It’s Never Too Early To Get Ready For The 2017 Tax Season

tax season

 

April 18 is almost a distant memory for most of us. Tax returns or extensions are filed, documents stored, and refunds are on their way to our bank accounts if not received already.

If tax season 2016 was too hectic for your tastes, there are ways you can prepare for a smoother 2017 tax season by preparing early. Mid-year is the perfect time to assess your individual tax scenario.

Keep track of these milestones:

  • Birth or adoption of a child
  • Marriage or divorce
  • Transferring or relocating for work
  • Change in military status or activity
  • Death of spouse
  • Receiving lump sum distributions, inheritances or settlements
  • Starting or selling a business
  • Establishing a home office
  • Significant medical expenses not covered by insurance
  • Job search expenses, including mileage, lodging and relocation expenses
  • Collecting Social Security, Unemployment or Social Security Disability Insurance benefits

Each of these milestones will affect your tax status for 2017. Now is the time to consult with a tax pro who can advise you on the best tax strategy for these life events.

Understand the updated tax laws for 2017

Tax laws change frequently at the state and federal level. These changes can include:

  • State tax regulations
  • Itemized deduction allowances
  • Changes in tax credit programs, eligibility or regulations
  • Changes in trust and estate regulations
  • Retirement account contribution limits
  • Income limits for contributions to a Roth IRA

You can begin researching these changes through your state revenue department website, IRS.gov website, or community resources such as  workshops or lectures.

You’re not alone, however, if you find the language of these regulations confusing or difficult to understand. Always enlist a qualified tax pro if you need clarification on any tax matter, particularly changes in tax laws or regulations.

If you are a low wage earner, disabled, or a senior, you can access basic tax advice through the VITA program beginning in January of each year. Trained volunteers will assist you with any basic tax questions as well as provide tax filing assistance.

File early

Identity theft and tax  fraud are on the rise. Filing early in the tax season will prevent an identity theft ring from attempting to file a fraudulent tax return under your name and social security number.

Last but not least…

Organize your tax documents throughout the year. If you haven’t done so already, set up a filing system for your paystubs, receipts, freelance/side job income, medical/dental expenses, and home office expenses.

There are also many spreadsheet and basic bookkeeping programs and apps available to help you keep record of your income, expenses and deductions throughout the year.

Staying organized year round will eliminate the last-minute rush to gather paperwork and records on tax filing day, making things easier for you and for the tax pro who will be filing your return.

Mid-year is a perfect time to prepare for the 2017 tax filing season. Make note of any significant life change, stay current on changes to tax laws and regulations and file early in 2017.

Who Can Represent You? A Quick Guide To Tax Professionals

 

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When dealing with the IRS, many people prefer to have someone represent them during IRS proceedings. If you’re facing an IRS matter and wish to have a representative, here is a brief overview of the professionals who can help.

Limited representation

The following professionals can represent you before the IRS only if they prepared and signed your tax return:

  • Business partners
  • Employees
  • Relatives
  • An officer of a corporation, professional association or other organization

Limited representatives can’t represent you in matters such as IRS collections, appeals, estate closures, or in tax court.

Additionally, the people listed above can only appear before certain IRS representatives:

  • Revenue agents
  • Customer Service Representatives
  • IRS employees in similar categories

Unlimited representation

When you are facing a more complex IRS matter such as collections, appeals, tax liens, and estate closures, the following professionals can assist you:

Tax attorneys: Look for an attorney who is in good standing with the state bar association and with the IRS. Additionally, you will want to find an attorney who ether specializes in taxation, or who is a general practitioner with additional coursework in taxation.

Certified Public Accountant (CPA): CPAs have either a Bachelor’s or a Master’s degrees from an accredited college or university and have passed the state CPA exam. In order to represent you before the IRS, your CPA must be in good standing with the IRS, with no license suspensions or disciplinary actions on their record.

CPAs are especially skilled in reviewing and analyzing financial statements and tax returns.

Enrolled Agents (EA): An EA is a licensed tax practitioner who has been authorized by the U. S. Department of the Treasury to represent taxpayers in tax matters. The EA designation is the highest credential awarded by the IRS, and there are over 48,000 EAs in the United States.

Facing an IRS proceeding on your own can be intimidating. By hiring a qualified professional to represent you before the IRS, you’ll have someone who will ensure your rights are being upheld and who can negotiate with the IRS on your behalf.

By understanding the difference between limited and unlimited representation, you will be better prepared to find the tax pro who is best suited to your needs.

Always look for a licensed tax pro who is in good standing with the IRS as well as with their professional association. Speak to several within the same level of representation. Doing so will ensure you have the best person to represent you before the IRS.

