How The FAST Act Can Affect Your Passport

passport

 

President Obama signed the FAST (Fixing American’s Surface Transportation Act) into law on December 4, 2015. Embedded within that law is one provision that can have serious consequences for passport holders who also have delinquent tax debt in excess of $50,000.

If you are an ex-pat living overseas or if you travel abroad for leisure and are delinquent on a tax bill of $50,000 or more, you could have difficulty renewing your passport.

The Secretary of State has the ability to deny a passport application or renewal to individuals who have been identified by the IRS as delinquent on their taxes.

As with most bills, this provision is tied to a bill that is unrelated to tax and IRS matters.

It is important for you to seek counsel if you are living overseas, travel abroad, have foreign income or assets, a spouse who is a non-US citizen, a foreign inheritance or stock options.

Only a licensed tax professional skilled in US tax laws and foreign tax matters is qualified to address your tax debt if you are a passport holder or will be applying for a passport in the near future.

Your tax professional can assess your overall tax scenario, including income or assets that could result in a significant tax bill now or in the future.

The IRS defines “significant” tax debt as $50,000 or more, indexed for inflation and including fees and penalties.

Don’t wait until your passport application or renewal is denied. If you travel abroad frequently and are delinquent on your taxes in excess of $50,000, we can help.

We will carefully assess your tax status, advise you if you qualify for tax relief or any of the other available options, and formulate a plan of action.

Get started today by contacting us using any of the methods described under the”Contact” tab on our website. Don’t let a large tax delinquent tax bill jeopardize your ability to travel or live overseas.

How Answering a Simple Question Will Put You At Risk

risk“May I please have your social security number?”

If you’ve ever checked in at the doctor’s office or filled out a job application, chances are you’ve had to provide your social security number. Doing so can put you at risk of identity theft.

We’ve all done it, because we are conditioned to hand it over to just about any professional party that asks: health care facilities, at school or our child’s school, the insurance office, or even when we call our health insurance company or bank.

The social security number has humble beginnings: it was originally devised to help the Social Security Administration (SSA) identify individuals eligible for Social Security benefits.

Since then, it’s morphed into an all-purpose identification number.

The good news? Chances are, if you politely decline to provide your social security number at the doctor’s office, or on the phone with your insurance company, there’s a good chance they can retrieve your information using your birthdate or even your last name and address.

Of course, you’ll need to provide it when filing taxes or filing for unemployment or disability benefits.

There are steps you can take to protect your social security number:

Never carry your social security card in your wallet. Leave it home in a safe place or in a safe deposit box at the bank. Take it out only when you need it, such as when you complete new hire paperwork, file your tax returns, or apply for government benefits.

You will also need it for passport and driver’s license applications as part of verifying your citizenship.

If you are completing a paper job application, leave the social security number field blank. If pressed to provide it, simply state you’ll be glad to furnish it when you are hired.

Online job applications can be tougher, as many of them require that you provide your social security number in order to advance to the next screen. However, employers are becoming more cognizant of security and privacy, and you may have to only disclose the last four digits of your social security number.

Never share your social security number online or on social networks. Never. Same goes for friends; never share your social security number with them.

Never program your social security number into your phone or tablet. If your phone or tablet is ever stolen or hacked, your social security number is there for all to see.

If you can’t memorize your social security number, create a sentence or short paragraph that contains parts of your social security number throughout, and keep it in a place other than your wallet or coin purse.

It only takes a second for your social security number to fall into the wrong hands and to put you at risk for identity theft.

Once you become a victim of identity theft, it can months and sometimes years to clear up your credit report, bank records, tax returns, and other vital records.

What once started out as a humble identification number for the SSA is now an all-purpose identification number. However, protecting your social security number is vital in lowering your risk of identity theft.

No one is ever immune to identity theft, but keeping your social security number under lock and key is one way to make yourself less of a target for identity thieves.

The Offer In Compromise: Is It For You?

offer in compromise

The IRS offers several repayment options for taxpayers, including the Offer In Compromise. Is it for you?

