HERE 10 tips if you owe but cannot immediately pay the IRS: • Pay What you can: Pay promptly to stop additional penalties and interest from accruing. If you are unable to pay, consider getting a loan to pay the bill in full rather than make installment payments to the IRS. • Additional Time to…
IF YOU cannot pay all your taxes owed to the IRS, you may make an offer to pay a smaller sum to fully pay all taxes, penalties, and interests. This is called Offer in Compromise (OIC). Let’s discuss the pros and cons of OIC. Advantages: If the offer is accepted, you will be left alone;…
TAX scams via email have become widespread over the last year. Thieves have become bolder. Their bogus IRS website has improved graphics and looks so real that even a veteran IRS auditor unwittingly logged into it. If he can be duped into this bogus website, what about ordinary folks like you and me? The IRS…
ABOUT a dozen of my clients have complained of receiving threatening phone calls from the “IRS” to pay up or be subject to criminal investigation. This is a problem for us taxpaying folks. And it’s growing. The IRS renewed its warning about an emerging phone scam that continues to target people across the nation, especially…
IF YOU paid someone to care for your child, spouse, or dependent, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Here are 10 tips on claiming a credit for child and dependent care expenses. • The expense for child and dependent care must be provided…
OF course not. Why should I pay taxes based on the highest tax rates? The lowest rates belong to joint filers and widows, followed by heads of household, and single taxpayers. Certainly, it does not make sense to file married filing separate and pay those sky-high rates. Or does it? Let’s discuss the advantages and…
The IRS issued new guidance requiring individuals with an interest in a “specified foreign financial asset” to attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets exceeds $50,000. Use new form Form 8938 (Statement of Specified Foreign Financial Assets) starting in 2011. Q….
NEW Foreign bank account rules were designed to combat money laundering, terrorism, and tax evasion. Unfortunately, folks like you and me get snared in the process. We get penalized if we don’t follow the new rules. I have written a series of simplified articles on this subject to help you understand the new rules and…
THE chief of the Franchise Tax Board (FTB) shares highlights of California’s audit program. The State examines about 300,000 income tax returns per year. Audits are conducted by desk, field, or correspondence. Field audits are conducted at your place of business (better at your representative’s office). The audit program has about 900 auditors located in…
A SHORT sale occurs when you sell your property for a price that is short of the balance owed to avoid a foreclosure – with the consent of your lender. Let’s define recourse and non-recourse loans and discuss variations when the property is outside California or if you move into or out of California. Here…
(Part 2) SHAREHOLDER loans accumulate over time and become red flags for IRS audits. Left unchecked, they grow to sums that are hard to repay. Let’s discuss some tips and developments. Here are Tips to Alleviate this Problem: Make some payments, even a small amount from time to time. This indicates the existence of a…
YOU have just lost an audit and have decided to bring your case before the appeals office of the IRS. You have learned the basics of the appeals process and how to prepare for the conference from previous articles. Let me now give you 10 strategies as you face the Appeals Officer: 1. Respect the…
AS you know, cancellation of debt income can surface from the foreclosure of your residence or any other real property. Like adding salt to an open wound, you are then faced with debt forgiveness income from the cancellation of debt on the mortgage of your property that has just been foreclosed. The bank issues a…
YOU are still upset from losing an IRS audit. You have two choices: pay or fight. If you choose to fight, go to appeals. Let me give you 10 tips on how to prepare for the appeals conference: 1. Request access to your case files. Take a look at any dossier they have on you….
