lot of clients that need tax debt relief. Many tax debt cases happen because a taxpayer unknowingly hired a dishonest tax preparer to file their tax return. Let’s see how this works in real life.

Situation

The government indicted, tried, and convicted tax preparer Gregory D. Goosby of 30 fraud violations where he willfully aided and assisted in the preparation of false and fraudulent income tax returns.

Vincent Allen engaged Goosby to prepare his tax returns before Goosby’s fraud conviction. Allen gave Goosby his W-2, 401(k) statement, mortgage interest statement, and property tax statements. Goosby used those deductions but also added others, claiming false and fraudulent deductions for charitable contributions, meals and entertainment, and pager and computer expenses.

Guys with Guns

Two special agents from the IRS’s Criminal Investigation Division interviewed Allen concerning Goosby’s preparation of his income tax returns. Allen agreed with the IRS that the deductions were false and fraudulent, but both the IRS and Allen blamed Goosby. The IRS did not charge Allen with intent to evade taxes (fraud).
or click here to call us 1-855-743-5765.

Statute of Limitations

In general, the IRS has three years from the date you file your tax return to audit it and propose adjustments. In the case of fraud, the IRS can audit your return at any time. There is no limit on how far back the IRS can go.

In this case against Allen, the first-ever case of this nature decided by the Tax Court, the fraud was committed by Goosby, the preparer, not by Allen, the taxpayer. So the Tax Court had to decide whether the fraud by the tax preparer extended the statute of limitations on the client’s return.

And that’s exactly what the Tax Court decided in this precedent-setting case. The tax preparer’s fraud extends the statute of limitations for fraud to the client even when the client is not charged with fraud. This means that if your tax preparer fraudulently prepares your return and you file it, the law extends the period during which the IRS can audit that tax return from the usual three years to forever.

Allen Was Lucky

Although Allen may not have felt lucky after he paid his lawyer fees and also handed over $10,000 in taxes, the IRS did not charge him with fraud and the court did not make him pay the 75 percent fraud penalty on the taxes due.
or click here to call us 1-855-743-5765.
Beware

Using a dishonest tax preparer is a mistake. When the IRS catches the dishonest preparer, it likely catches you, too. And as the Tax Court has now ruled, fraud is fraud, and that opens your tax return up to IRS examination forever.

Protect yourself. Do not engage dishonest tax preparers. With Howard Tax Prep LLC, you will always have an honest tax preparer. We will always do our best to help you lower your taxes, but we will never cheat.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

BUSINESS CREDIT, Business Strategies, business taxes, General Information, INSURANCE, RUNNING YOUR BUSINESS, Self Employed, Tax Reduction, TAXES

Deduct Your Costs of Sponsoring Sports Teams

May 15, 2019 Howard Tax Prep LLC

In our south loop Chicago tax preparation office, when we prepare small business tax returns, we are often asked if a company can deduct the costs of sponsoring a sports team. Have you wondered what it takes to deduct the costs of sponsoring a sports team? What if you play on the team? Could you pay for the team travel expenses?

Revenue Ruling 70-393 states that the monies spent to outfit and support a sports team are similar to monies spent on other methods of advertising; accordingly, you may deduct them as business expenses for federal income tax purposes.

In the Strong case, Strong Construction Co. Inc. advertised its business primarily through either word of mouth or athletic sponsorships. As part of the athletic sponsorships, the corporation paid for the uniforms, logo design, hats, T-shirts, sweatpants, coats, bags, and pants for all players on its sponsored teams (broomball, softball, wrestling, etc.). The court ruled that the expenses were ordinary and necessary business expenses and that Strong could deduct them as advertising or promotion.

In the Bower case, James Bower sponsored the Lafayette Bower Housing Hustlers basketball team, and he was both an assistant coach and a player. As the Hustlers’ sponsor, Bower paid for the team’s travel, lodging, food, promotions, AAU fees, tournament fees, gym rental, and uniforms. The court noted that Bower’s sponsorship increased his commodity brokerage commissions and generated additional clients; accordingly, the court ruled that Bower’s sponsorship expenses were deductible business expenses.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

BUSINESS CREDIT, Business Strategies, business taxes, Family Tax Issues, General Information, Self Employed, TAX DEBT RELIEF, Tax Reduction, TAXES

Owe the IRS? Find out what your credit report tells them.

May 11, 2019 Howard Tax Prep LLC

man in white shirt using macbook pro

Author: Trudy M. Howard

In our Chicago tax debt office you’ll often hear me say “the IRS is worse than the FBI.” Of course this is simply my opinion (based upon years of research, tax debt cases, education, and government documents), but if the IRS isn’t worse than the FBI, they surely are a close 2nd!