Note: The content in this post is not intended to replace the advice of a licensed tax professional. If you are facing a tax-related hardship, consult a tax professional to determine the best option for your unique circumstances

Facing a sizable tax bill is unsettling, especially if you lack the means to pay it. The Offer In Compromise (OIC) is one of the payment options available. Here is a brief look at the OIC and what it can and can’t do for you.

The OIC is designed for taxpayers who have the means to only pay a portion of their total tax bill.

Requirements

You’ll need to file IRS form 656, along with the $186.00 filing fee.

Generally you’ll have between 11-24 months to pay the agreed-upon amount.

The IRS will take into consideration your ability to pay, your income/assets and asset equity when determining your eligibility for OIC.

Eligibility

The IRS has designed an eligibility screening tool that you should use before applying for the OIC program. If you are eligible, you will need to complete the OIC form, (Form 433-A for individuals or form 433-B for businesses).

You’ll need to submit the forms along with the $186.00 filing fee and your initial payment.

Payment options

  • The IRS offers several different payment options:
  • Lump sum in cash
  • Periodic payments, in which you pay the initial amount and then make monthly payments while the IRS evaluates your application.
  • If you meet the low-income guidelines, you don’t need to submit an initial payment or the application fee, and you won’t need to make monthly payments while the IRS evaluates your offer.

If your offer is accepted:

You must meet all terms of the offer

Any tax refunds due during the calendar year will automatically be applied to your tax debt

Any federal tax liens will not be released until you have satisfied the OIC terms

If your offer is rejected, you and your tax professional have the right to appeal. You can file the Request for  Appeal form within 30 days in order for your appeal to be considered.

Facing a significant tax debt can be stressful. It’s always best to enlist a qualified tax professional when dealing with a sizable tax bill, especially if you lack the means to pay it in full.

Your tax pro can help you determine the best payment plan for your circumstances, and they can negotiate with the IRS on your behalf.

If you are in need of a licensed tax pro or if you are facing a large tax debt, visit us at indealtaxsolution.com and get in touch by using any of the available options under the “Contact” tab on the menu bar.

You don’t have to go it alone. We can help.

Don’t Let A Big Tax Bill Scare You: Tax Payment Options

If you’re facing a large tax bill, don’t panic. There are options available to you.

tax

If you’re like most hard-working taxpayers, the thought of a sizable tax bill is enough to make you break out into a cold sweat. However, the worst thing you can do is ignore your tax bill, since the legal and financial consequences can be far-reaching and far worse than the tax bill itself. There are tax payment options available to you. Here’s a look at some of them:

If your tax bill is $10,000 or less, you may be eligible for the IRS’s guaranteed payment plan. One thing to keep in mind is that the program doesn’t cover your fees and/or penalties, which could nudge your tax bill over the $10,000 threshold.

This program also doesn’t cover any delinquent employment taxes.

Under $25,000

If you owe more than $10,000 but less than $25,000, one tax payment option available to you would be the streamlined payment plan offered by the IRS. Under this plan, you would pay off your tax debt in 72 months or less. Additionally, this plan will allow you to have any tax liens released.

$25,000 or more

If you owe between $25,000 and $250,000, the IRS offers a streamlined payment program in which you pay off your tax bill within 72 months, but any tax liens  filed against you will not be paid off as part of this plan.

If you find yourself unable to pay off your tax debt in 10 years the IRS offers the partial payment plan.

You may need to liquidate certain assets in order to pay your tax debt under this plan, and the IRS will review  your financial information every one to two years to confirm that you are still eligible for this tax payment option.

Regardless of the program you choose, you’ll need to satisfy the following requirements:

  • Accurately disclose all income and assets
  • File all tax returns, including past due tax returns
  • You must agree to make timely payments

You may also renegotiate the terms of your payment plan if there is a change in your income. Less income due to job loss or other hardship may result in a lower payment, while to opposite is true if your income increases.

