Tuesday, June 11, 2024

How To Deal With Taxes

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How to Deal with Taxes

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  • Estimate your tax refund andwhere you stand

  • Know how much to withhold from your paycheck to get

  • Estimate your self-employment tax and eliminate

  • Know which dependents credits and deductions

  • Estimate capital gains, losses, and taxes for cryptocurrency sales

  • See which education credits and deductions you qualify forGet started

The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Save The Right Paperwork All Year Long

Stay on top of tax-related paperwork throughout the year it will make your life easier during tax season. You might want to keep receipts for things like charitable donations, work-related expenses and medical bills, or other items from step 4. You may also want to keep statements from student loans or investments and any grants or fellowships. Having these handy and organized can help you determine whether to itemize and make the process easier. You should keep your paperwork after you file, too. The IRS recommends keeping records for at least three years.

Separate Business From Personal Expenses

If the IRS audits your business and finds personal expenses mixed with business expenses, regardless of whether you reported business expenses correctly, the IRS could start looking at your personal accounts because of commingled money, Blake says. Always get a separate bank account and credit card for your business and run only business expenses through those accounts.

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Look for help in the right places – Working with a trusted tax professional, look for gaps and loopholes that can curb your IRS debt. “Depending on your issue, there may be some federal or state amnesty-type programs available to you, and there may be a limit to the number of years you need to file and pay,” says Abby Eisenkraft, owner of Choice Tax Solutions in Melville, N.Y.

Be honest and straight with the IRS – “Don’t lie or omit income,” Eisenkraft adds. “You’re already on their radar, and the last thing you want is for your case to be referred criminally within the IRS, if it appears you are intentionally hiding income.” Keep as calm as possible if and when you interact with the IRS – they’re human beings, too, and can act accordingly if you’re hostile or angry. “Don’t be rude or unpleasant,” says Eva Rosenberg, founder of the website, TaxMama.com. “That will come back to bite you later on.”

You can negotiate – Taxpayers should also consider whether they might qualify for an offer in compromise, states Wu. “This is an agreement between the taxpayer and IRS to settle a tax liability for less than the full amount,” he says. “There are several types of offers and different factors that contribute to acceptance for each.” Talk with a tax professional if you go that route, Wu advises.

You’ll need to be equally aggressive in making the problem disappear – a scenario that is definitely in your best interests in a back taxes situation.

A Fresh Start For Tardy Taxpayers

How to Deal with Taxes?

Back in 2011, the IRS rolled out its Fresh Start program, geared toward giving late-paying Americans a path back to paying off their tax liabilities.

“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” IRS Commissioner Doug Shulman said at the time. “These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.”

The IRS particularly focused on the following changes:

  • Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
  • Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
  • Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
  • Creating easier access to installment agreements for more struggling small businesses.
  • Expanding a streamlined Offer in Compromise program to cover more taxpayers.

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File Your Missing Tax Returns Right Away

You will not be able to make a payment arrangement or settle a matter concerning back taxes unless you have officially filed all tax returns with the IRS. You should file a tax return regardless if you are able to pay the liability. The penalty for failure to file a past due tax return is the highest fine the IRS is able to impose. Therefore, if you file your missing returns, it can save you a great deal of money in the long run as opposed to not bothering to file them at all, thus accruing higher penalties and interest.

It is imperative that you also file your current tax return on time. The IRS will not enter into a payment agreement with a taxpayer who has not filed their current tax return. Plus, this will just catch up with you as well and thus you will owe even more money and accrue even more interest and penalties.

If You Think The Amount Youve Been Charged Is Wrong

If you think your statement is wrong, you should and ask them to explain it.

Income Tax helplineMonday to Friday, 8am to 8pmSaturdays, 8am to 4pmCalls cost 12p per minute from a landline, and from 3p to 45p from a mobile

HMRC phone lines are often busy. The best time to call is between 8am and 11am on Wednesdays, Thursdays and Fridays – but you might still have to wait in a queue.

There are lots of reasons why the tax youre being asked to pay could be wrong. It could be because:

  • you made a mistake on your tax return
  • you stopped being self-employed, but didnt tell HMRC
  • you missed filing a tax return, so your income tax has been estimated – HMRC call this a determination
  • a payment you made previously hasnt been taken into account
  • your profits have fallen, so any payments on account included in your bill are too high

Contact the charity TaxAid if you earn less than £20,000 a year and cant sort out your problem with HMRC. The help on their website is available to everyone, whatever you earn.