When I tell you that the IRS can find out anything, I mean they can find out anything (except for your blood type, but I’m sure that’s pending)! The IRS has access to systems that you wouldn’t believe existed. For example, did you know that the IRS receives a weekly file of new movers? It’s true. “The United States Postal Service (USPS) provides an address update product — the National Change of Address Linkage (NCOA^Link), and the IRS receives a weekly NCOA^Link file from USPS. The file contains all of the reported changes of address in the United States for the week.” Not only does the IRS use this system, along with several others, the IRS also has the authority to pull a debtor’s credit report! Keep reading to see what your credit report tells the IRS.

or click here to call us 1-855-743-5765.

There are 6 key things that an IRS collections representative is looking for when they access your credit report.

Previous residences along with old/current employers.
Other lien holders to see how much you owe, and how much you’ve paid.
Property that may not have been disclosed during your collections interview.
Leads to hidden assets by identifying other creditors.
Financial institutions that you have done business with in the past and currently.
Entities and associations with foreign banks and corporations.

Hopefully, by viewing this list you see that it is important to disclose all financial information when dealing with the IRS. Once you submit all of your financial information, Howard Tax Prep LLC, located in the South Loop of Chicago, can help you with an IRS tax debt settlement, a tax debt payment plan, removal of tax lien, and IRS wage garnishments in Chicago, and all 50 states.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

BUSINESS CREDIT, business taxes, Family Tax Issues, General Information, Retirement Income, RUNNING YOUR BUSINESS, Self Employed

7 KEYS TO SETTING & STICKING TO A BUDGET!

May 6, 2019May 6, 2019 Howard Tax Prep LLC

Author Trudy M Howard.

In our South Loop Chicago Tax Office, we not only help clients with tax planning to reduce their taxes, but we also draft personalized financial wellness plans. If you want to eliminate debt, be prepared for an emergency, and retire with confidence, you must learn how to budget your finances. Not only do you want to set a budget, but you need to STICK TO YOUR BUDGET in order to be successful. Keep reading to find out the 7 KEYS TO SETTING & STICKING TO A BUDGET.

1.) Set realistic amounts: If you know that you like to shop, or that you don’t like to cook, don’t set a budget of $25 a month for shopping and dining out.

2.) Use cash instead of a debit/credit card. Retailers know that consumers spend more when they use their card instead of spending cash. Every Sunday withdraw enough for your gas, lunch, groceries, and incidentals.

3.) Watch your funds: Balance your checkbook! Don’t rely on the online banking system to give you current balances, as some purchases may not show for 24-48 hours later. Balancing your checkbook also helps you avoid overdraft fees, and less overdraft fees equal more savings!

4.) Stick to your entertainment budget: Use a prepaid debit card for your entertainment cost. Once the card is empty, you’ll know that you’ve reached your entertainment budget for the week. Be prepared to say NO to invitations from friends, and don’t feel as if you need to provide a detailed explanation about your financial situation.

5.) Expect unexpected expenses. No matter how disciplined you are in sticking to your budget, just as sure as the sun rises in the East, and sets in the West, I can GUARANTEE YOU that some unplanned expense is going to come up. Whether it be an increase in fuel cost, an increase in your utilities, or an unexpected dental emergency, expect to spend an extra $100-$150 a month.

6.) Track every purchase for the next 30 days. In order to get a clear look at your spending habits, you need to track all of your purchases. From the gum that you purchased, to the car note that you paid, Record. Every. Single. Purchase. Although you can use your bank statements to track your spending, writing down the figures can help you identify and remember areas of your concern.

7.) Pay bills on time to avoid late fees and bad credit. Nothing, and I mean NOTHING, can destroy a budget faster than a late payment fee! If you don’t like having your bills set to auto pay, try using google calendar to set a reminder the day before a bill is due. Not only does paying your bills on time increase your credit score, but it also creates more wealth building opportunities.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

BUSINESS CREDIT, Business Strategies, business taxes, General Information, RUNNING YOUR BUSINESS, Self Employed, TAX DEBT RELIEF, Tax Reduction, TAXES

Commercial Fuel Card Without A Personal Guarantee.

April 22, 2019April 22, 2019 Howard Tax Prep LLC

Commercial Fuel Card

Gas Cards Without A Personal Guarantee

Would you like to free up some cash so that you can increase your marketing budget, purchase more supplies, or reward your employees? Have you heard about obtaining business credit without a personal guarantee, but haven’t been able to secure your own business credit? Are you a small business owner that has damaged personal credit? Have you been told that you can’t get business credit if you have bad personal credit? If any of these things apply to you, you’ve come to the right place!