Facing a sizeable tax bill is stressful. At the same time, there are payment options available to you. Always consult with a licensed tax professional before negotiating with the IRS.

Your tax pro will negotiate on your behalf, and will also ensure your rights are upheld as your case progresses.

Did You Get A Letter From The IRS? Don’t Panic!

Alarmed about that letter from the IRS?

vecezy.com
vecezy.com

 

No one relishes the thought of getting a letter from the IRS. Here is a quick guide to the most common reasons for a notice from the IRS, and steps you can take.

  • If you owe a past due balance on your taxes.
  • If the IRS intends to levy certain assets for non-payment of delinquent taxes
  • If you default on a payment agreement or installment plan.
  • If you have an unclaimed tax refund

Other reasons the IRS may send you a notice:

  • Incorrect or missing information  on your tax return. The IRS will send you a letter requesting clarification or supplemental documentation.
  • Notice that your return has been selected for an audit

Regardless of the reason for the letter, it is important that you respond right away. Setting the letter aside and hoping the IRS will forget isn’t realistic no matter how badly you want the matter to go away.

All IRS correspondence lists an 800 number and address for your written responses. Whenever you call the IRS, keep a log of when you called, who you spoke with, and the outcome/response.

If you correspond with the IRS by mail, be sure to send your letter via certified mail with a return receipt.

Most IRS notices have a clearly stated deadline. Don’t ignore it. If you can’t provide the needed information by the deadline, call the IRS and explain your situation. Chances are, you’ll get additional time to comply.

Since mail is the IRS’s first line of communication, don’t ignore any correspondence. Chances are, it’s a request for clarification on missing or incorect items on your tax return.

If the letter is a notice to pay past due taxes, or is a notice of default, don’t ignore it. Doing so will bring about legal and financial consequences that will be harder to resolve than the original problem.

If you’re facing unpaid back taxes, a pending tax lien or other tax-related hardship, we have qualified tax pros on staff who can help.

Get started today by choosing any of the options under the “Contact Us” link on your website. Whether you choose to chat, email, or call, we can help.

 

Don’t Panic: What You Need To Know About Filing An Amended Tax Return

Filing an amended tax return doesn’t have to be a pain.

amended tax return

You did it. You hit the tax deadline without a second to spare. You clicked the “submit” button on your tax software, stashed your tax documents, and went about your business.

A short time later, you realize you forgot to claim an exemption or additional income. Will you have sufficient time to file an amended tax return before the IRS takes notice?

Here’s the good news: your tax return won’t be flagged for an audit or you won’t be dealing with the IRS correspondence. Taxpayers have up the three years to file an amended return.

Here are the circumstances that call for filing an amended tax return:

  • Change in the number of dependents you can rightfully claim on your return, or forgetting to claim a dependent.
  • Change in your filing status
  • Forgetting to claim an exemption
  • Forgetting to claim all sources of income

On the other hand, you won’t need to file an amended return if there are simple math errors or if you forgot to include your W2 or 1099 forms. The IRS will automatically correct any math errors and they already have your W2 and 1099 information from your employer(s).

The forms you’ll need

You’ll need to use the 1040X form to file your amended federal return. Since each state’s amended form is different, you can access that information through your state’s tax board website.

You won’t need to file a whole new return. Just note the areas of correction on your 1040X and your state form, and the IRS and tax board will review the corrections and make the necessary adjustments.

The key is to file an amended return as soon as possible; you’ll want to claim the full refund to which you’re entitled, or have the updated figure for the taxes you’ll owe.

Unlike your primary return, you can’t electronically file an amended return since “e-filed” returns aren’t accepted by the IRS and/or state tax boards. Be sure to send the amended return certified mail, so you can verify the IRS and state tax board received it.

Major life changes such as divorce, death of a spouse or change in family size warrant filing an amended tax return. Although you have up to three years to file an amended return, it’s best to do it quickly.

You’ll have peace of mind knowing the matter is taken care of and the IRS and state tax board have all the updated information they need.