 

DIY Tax Defense: The Installment Agreement

 

installment agreement

If you’re facing the end of tax season with a large tax bill that is beyond your means, the IRS installment agreement is one possible option available to you. In addition to the Offer In Compromise or the CAP program, the Installment Agreement is available to taxpayers who can’t pay their tax bill in full.

Eligibility

You must owe less than a total of $50,000 in taxes, penalties and fees. Businesses must owe less than $25,000 including penalties and fees.

How it works

  • Complete IRS form 9465
  • Complete IRS form 433F
  • Call the IRS number shown on your tax bill and follow all instructions
  • You may also apply online
  • Pay the minimum monthly payment
  • File all requested tax returns and pay taxes in full and on time. If you are unable to do so, contact the IRS immediately.
  • All future refunds will be applied to your outstanding tax bill.

If at any time you are in danger of defaulting on your installment agreement, contact the IRS right away to make alternate payment arrangements.

The IRS will not initiate collection actions against you if:

  • An installment agreement is being considered
  • While an installment agreement is in effect
  • 30 days after an installment agreement request is denied
  • During the IRS review period for an appeal of a denied or terminated installment agreement

As with any IRS payment arrangement, it is crucial that you provide all requested documentation within the timeframe established by the IRS, and adhere to the agreement if it is approved.

If you experience any changes in your financial circumstances, notify the IRS right away to see if you are eligible to have your installment agreement amended to reflect your current financial scenario.

If for any reason you don’t receive your monthly statement, send your payment to the IRS address as stated on your installment agreement. Never skip a payment.

Dealing with the IRS on your own can be intimidating particularly if you’re unaccustomed to handling your own complex financial transactions.

When in doubt, enlist a licensed tax professional to help you determining your best course of action. Your tax pro will discuss all of your available options, negotiate with the IRS on our behalf, and ensure that your rights are upheld in any IRS tax proceedings.

 

 

New (Tax) Year’s Resolutions

Untitled design(3)As 2015 winds down, tax season is gearing up. Here are some great ways to make sure things are looking up for you tax-wise in 2016.

1. Resolve to e-file

Electronically filing your tax return, or e-filing, has its rewards. No lost paperwork in the mail, no IRS employee errors as they manually process your return, and a faster turn-around for refunds. By e-filing your return, your information is transmitted directly to the IRS. A tax pro can e-file on your behalf, or you can take the DIY approach with many of the e-filing options available to consumers.

2. Know what you’ll owe

If your income changes considerably in 2016, chances are you’ll be facing a higher tax bill for 2016. Income sources such as bonuses, IRA distributions, purchase contracts, settlements, and certain gambling winnings can all nudge you into the next highest tax bracket.

Prepare in advance, if you can, by setting aside enough money in your savings account to cover the increased tax bill. By doing so, you’ll lessen the “sticker shock” on tax day, and can take care of your tax bill in one lump sum. By doing so, you’ll avoid penalties, fees, and possible hassles in dealing with the IRS.

A qualified tax pro can be of great help at a time like this, and can advise you in taking the steps necessary to address your higher tax bill in 2016.

3. Ask for help

If you’re facing back taxes, IRS collection actions, a large tax bill, or any other serious tax matter, 2016 is your year to ask for help. Very few people are equipped to wade through IRS tax code and to interpret and apply those regulations to their own tax scenario.

Enlisting a qualified tax pro to help you assess your individual tax matter can pay dividends in terms of peace of mind and a clearer idea as to what the IRS is requesting from you. A tax pro will help you understand complicated IRS tax code as it applies to your circumstances, and can advise you of the best course of action to take in dealing with the IRS.

The end of 2015 doesn’t have to mean the start of tax headaches in 2016. By e-filing, understanding how much you’ll owe and asking for help,  you can get ahead of the stressed-out masses waiting til the end of 2016.

By resolving to get a fresh start in the new tax year, your tax outlook for 2016 could look much brighter.

If you’re facing a serious tax issue, resolve to take charge by calling us at (888) 224-3004 or by clicking the white “Start Chat” button at the top of our homepage. We have qualified tax pros on staff who can help you make sense of your back taxes, IRS collection, or other serious tax matter.

The New Tax Year Resolution You Must Make Right Now

calculator-1019743_1280Ignoring that past due tax debt will get your new year off to a stressful start

2015 will be history in a matter of days. If looking back on 2015 also includes an outstanding tax debt, addressing that tax debt needs to be at the top of your New Year’s resolutions list.