IF YOU have offshore bank accounts, should you report the accounts to the US government? Yes, if the aggregate balances exceed $10,000 at any time during the year. What if you had the accounts before you left for the US? Yes, you should. There are reasons why our government wants to know: combat money laundering,…
MANY financially distressed borrowers lost their homes and had their loans cancelled during and after the recession. It was a relief to have their debts reduced or forgiven, but the same debt relief also triggered tax consequences that they were not aware of. In my CPA practice as a tax consultant, homeowners express shock and…
IRS agents are equipped with a guide that provides audit techniques to issues unique to attorneys. IRS instructs its agents to probe into the following areas: – Unreported income, deferral of income. – Advanced client costs. – Bartering. – Constructive receipts. – Personal service corporations. – Worker Reclassification – were employees misclassified as independent contractors?…
IT STARTED with a letter from the IRS. Your tax return has been selected for examination. You suspect that something is wrong. Is it possible that the agent suspects fraud? Is it probable that you have been referred to CID (Criminal Investigation Division)? If so, you need help. In a hurry! It would be foolish…
(Part 3 – Audit Scores) This is the last of three articles on how the IRS receives, validates, stores, and scores tax returns for audit. – How efiled and paper-filed tax returns are verified, validated, and reviewed for accuracy. – How tax returns are stored into master files. – How IRS scores tax returns for…
(Part 2 – Master Files) LAST week we discussed how tax returns are received, verified, and reviewed for completeness. Let’s now discuss the second of a three-part series on how your tax returns are stored into master files. – How efiled and paper-filed tax returns are verified, validated, and reviewed for accuracy. – How tax…
LET’S now discuss the last of three articles: How the IRS scores tax returns for audit. The higher the score, the more likelihood that you’ll be chosen for audit. 1. Scoring System: The IRS uses a Discriminant Function System (DIF) to determine returns that are most likely to generate additional revenue for the government. Although…
IRS conducts field audits where the books and records of a business are maintained. This, of course, is either at your home, office, warehouse, factory, or store. But I don’t like any of these locations. After representing taxpayers in IRS disputes for four decades, I prefer your audit conducted at my office – as your…
IF YOU fail to file on time or pay on time, penalties kick in. Here are 10 reasonable causes to abate (forgive) penalties for late filing or late paying: 1. Tax returns were mailed on time. A return used to be considered filed on time if it is postmarked on or before the due date. …
YOU should have received Form W-2 (Wage and Tax Statement) from your employer by now. If you did not, here are 10 tips to help you file: 1. Employers have until January 31 to furnish your W-2. 2. If you have not yet received your Form W-2, ask your employer when the W-2 was mailed….
THERE are two different approaches to prepare for an audit: shoe-box and organized approach. Let’s discuss each method so you can determine which one is best for your next audit. Why you should be organized – In my four decades years of defending taxpayers audited by the IRS and other governmental agencies, this methodical approach…
HERE are the top 10 things the Internal Revenue Service wants you to know about this valuable credit: 1. If you qualify, it could be worth up to $6,044 this year. EITC not only reduces the federal tax you owe, but could result in a refund. 2. The amount of your EITC is based on…
1. YOU may deduct donations to qualified organizations. Qualified organizations have tax-exempt status from the IRS. These include corporations or foundations organized in the U.S. for religious, charitable, educational, scientific, literary, or prevention of cruelty to children and animals. 2. You cannot deduct contributions made to specific individuals – priests, nuns, victims, and political organizations…
HERE are 12 tips to help you choose your correct filing status: 1. There are five filing status options to choose from: single, married filing jointly, married filing separately, head of household and qualified widow/widower with dependent child. 2. Your marital status on the last day of the year determines your marital status for the…
1. E-FILE. When you e-file, your chance of getting an error notice from the IRS is significantly reduced. Besides, it’s faster. Your refunds also arrive sooner. 2. Check your occupation. Your occupation must be consistent with your income and expenses. It does not make sense for a waiter or hairdresser not to report any tips….
YOU may deduct medical expenses only to the extent that expenses for doctors, drugs, insurance, etc. exceed 10 percent of your adjusted gross income. This means that you lose the first 10%. Only the excess is deductible. This is called for budget deficit reduction, folks. 1. Only prescribed drugs are deductible. Over-the-counter drugs are not,…