As with any tax matter, always check with a licensed tax professional regarding your individual tax scenario.

What The New Student Loan Discharge Program Means For Your Taxes

President Obama’s new student loan discharge program can ease the financial hardships of disabled borrowers.

If you’re among the 400,00 permanently disabled student loan borrowers, no one needs to tell you that making student loan payments on SSDI  is next to impossible. The Obama administration recently took bold steps to make sure your student loans will be discharged.

Although permanently disabled student loan borrowers have had the option of seeking loan forgiveness, the process was long and complicated, leading many eligible students to forgo loan discharge.

Four years ago, the Administration worked to streamline the process, making it less complicated and removing barriers to loan discharge.  Even with those changes, very few borrowers utilized the program. Here is a summary of the new plan:

  • Working in conjunction with the Social Security Administration (SSA) the Department of Education has so far identified over 387,000 eligible student loan borrowers. Of those 387,000, approximately 179,000 are in default, running the risk of having their SSDI benefits garnished in order to pay their student loans.
  • Individuals who have been identified by the Department of Education and the SSA will receive written notification over the next four months. Eligible borrowers will not have to submit supporting documentation under this program.

Tax Implications

If you’re among the eligible borrowers and have your student loans discharged for forgiven, the loan balance could be considered taxable income depending on your individual financial circumstances.

Although individual disability-related student loan forgiveness programs are already in place, this new program is part of the Obama Administration’s Student Loan Bill of Rights and is designed to make the process more accessible and less complicated.

Eligible borrowers will not only receive a letter in the coming weeks, but also guidance on how to better navigate the student loan discharge process.

For many struggling disabled student loan borrowers, this program could mean the difference between peace of mind and ongoing financial hardship.

Always refer your specific tax questions to a licensed tax professional.

student loan discharge

 

What You Need to Know About Student Loan Interest Deduction

Sure, those student loan payments are a pain. The student loan interest deduction is one way to ease the sting of student loan payments.

If you’re just starting out with student loan payments, you may not be aware of the potential tax benefits. The student loan interest deduction can reduce your taxable income by up to $2500.00. Here’s how it works:

You’ll receive a 1098-E form from your student loan servicer. If you’ve been making payment during 2015, they will have sent you this form no later than February.

Your student loan servicer will issue the 1098-E form if you paid $600.00 or more in interest during the tax year.

Box 1 on the 1098-E will indicate how much interest you’ve paid in 2015.

  • If your modified adjusted gross income is $65,0000 or less, you’ll be able to claim the full deduction, even if you don’t itemize your other tax deductions, such as medical or business expenses.
  • If your modified adjusted gross income falls between $65,000 and $80,000, the deduction will begin to phase out.
  • Once your income reaches $80,000 or more, you will not be eligible for this deduction.

As long as the student loan is in your name, and as long as you meet the income requirements, you can claim the deduction even if someone else is making the payments for you.

Keep in mind that if you will be filing as a married person filing separately, you won’t be able to claim the deduction.

While this deduction won’t completely take the sting out of those dreaded student loan payments, you can get some relief at tax time by deducting your student loan interest on your tax returns. student loan interest

 

 

Don’t Fall Victim To This Tax Scam

 

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You’re at work or out with friends when your phone rings. The caller i.d. shows “Internal Revenue Service” or similar. You check your voice mail later on and are horrified to discover a message from an IRS agent, urging you to call back immediately regarding an outstanding tax bill that’s due now.

You might also find an email from the IRS, requesting personal information and/or payment of an outstanding tax bill.

Don’t take the bait. Tax season is the most popular time for identity thieves, due in part to the sheer volume of available personal information and jittery taxpayers hesitant to question the IRS. Here is what you need to know in order to avoid falling victim to the latest tax scam:

The IRS will never initiate contact by phone or email. If you do in fact have an outstanding tax bill, you will receive a bill from the IRS, along with contact information for the agent assigned to your case.