Penalties and fees

If you have not  yet paid your 2014 taxes, you’ve been racking up penalties and fees for each month of non-payment. The IRS assesses a non-payment penalty of 1/2 of 1 percent of the balance for each month after the initial due date. It may not sound like much, but it can penalties can add up to as much as 25 percent of the balance due.

That’s a lot if you’re on a tight budget, and penalties can add up quickly, not to mention past due notices from the IRS.

Don’t panic, and don’t ignore the IRS

Don’t assume the IRS will forget about those outstanding taxes, because their role is to collect tax payments from citizens. If you’re ignoring their written notices in hopes the IRS will forget and move on, it will never happen.

The IRS will become more aggressive with each passing month of non-payment. Regardless of where you are in this collection cycle, the IRS won’t forget. If you are facing asset seizure for non-payment of past due taxes, you need to take action immediately to protect your bank account and other assets.

Your best defense against the IRS

The bad news is you owe back taxes. The good news is that there are tax professionals who can help you. A qualified tax pro can determine if you’re eligible for an installment agreement, Offer In Compromise or Currently Non-Collectible status. A tax pro such as an Enrolled Agent or tax attorney can represent you in negotiations with the IRS.

One key advantage to hiring a tax pro: they know the complex IRS tax code inside and out, so you won’t have to. A qualified tax pro will also ensure your rights are upheld throughout the collection proceedings. They will also explain each step to you in terms that you can understand.

You won’t hear jargon or “legalese,” but you will hear an honest assessment of your financial circumstances and your options. Your tax pro can work with you in arriving at a payment arrangement you can live with over time.

If you’re facing 2016 with an outstanding tax bill, now is the time to take charge and take back your life. We have qualified tax pros on staff who can help you sort out your options, negotiate on your behalf with the IRS, and advise you every step of the way. Even better, they can translate that complex IRS jargon that might be difficult to interpret and understand.

If you’re ready to face 2016 with a clear plan of action, give us a call today at (888) 224-3004. You can also chat with us by clicking the white “Start Chat” button at the top of our homepage.

Either way, you don’t face to face past due taxes alone. We can help.

 

 

 

Don’t Overlook These 5 Tax Breaks

Freeimages/Paige Foster
Freeimages/Paige Foster

Don’t overlook these last-minute tax breaks

Part 3 of a 4-part series

Year-end tax planning may yield some pleasant surprises in the form of tax breaks you hadn’t thought of before. Take a look at these five possible tax breaks and see if they may be an option for you. 

Always check with a qualified tax pro to see if you meet the requirements for any of these tax breaks. 

1.  Earned Income Tax Credit (EITC): While this credit is only available if your income falls within the low to moderate range for your household size, don’t count it out if you’ve had some significant changes to your earnings this year. Those changes can include:

  • Job loss or layoff
  • Significant cut in pay or hours
  • Disability

If you’ve experienced any of these events this year, chances are you struggled with significantly less income than in prior years. Check with a tax pro to see if you are eligible for the EITC for this year. 

2.  Jury duty fees paid to employer: If your employer pays your full salary while you’re on jury duty, they may ask you to turn over your jury duty fees (paid to you by the court) when you return to work. 

Even though jury fees are  miniscule in comparison to your income,   the IRS still regards them as taxable income. Be sure to deduct those fees from your taxes, so you aren’t taxed on money that was passed directly to your employer. 

Be sure to save any statement or receipts verifying the jury duty payments.

3. State taxes you paid last year: If you ended up owing state income tax last year, be sure to include that amount on this year’s return as an itemized deduction. You may also include any estimated quarterly income taxes you’ve paid as well. 

4. Self-employed health insurance premiums: If you’re self-employed, you know firsthand that insurance coverage isn’t cheap. The IRS understands this and allows for self-employed workers to deduct insurance premiums for medical, dental and long-term care insurance. 

This deduction includes insurance premiums paid for yourself and your dependents. You can include this figure as an itemized deduction on Schedule A of your 1040 tax form. 

5. Protective clothing required for work: If your line of work requires you to wear protective clothing, you’re in luck. Items such as hard hats, goggles, work boots, and fire-retardant outer wear are just some of deductible items. 

There is a catch, however. The clothing items can’t double as street wear, and they must be required by your employer. You’ll deduct the cost of these items on Schedule A of your federal tax return. 

As with any deduction, always check with a tax pro to see if you’re eligible. 

These easily overlooked tax breaks can take the sting out of tax day. Gather your receipts and tax records, talk with a tax pro, and get ready to enjoy a lower tax liability for your 2015 taxes. 