TaxAid helplineMonday to Friday, 10am to middayCalls cost up to 12p per minute from a landline and 45p from a mobile

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Get Help From A Licensed Tax Professional

Receiving a notice from the IRS would raise anyones blood pressure. Before you jump into action, contact a qualified tax professional for delinquent tax help. You are entitled to tax representation in any matter with the IRS, and you should never try to handle any tax issues without proper representation, said Michael Raanan, MBA, enrolled agent, owner of Landmark Tax Group and a former IRS agent.

Reach out to the IRS and a tax professional immediately if the IRS has already started contacting you to collect. You can ask the IRS to briefly halt any collection activities until you have secured tax representation, Raanan said. Do not hesitate to do so, as a long delay will only make things worse.

Communicate And Keep Records

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To ensure the delivery of your communications, send everything to the IRS via certified mail with a return receipt. It will show that you sent your tax return and someone at the IRS signed for it.

Make sure a postal employee postmarks your receipt if you opt to use certified mail. The date of the receipt will serve as the postmark date. Again, keep your receipt for proof of delivery.

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Set Up An Installment Agreement

The IRS might be willing to set up a monthly payment agreement if you owe less than $50,000 in combined tax, penalties and interest, and youve filed all your required returns. Short-term installment agreements might be available for balances up to $100,000.

Use the IRS online payment application to find out whether an installment agreement is available for your situation.

If you successfully set up a monthly payment agreement, make sure you stick to your repayment schedule. In the event that you miss a required IRS deadline, it has the right to revoke the payment arrangement and restart the collection process, Raanan said.

While you are under an installment agreement, any IRS tax refund that might be due to you in future years wont be sent to you instead, it will be credited to the outstanding balance on your installment agreement.

Resolve Your Tax Issues Now

Tax returns serve a variety of purposes: You might need them to apply for student financial aid, a mortgage or a personal or business loan. In addition, yourSocial Security, disability and Medicare benefits are based on your reported earnings.

Fortunately, you have options when your delinquent taxes become a problem or if youre facing a tax audit. Tax information is tricky, however, and the repercussions for failing to file or pay can be substantial so act quickly.

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How Can I Stop Irs Wage Garnishment

If you owe taxes to the IRS, they may garnish part of your wages if you dont respond to their payment request. What this means is that the IRS will inform your employer of the taxes you owe so that a part of your paycheck will automatically go towards your tax debt balance.

Wage garnishments can be a heavy financial burden, so the best way to put an end to an IRS wage garnishment is to speak to a tax attorney. An attorney can help you set up a repayment plan or settle your tax debt for less than what you owe. At this point, it will be extremely valuable to have a tax attorney guide you through the process to prevent other financial burdens in the future.

Here Are 5 Ways The Super

How to deal with past due tax returns
  • The super-rich are always looking for ways to decrease the amount of taxes they have to pay.
  • But what are the things they do to ease their burden?
  • Experts break down 5 common strategies that help save their clients money.

The more money you make, the more taxes you pay right?

Not necessarily.

While the U.S. tax code is structured so that high earners pay a higher tax rate, the ultra-wealthy often take advantage of laws that enable them to lower their effective tax rate.

“In general, America’s wealthy are different when it comes to tax planning because of the options they may have with categorizing the assets they hold,” said Ron Carson, founder and CEO of Carson Group and co-author of “Avalanche: The 9 Principles for Uncovering True Wealth.”

“Their net worth often presents opportunities when tax planning to help protect their assets,” he added.

Billionaire Warren Buffett, CEO of Berkshire Hathaway, has repeatedly pointed out the disparity, advocating that rich Americans pay higher taxes. To make that argument, he famously noted that he pays fewer taxes, on a percentage basis, than his secretary and other employees, since a bulk of his wealth is in stock rather than wage income.

Explore the possibilities of categorizing your assets into three tax locations taxable, tax-deferred, and tax-free to best protect what you’ve built.Ron CarsonCarson Group CEO

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Why You Need To Think About Taxes Before You Start Freelancing

When I started freelancing, I had zero clue about how to deal with taxes. Where I used to live, if you earned anything below X amount per year, you were exempt from taxes, so having worked only terrible jobs so far I knew nothing about how to calculate mine.