The IRS will also never demand payment from you without the opportunity to appeal.

A tax scammer may threaten you with arrest or incarceration if you don’t pay your tax bill on time.

The IRS grants taxpayers the opportunity to contest or appeal their tax bill. The appeals process is clearly outlined in the tax due letter sent by the IRS.

The IRS will never demand that you pay taxes using only one method. Unlike tax scammers who insist you pay with cash or debit card. the IRS provides different payment options: personal check, cashier’s check, online payment with check or credit card using the IRS’s secure online payment portal.

Tax scam artists will pose as an IRS agent over the phone or via email. They’ll use their name and a phony badge number. They may ask for your debit/credit card information, or your checking account information.

Don’t fall for it. A legitimate IRS employee will never ask for payment information over the phone.

These scams initially targeted older taxpayers, recent immigrants and other vulnerable groups. Tax scam artists have now branched out, and even tried to scam a police detective.

Needless to say, if you receive one of these calls, do the following:

Hang up immediately.

Report the call to the Treasury Inspector General for Tax Administration (TIGA).

Report the call to the Federal Trade Commission (FTC).

If you believe you owe taxes, contact the IRS directly at (800) 829-1040. IRS workers can verify your tax balance and help you make payment arrangements if necessary.

 

 

5 Tax Audit Myths You’ve Probably Heard

tax audit

 

Tax audits are a favorite topic for urban myths. Here’s the truth behind the hype:

A Tax Audit Is Intimidating: Unlike the grill sessions you’ve most likely seen on TV, most IRS audits are correspondence audits: you’ll receive a notice requesting additional information or clarification of information on your return. You provide the needed documentation, the revenue agent or clerk reviews it, and case closed.

Definitely not the sleeves-rolled-up interrogation session of urban myth!

You’ll Get Audited Right Away: In most cases the IRS will abide by the three-year statute of limitations–unless the return in question has substantial errors.

It can take a year or more for the IRS to wade through the millions of tax returns it receives before it determines your return is worth a second look. In the case of more complex returns with substantial errors, the IRS may reach back six years.

Tax experts suggest keeping tax records (income documentation, income/expense records) for up to six years for this reason.

Professionally-prepared returns are audit-proof: As much as we’d like to think this is the case, it’s not. If your tax preparer embellished your return, provided incorrect information, or attempted to claim deductions for which you’re not eligible, the IRS can and will come knocking.

Find a tax pro with an established track record in your community and who is good standing with both the IRS and the Better Business Bureau. Online review sites such as Yelp and Google are also helpful, along with recommendations from friends and colleagues.

Tax audits are common: Given the sheer volume of urban myths and audit-related horror stories, it’s safe to assume that tax return audits are common. The good news: only an average of 1 in 116 taxpayers will undergo a tax return audit.

Low-to-moderate earners won’t be audited: If you’re among those in the lower income brackets, this myth might be music to your ears. It’s just that: a myth. Unfortunately, an audit is an equal opportunity headache.

The IRS takes into consideration(among many other factors) the accuracy of the information on the tax return, not the taxpayer’s income status.

Certain deductions will trigger an audit: Have you heard the one about home office expense triggering an audit? Educational expense deductions or dependent care deductions? The good news is that certain deductions will not trigger an audit.

The IRS will, however, pay close attention to returns that are suspicious, inaccurate, or “beyond common sense,” so it pays to file an accurate and truthful return each year.

Tax season is fertile ground for rumors, urban myths and other scary stories surrounding tax returns and tax audits. The good news is that they are just that: urban myths and scary stories.

If you are in among the 1 in 116 to be selected for audit, chances are you will be facing a correspondence audit. Respond promptly to all requests for information, and when in doubt, enlist is a qualified tax pro.

We have IRS Enrolled Agents and tax attorneys on staff who can help. If you’re facing an audit or other serious tax matter and would like a tax pro by your side, get started today by scrolling to the bottom of our homepage and clicking the blue “start secure chat” button.