5 More Overlooked Tax Deductions

freeimages.com
freeimages.com

Make the most of these overlooked deductions

Yesterday’s post discussed five of the most easily missed tax deductions. Now is a great time to review your receipts and records to see if you qualify for any of these tax deductions.

Hang on to those receipts, however. You’ll need them on tax filing day, and as proof of eligibility for a given deduction should you ever be audited.

As with any deduction, be sure to check with a licensed tax preparer regarding your eligibility for any itemized deduction, especially if this will be your first year claiming that deduction.

IRS tax code is complicated, and a qualified tax pro will be able to assess your unique tax scenario and also determine whether or not you are eligible for these deductions.

1. Education expenses: Education doesn’t come to an end when you receive your diploma or degree. Enrolling in college courses that are specific to your skill set or to train for a new career is a good strategy in today’s economy.

Eligible expenses include books, tuition, fees and supplies not covered by financial aid, scholarships or tuition reimbursement through your employer.

2. Safe deposit box fees: Be sure to keep track of monthly or quarterly safe deposit box fees; you can deduct them at the end of the year.

3. Foster care expenses: The IRS defines a foster child as a child who is placed with you through a court order, judgement, or by a licensed private or government foster care agency. Unreimbursed foster care expenses are also tax deductible.

4. Lead paint removal: If you’re planning on getting rid of the lead paint on that old house you just bought, good news: lead pain removal expenses are tax-deductible.

There is a catch, however. In order for it to be a qualified expense, the lead paint removal must be for the purposes of preventing a child from eating or otherwise consuming the lead-based paint.

The surfaces must also be in bad shape, and be within easy reach of a child who already suffers from lead exposure. In other words, if your child tested positive for lead exposure due to lead-based paint in your home environment, you do have a shot at deducting the paint removal costs.

IRS code relating to this deduction is complicated, so if you will be removing lead-based paint from your current home or a home you just bought, be sure to check with your tax advisor regarding this deduction.

5. Medical travel expenses: If you or a loved one are ill and need to travel out of town for medically necessary treatment, hold onto to all of your travel and lodging receipts.

 

5 Reasons Why You Should Have a Pro Do Your Taxes

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Hiring a tax pro will save you time and money

No one relishes the thought of preparing their own tax return each year. While there are lots of DIY software and apps to choose from, they may not be enough if you’ve experienced significant changes to your tax scenario this year, or if the thought of preparing your own taxes makes you break out in a sweat. You may also benefit from a tax prep pro if:

  • You’re just not good with numbers.
  • You’re busy and short on time
  • You started a freelance business or freelance side gig
  • You got married, had a child, or divorced during the tax year
  • You bought your first home
  • You’re dealing with student loan interest

The bad news? You’ll need to pay to have your taxes done, but the good news is that you’ll save money in the long run. Here’s why:

  • Your tax prep pro will file an accurate return on your behalf. You won’t need to worry about making a mistake on your return
  • He or she will be familiar with the deductions available to you, from the standard deduction all the way to complex itemized personal and business deductions. This can save you money in the long run as each deduction will lower your overall tax liability.
  • He or she understands IRS language and U.S tax codes as they apply to you. That alone would be reason enough if the thought of perusing the IRS website for tax information gives you a headache.
  • He or she has the time to explain tax matters to you in a way that you’ll understand. Most people get confused by the difference between a tax credit and a tax deduction. Your tax pro knows the difference and will be happy to explain it to you.
  • They interpret tax codes for a living so you won’t have to.

Finding a Qualified Tax Prep Pro

Asking for personal recommendations from friends and neighbors is a start. Google and Yelp are also excellent tools. If you’re in the Orange County, CA area, give us a call at (888) 224-3004. We can help you find someone in the local area that you can trust with your tax matters.

If you’re facing big changes this year such as marriage, birth or adoption of a child, or any other key life change, your tax scenario will change as well. Hiring a pro to do your taxes takes the burden off you, so you can go about your normal routine.

You’ll get an accurate return in exchange, along with explanations of any tax matter that is important to you. A tax prep pro is your partner in preparing an accurate and timely return every year, saving you time and money in the long run.

What To Expect at A Wage Garnishment Hearing

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Knowing What to Expect Can Help You Prepare

No one relishes the thought of having their wages garnished for any reason. It is hard enough to get by in today’s economy without the stress of an even smaller paycheck due to garnished wages. At the same time, you do have recourse by filing for a hearing. A judge will evaluate your circumstances and either uphold the court order or levy, or he or she will overturn it based on inability to pay.

Steps To Take

In order to secure an exemption, you’ll need file a written petition for a hearing date. You’ll need to include the following details:

  • Your case number
  • You full legal name
  • Your formal petition requesting reduction or elimination of the garnishment
  • Exemption calculations

Once you file your written request with the court clerk, you’ll receive a notice stating whether or not your petition was granted, and if so, your hearing date. It is essential for you appear on the day and time assigned to you.

What You’ll Need to Bring

  • Proof of dependents and your exemptions
  • Paystubs
  • Receipts for any payments you may have already made
  • Proof of bankruptcy filing if your attorney has not yet notified the court of bankruptcy proceedings

At this stage, you must show the presiding judge you are filing for an exemption based on inability to pay, or if you are requesting a lesser garnishment from each paycheck. The judge will consider the following factors when evaluating your case:

  • Whether or not you have filed for bankruptcy
  • You have already paid the debt in full
  • Whether or  not you provide 50 percent of the support of any dependents in your household
  • Whether or not you are the primary earner and head of household
  • You have an existing payment agreement established with the creditor or tax agency, and that agreement is in good standing

If the judge rules in your favor, your garnishment can either be eliminated altogether or reduced to less than the customary 25 percent of your pay. If the judge rules against you, the wage garnishment will move forward as ordered.

If you are facing a garnishment hearing, it will be in your best interest to have legal representation. A qualified tax attorney will be able to assist you with tax-related wage garnishments or levies. Your attorney will see to it that you fully understand your rights, and will ensure your rights are upheld.

If you are facing a tax-related wage levy or garnishment, we have tax attorneys on staff to assist you. Get started today by either clicking on the white “start chat” button at the top of any of our webpages, or by giving us a call. Don’t go it alone. We can help.

 

It’s December. Do You Know Where Your Tax Paperwork Is?

 

Photo: Ladyheart/morguefile
Photo: Ladyheart/morguefile

The tax year is winding down, and if you’re hoping to get a jump on the April 15th deadline by filing early, organization is key.

Now is a great time to gather all of your paperwork and organize it for easy reference on tax day. Getting organized ahead of time will save you time and energy when it comes time to file your taxes. Here’s a list of some of the things you’ll need:

If you work for an employer:

  • Paystubs and W2 forms. Employers have until January 31st to issue your W2. Once you receive it, compare the figures with the figures on your year-end pay stub. If there are any discrepancies, be sure to contact your employer’s payroll department or bookkeeper. You’ll want to clear up any issues long before your file your return.
  • Proof of 401k/IRA contributions. These figures will typically show on your paystub each pay period. If not, the plan administrator will typically issue a year-end statement as proof of contribution.
  • Your paystub will also show proof of contribution to any employer-sponsored HSA.

If you freelance or have side gigs in addition to W2 earnings:

  • Records of all tip income
  • Records of all your income and expenses for the year, along with receipts verifying those figures
  • If you earn more than $600.00 from any one client, they will issue a 1099-MISC by January 31. If you have not received your 1099-Misc by mid-January, follow up with the client. You will need the form in order to file your taxes.
  • You’ll need to report ALL income, regardless of how much you earn from a specific client.
  • Mileage records if you used your car in the course of conducting business, such as driving for Uber or driving to and from client meetings, medical appointments, and/or volunteer gigs.

If you’ll be itemizing your deductions:

  • For child/elder care: copies of all receipts and payments made to care providers.
  • If you hired a nanny or babysitter who earned more than $600.00, you’ll need to issue a 1099-Misc. form.
  • Charitable contributions: copies of all receipts. If you made donations to a qualified non-profit, they will typically issue a donor acknowledgement letter either at the time of donation or at the end of the year.
  • Copies of receipts for any goods donated. The charity will typically issue a receipt at the time of donation, and you’ll be responsible for declaring the Fair Market Value of the donated items.
  • For medical/dental: Copies of receipts verifying co-payments or other out-of-pocket expenses
  • Copies of mileage records to and from appointments
  • Copies of receipts for any medically-necessary mobility devices, home modifications, or vehicle modifications
  • For homeowners: Copies of the 1098 Mortgage Statement issued by the lender or servicer
  • Records for any repairs, rental expenses, insurance, or disaster-related repairs
  • Receipts for uniform expenses if a uniform is required for work, but not reimbursed by your employer

If this is the first year you’re either filing your own return or claiming itemized deductions, now is a good time to check in with a tax pro who can assess your unique tax scenario and advise you on exactly which documents you’ll need.

Getting ready for tax day is all about keeping organized records. If your paperwork is spread out among various shoeboxes, drawers, or some random spot you can’t remember, now is a good time to dig them out and organize them into one central file.

You’ll be glad you did come tax day.