To start, let us explain what a “personal guarantee is.” A personal guarantee means that the owners will be held personally liable for the debts of their business. Suppose you have a LLC Howard Tax Prep LLC has partnered with a national gas chain (comparable with Exon Mobil, Citgo, etc. with over 18,000 locations worldwide) to offer small business owners (being defined as businesses with revenues under 1 million dollars) fuel cards that report business payment history to Dunn and Brad Street, and Equifax every 30 days!

Only verified businesses that are structured as a LLC, S-Corp, or C-Corp with a Dun and Brad Street number will qualify. Because this is not a publicly marketed program, your business must be verified, prior to receiving the name of the fuel company (but trust us, you can find a station near you).

The best part about this offer? THE CARDS ARE ISSUED WITHOUT ANY PERSONAL LIABILITY TO THE OWNERS, & WITHOUT THE USE OF THE OWNERS PERSONAL CREDIT. If you need a truck driver fuel card, Uber driver fuel card, Lyft driver fuel card, or just a general small business owner fuel card, we can help!

WHAT ARE THE DETAILS?

National fuel provider. Qualified businesses that are ready to move forward will be given the name of the fuel company prior to paying the 1 time $49.95 Howard Tax Prep LLC processing fee.
Minimum deposit of $200 for a $500 credit line is required.
Accounts are reviewed every quarter for credit line increases.
After 12 months of ON TIME PAYMENTS, your deposit will be returned.

WHAT ARE THE REQUIREMENTS?

Business Must Be Structured As A LLC, Corporation, or S-corporation.
Must have a BUSINESS CHECKING account.
Must Agree To Make ON-TIME Payments.
Deposit Payment Can Only Be Drafted From Business Checking account.

Who should use fuel cards?

Owner Operator Truck Driver

Owner Operator Truck Drivers no longer have to use personal credit cards or cash profits to purchase fuel! Reduce driver fraud by setting fuel limits & restricting usage. Save on fuel cost, while building your business credit Paydex score.

The principal or owner is not personally liable for any bad debt.
The account will be in the name of the business.
Helps to Establish & build business credit.
Account payment history reported to DnB and Equifax every 30 days.
Accepted at over 18,000 locations Worldwide.
Free online invoicing.
Activate new cards as needed.
Restrict cards with fuel only limits & purchase restrictions during non-business hours.
Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
Earn rebates on fuel at branded locations.

GET YOUR CARD NOW!

Small Business Owner

Small business owners no more using your profits & personal credit cards to cover fuel cost. Use the cash you save and apply it toward marketing, inventory, and more! Save on fuel cost, while building your business credit Paydex score.

The principal or owner is not personally liable for any bad debt.
The account will be in the name of the business.
Helps to Establish & build business credit.
Account payment history reported to DnB and Equifax every 30 days.
Accepted at over 18,000 locations Worldwide.
Free online invoicing.
Activate new cards as needed.
Restrict cards with fuel only limits & purchase restrictions during non-business hours.
Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
Earn rebates on fuel at branded locations.

GET YOUR CARD NOW!

Uber & Lyft Driver

Uber and Lyft Drivers that would like to build their business credit, and free up their cash flow. Use your additional cash flow for brake repairs, oil changes, and more! Save on fuel cost, while building your business credit Paydex score.

The principal or owner is not personally liable for any bad debt.
The account will be in the name of the business.
Helps to Establish & build business credit.
Account payment history reported to DnB and Equifax every 30 days.
Accepted at over 18,000 locations Worldwide.
Free online invoicing.
Activate new cards as needed.
Restrict cards with fuel only limits & purchase restrictions during non-business hours.
Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
Earn rebates on fuel at branded locations.

GET YOUR CARD NOW!

How easy it to use the card?

1-2-3 Driver Instructions

Swipe card
Enter driver ID when prompted (may also be call DIN or PIN)
Enter odometer reading when prompted
The principal or owner is not personally liable for any bad debt.
The account will be in the name of the business.
Helps to Establish & build business credit.
Account payment history reported to DnB and Equifax every 30 days.
Accepted at over 18,000 locations Worldwide.
Free online invoicing.
Activate new cards as needed.
Restrict cards with fuel only limits & purchase restrictions during non-business hours.
Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
Earn rebates on fuel at branded locations.

GET YOUR CARD NOW!

business taxes, Family Tax Issues, General Information, Self Employed, Tax Reduction, TAXES

Now that you’ve filed, do you need to tell your employer to withhold more or less income to pay your 2019 taxes?

April 19, 2019April 19, 2019 Howard Tax Prep LLC

Reprinted with changes, edits, & permission by the IRS.

