Thursday, November 5, 2020
An Offer in Compromise is a negotiated contract between the taxpayer and the IRS that allows taxpayers to settle their tax debt for less than the full amount owed.
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The IRS may accept an Offer in Compromise for three reasons, There are several reasons the IRS will accept such a compromise.
Call 855-336-0719 now for free tax consultation at no cost to you.
Doubt as to Conductibility- The IRS doubts that the taxpayer would ever have the financial capability to pay the full amount owed within the time frame of the statutory period for collection (typically ten years from date of assessment).
Doubt as to Liability
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Thursday, October 22, 2020
Adjusted Gross Income (AGI) is a key element in determining your taxes. Lots of other things depend on your AGI (or modifications to your Adjusted Gross Income) such as your tax rate and various tax credits.
Adjusted Gross Income even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs all routinely ask for your adjusted gross income. This is a key measure of your finances.
As you can guess, the more money you make, the more taxes you will pay. Conversely, the less money you make, the less taxes you will pay. The number one way to reduce taxes is to reduce your income. And the best way to reduce your income is to contribute money to a 401(k) or similar retirement plan at work. Your contribution reduces your wages and lowers your tax bill. You can also reduce your Adjusted Gross Income through various adjustments to income. Adjustments are deductions, but you don't have to itemize them on the Schedule A. As you can see, two of the best ways to reduce your taxes is to save for retirement, either through a 401(k) at work or through a traditional IRA plan.
Contributions to these retirement plans will lower your taxable income, and lower your taxes. Taxable income is another key element in your overall tax situation. Taxable income is what's left over after you have reduced your AGI by your deductions and exemptions. Almost everyone can take a standard deduction, and some people are able to itemize their deductions. Because your adjusted gross income is so important, you may want to begin your tax planning here. What goes into your adjusted gross income? AGI is your income from all sources minus any adjustments to your income. The higher your total income, the higher your adjusted gross income.
With Tax Day behind us, consumers and business owners who owe the IRS are not out of the woods. But while death and taxes are the big two inevitability, those with serious tax problems should know that it is possible to negotiate with the IRS to reduce past-due tax penalties and payments.
Americans, carrying more debt than ever, are also more likely to have tax problems than in the past. In 2004, the total of uncollected IRS taxes reached upwards of $250 billion. The number of levies (a key enforcement tool in which the IRS takes possession of assets to collect on unpaid taxes) topped 2 million during fiscal year 2004 - a 21 percent increase from 2003 and triple the 2001 number.
Tax problems merit professional help when individuals cannot pay tax liabilities of $10,000 or more, tax specialists can negotiate directly with the IRS on behalf of these consumers, helping them obtain settlements."
Tax relief specialists usually are attorneys or certified public accountants with special training and experience. Tax experts can navigate the intricacies of IRS forms and calculations, help consumers understand the criteria the IRS imposes, and then help them get back into good standing with the IRS.
Depending on the severity of an individual's situation, two types of IRS settlement are available: An offer in compromise reduces the principal amount owed to the IRS.
An installment agreement is a payment plan for the amount due and often includes reduced penalties. Remember that you cannot let overdue taxes languish. "The IRS is serious and increasingly aggressive about tax collection and evasion. Tax debt can result in a lien on a house or garnished wage."
Advisors can help consumers with the following steps: Evaluate the situation and determine the amount of taxes owed to the IRS.
Ascertain whether the situation meets IRS standards for "doubt as to collect ability" (i.e., unable to pay the full tax burden), "doubt as to liability" (i.e., consumer might not owe the tax), or "economic hardship."
Establish the full amount owed, including taxes, penalties and accumulated interest, and understand whether collection limitations or penalty cancellations are possible. Determine the best method for managing and eliminating the tax debt. Negotiate with the IRS to settle on an agreed course of action and resolve the debt.
While facing and handling tax debt can be painful, last year's bankruptcy reform legislation made it even more crucial for consumers to act. Historically, consumers in severe IRS debt might file for Chapter 7 bankruptcy protection or wait for the 10-year statute of limitations on tax liability to expire. Now, people are much more limited in the ability to obtain Chapter 7 filings. The bill's new "means test" leads many consumers instead to file Chapter 13 bankruptcy, which establishes a repayment plan, rather than wiping out all debt. Consumers with tax debt may find it much less costly and simpler to work with a debt resolution firm's tax relief service, which allows individuals to set up tax payment plans while avoiding court fees, attorney fees and bankruptcy judgments on their records.
Tuesday, September 15, 2020
Save On Taxes: Buy A Hybrid Car
The hybrid vehicles are significant in saving the tax payer from paying a big amount of tax.
Those who are benefited by the purchase of the hybrid vehicles are dejected on the very mention of the possibility that the government at some point of time might restrict the launch of these vehicles in the market.
The government of many developed nations have many a times made plans to prohibit the large-scale production of these vehicles and also to substitute the already on the run vehicles based on gasoline. However, in the recent times, the government of these countries has lent its support to the production and use of these vehicles. This decision is since the hybrid tax credit has shown its potential in saving the money. The tax creditor, as it is available straightforward from the money to be paid as tax, is greater to a tax deduction. The tax deduction is of the nature that it decreases the tax reliability on the rate of the tax to be paid. That is why the hybrid tax credit is of such great significance for the taxpaying person. A deduction simply reduces the tax liability based on the tax rate of the individual taxpayer to owe a hybrid vehicle. The fact could not be denied that the hybrid vehicle saves a great amount as it has superior gas mileage.
This type of tax credit can’t be applied for buying a second-hand vehicle. It is the responsibility of the manufacturers of the vehicles to provide the information about the credit amount to be put on it and this information is available to the buyers at the time of purchase of the vehicle that assists him to allege the credit. There are several conditions applied on the hybrid vehicles. Firstly, there was a time limit and this tax credit was made applicable for the vehicles available in the market within this limit. Secondly, it was mandatory to use the vehicle in USA only. Moreover, the credit started only after a model achieved the target of 60,000 sales.