Once I started pulling in decent money, I had to work out exchange rates, deductions, and more. In the end, I decided to work with an accountant, which is something I shouldve done from the beginning to save myself a lot of headaches. All that mess couldve been avoided had I done some research before I jumped into freelancing, such as:

  • How much would I have to pay in taxes as an independent worker?
  • What classification of independent work do I fall into?
  • Are there any deductions I can claim for my taxes?
  • How and when do I have to make payments?

Luckily, I never ran into any problems with that countrys tax agency, such as owing them money. Then, I moved to Argentina, where taxes are notoriously complex. However, I had learned my lesson by then, so I started researching how the whole thing worked before I set foot in the country.

Even so, I still had to meet with accountants to help me decipher how much money I owed and how to sign up as a taxpayer. Even when youre willing to pay taxes, a lot of countries make it ridiculously hard to do so, which brings us to the next section.

Seek Your Accountants Advice On Your Business Plan

A good accountant gives you advice on how to grow your business, Bhansali says. Seek their advice to determine how much to contribute to your retirement fund and whether you should take a bonus or delay it a year. Your accountant can tell you if buying a small space for your store or business – rather than renting – could save you money.

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Managing Assets Like A Business

One way to save on taxes is creating a structure such as a limited liability company, or LLC to manage multiple investments, said Featherngill. It could include portfolio assets, real estate or a business.

While it could get complex, there may be opportunities to save money while at the same time creating a governance structure for your assets, she explained. “If the LLC is a management company that provides oversight and advice to owners of the assets, under certain circumstances the expenses incurred by the LLC will be deductible as business expenses.”

The Power And Limitations Of Cra Collections

What’s the deal with taxes?

The CRA is very powerful. Not only can it charge penalties and interest on outstanding tax debt, but the CRA collections department is legally able to take very strong action to collect on debt that is owed. This means that the agency is often very difficult to negotiate with, since it holds so much power.

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Heres How To Deal With Income Taxes

Want to make a bunch of money?

Leave states that charge you income tax.

For example, California charges over 13% income tax.

Back in 2012, I moved from California to Florida.

I was able to rent a nice place on the beach for $25,000 a month, which meant I paid $300,000 in rent back in 2013.

In fact, just the money I saved in income taxes by moving to Florida in that FIRST year covered my 25K monthly rent for 4 YEARS.

Think about that I paid 4 years of rent on the beach just to leave.

If you live in a place like California or New York, youre literally throwing money away.

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This is why many high-income New Yorkers are now moving to Florida.

Why wouldnt they?

Florida has no state and local income taxes, has a budget surplus, and is booming.

New York, meanwhile, is in debt while they are taking over 12% of your money.

Heres the question every New Yorker should be asking:

Why should New York have such high state and local income taxes while states like Florida get by just fine without any state income tax?

The Governor of New York, Andrew Cuomo, recently said that the state is missing $2.3 billion in expected tax revenues from December and January.

This is because the rich realize that they need to leave New York with their outrageous income taxes.

Tax the rich, tax the rich, tax the rich. We did. Now, God forbid the rich leave. Governor Cuomo

Over the past 6 years, I could literally buy a jet just by leaving California. So, why should I have stayed?

If Your State Doesnt Have A Reciprocal Agreement

If the state you work in does not have a reciprocal agreement with your home state, youâll have to file a resident tax return and a nonresident tax return.

  • On your resident tax return , you list all sources of income, including that which you earned out-of-state.

  • On your nonresident tax return , you only list the income that you made in that state.

In most cases, your home state will allow you to claim a tax credit on your resident tax form for the taxes that you paid to your work state.

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Free Income Tax Advice

We offer a free 10 minute income tax consultation with one of our students. We will identify your tax problem and advise you if you need assistance from a tax lawyer to solve it and if so we will suggest a one hour consultation with one of our lawyers, the fees if you wish to consult and a rough estimate of the legal fees if you choose to retain us.

Tips For Dealing With Back Taxes

How to Deal with Taxes?

Unfiled tax returns and unpaid taxes can add up to trouble. Like most people, you probably dont relish preparing your annual income tax returns. But what happens if you dont file your taxes? The simple answer is that you will incur back taxes and eventually, youllneed to deal with them.

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