Was your refund lower than expected, or did you have an unexpected tax bill when you filed this year? In our south loop Chicago tax preparation office, we saw a slight decrease in income tax refunds for personal 1040 taxes. On the other hand, many of our Chicago business tax preparation clients saw a decrease in their taxes dues thanks to the Tax Cut and Jobs Act. If you are concerned about your tax bill for the 2019 tax year, there are steps that you can take steps to make sure your federal income tax withholding is on the right track for this year.
Checking your withholding at the beginning of the year helps ensure you don’t have too little or too much withheld from your paychecks throughout the year. This is especially
important if you changed your withholding in 2018. A mid-year withholding change in 2018 can have a different full-year impact in 2019. You should also check your withholding any time your personal or financial information changes. Use the Withholding Calculator to help you decide whether you need to change your
withholding.

Federal taxes operate on a pay-as-you-go basis. This means that you need to pay most of your tax during the year, as you earn the income. Paying too much tax throughout the year will result in a refund while not paying enough can lead to a tax bill, penalties and interest when you file. One way to avoid owing a balance is to correctly calculate and adjust how much tax you should have withheld from your wages. Use the Withholding Calculator to help you decide whether you need to change your withholding.

Another option is to consider making quarterly estimated tax payments. Those who
don’t pay taxes through withholding, or don’t pay enough tax that way, may still use the Withholding Calculator to determine if they have to pay estimated tax quarterly during the year to the IRS. Those who are self-employed generally pay tax this way. See Form
1040-ES, Estimated Taxes for Individuals, for details. Visit IRS.gov/payasyougo to learn more about withholding and to determine if you should be making estimated tax payments. You are in the driver’s seat. Check your withholding today.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

Family Tax Issues, General Information, TAX DEBT RELIEF, Tax Reduction, TAXES

CAN I FILE BANKRUPTCY FOR TAX DEBT?

January 30, 2019January 30, 2019 Howard Tax Prep LLC

Once the IRS assesses a tax bill, it generally has 10 years to collect that amount before the statute of limitations expires. Holy smokes! That’s a long time to have a creditor chasing you! And this isn’t any ordinary creditor. The IRS has a lot of power that it can use to collect your late payments. The IRS can garnish wages, file a notice of federal tax lien, and empty your bank account.

If your tax bill has exploded beyond what you can pay, you’re probably already feeling the hot breath of the IRS. At this point, you need to consider your options for how to reduce or eliminate your tax bill.

If you have thought about bankruptcy, you need to be aware of its limitations. Tax debts are particularly sticky—many of them stay with you even after the bankruptcy process is complete. And it’s important to know that bankruptcy is not your only recourse. The IRS gives you four avenues of relief to help you get out of tax debt that you can read about here. Depending on your circumstances, one or more of those IRS methods could entirely eliminate that horrible tax cloud hanging over your head, or you can look into filing bankruptcy.

It is important to note that bankruptcy is not a simple process and has many lingering effects, such as the potentially decade-long hit to your credit. However, bankruptcy can be the perfect tool in the right situation—and it can permanently eliminate some of your income tax liabilities, including penalties and interest.

The following rules determine whether you can discharge your income tax debt in bankruptcy. You have to meet all three rules to qualify:

RULE #1: Debts must be more than three years old. You have to wait at least three years after the filing deadline for the tax years at issue (normally April 15 for calendar year taxpayers) before you file your bankruptcy petition. In other words, if you file your petition on April 15, 2016, you can discharge tax debts for tax years 2013 and earlier. But note that an extension pushes your filing deadline to October 15. So if you got an extension in 2013, you must wait until October 15, 2016, to file your bankruptcy petition before you can discharge tax debts from 2013.

RULE #2: You must file all tax returns. You have to wait at least two years after you filed your tax return before you file your bankruptcy petition. So what happens if you didn’t file a return for a year? To discharge that debt, you must file that return now and then wait for two years before you file for bankruptcy.

RULE #3: Wait eight months after IRS assessment. You must wait at least 240 days after the IRS assessed your taxes before you file the bankruptcy petition.

As you can see, timing is important. If you want to ensure that the bankruptcy proceeding will clear your tax debts, you must:

Make sure you have filed all of your returns.
Wait until enough time has passed so that you qualify for relief.
Commit No fraud. Bankruptcy will not discharge your debt if you committed fraud or willfully evaded taxes.

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Commercial Fuel Card

Who should use fuel cards?

Owner Operator Truck Driver

Small Business Owner

Uber & Lyft Driver

How easy it to use the card?

Share this:

Like this:

Share this:

Like this:

Share this:

Like this: