Root canals and IRS audits are 2 things that can make you cringe. You'll be able to avoid a root canal if you look after your teeth. Similarly, you'll be able to steer clear of an IRS audit by steering clear of particular practices and take care of your financial health. The IRS may need to audit you if several red flags appear.
The IRS determines the accuracy of your tax returns in an audit. You must be able to prove particular deductions.
You may be shocked by these IRS audit flags:
* Believe it or not, claiming too much in charitable donations may be a flag to IRS auditors. You're likely to be flagged for an audit if you declare $2000 when the average is $500. You need to save your receipts and be able to prove all $2000.
* Too many deductions for those who are self-employed. The IRS is very cautious to look for these kinds of deductions.
* People who earn over $100,000 are scrutinized more carefully.
* Last year's and this year's returns are inconsistent. These can be as simple as a name change due to marriage, but inconsistencies do stick out and are likely to be noticed.
* Considerable changes in income. For instance, the IRS will target you for an audit if you just made $20,000 this year when you earned $20,000 last year. Of course, there are plenty of reasons why your income may have changed so much. Proving it is necessary.
* The IRS flags incomplete tax returns. If an IRS employee has to interpret your tax return because of incomplete answers or unreadable handwriting, they are more likely to flag you for an audit.
* Inconsistencies between state and federal returns.
You can steer clear of an IRS audit by filing your tax returns accurately. Documentation should be kept for at least 3 years. Follow these tips to steer clear of further issues:
* Know that you can settle in installments, do the audit by mail without meeting the IRS, question its accuracy, and other rights.
* Be prepared to show receipts by keeping documentation.
* If the issue is too complicated for you, a professional should be consulted.
* You have nothing to fear if it is an honest error.
* Don't provide more information than needed.
* Do not panic because accuracy is just reviewed and you're not being accused of anything.
Your IRS issue shouldn't be a nightmare. Steer clear of audits, and if you happen to be flagged for one, stay calm. You can always consult a lawyer for help.
Friday, May 30, 2008
Tuesday, May 27, 2008
How Far Does IRS Jurisdiction Go?
Being aware of how far and wide the reach of the IRS goes is a little unclear, and there are some people who try to walk around the law to avoid paying taxes. Tax "protesters" usually try to dispute the jurisdiction of the IRS and the constitutionality. As a taxpayer, you must know the laws, so you don't end up having IRS issues in the future. Let us take a look at the reach and jurisdiction of the Internal Revenue Service.
Jurisdiction is a term commonly heard on movies, providing power to leaders to handle and enforce consequences on legal situations.
Since it has jurisdiction over all US taxpayers and people who make income in the US, the IRS is a bit amorphous. If you fail to understand that you have obligations to pay taxes as a taxpayer, you'll definitely have IRS issues.
Relating to the IRS is the Code of Federal Regulations Title 26:
"The Internal Revenue Service is a bureau of the Department of the Treasury under the immediate direction of the Commissioner of Internal Revenue. The Commissioner has general superintendence of the assessment and collection of all taxes imposed by any law providing internal revenue. The Internal Revenue Service is the agency by which these functions are performed."
If you're a resident of the US, a non-resident earning money in the United States, a citizen living in foreign countries, or a citizen making money in foreign countries, the IRS has jurisdiction over you as a taxpayer. If you don't pay taxes on property, earnings, capital gains, etc., you will encounter IRS issues.
The IRS has no jurisdiction over some people. In this excerpt from the case of Economy Plumbing and Heating Co. vs. The United States, it explains that non-taxpayers are excluded from the IRS's rules and regulations:
"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to non-taxpayers. The latter are without their scope. No procedure is prescribed for non-taxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them [non-taxpayers] Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue laws."
By visiting the IRS website or your state's tax website, you can avoid IRS problems and figure out if you are a non-taxpayer.
To negate the IRS's jurisdiction, tax protesters insist that the 16th Amendment giving Congress the power to collect taxes on income wasn't officially ratified. The 16th Amendment was indeed ratified with a majority vote.
Another argument is that the IRS isn't a government agency at all, and thus, has no jurisdiction or authority over anyone. This is a ridiculous argument because the Secretary of the Treasury has power to maintain and enforce internal revenue laws. Because of this power, the IRS was founded. Arguments like these can lead honest people to suffer serious IRS problems. Taxpayers are indeed under the jurisdiction of the IRS.
IRS issues result from failure to truthfully declare income or pay taxes. If you're a taxpayer, you are under the jurisdiction of the IRS.
Jurisdiction is a term commonly heard on movies, providing power to leaders to handle and enforce consequences on legal situations.
Since it has jurisdiction over all US taxpayers and people who make income in the US, the IRS is a bit amorphous. If you fail to understand that you have obligations to pay taxes as a taxpayer, you'll definitely have IRS issues.
Relating to the IRS is the Code of Federal Regulations Title 26:
"The Internal Revenue Service is a bureau of the Department of the Treasury under the immediate direction of the Commissioner of Internal Revenue. The Commissioner has general superintendence of the assessment and collection of all taxes imposed by any law providing internal revenue. The Internal Revenue Service is the agency by which these functions are performed."
If you're a resident of the US, a non-resident earning money in the United States, a citizen living in foreign countries, or a citizen making money in foreign countries, the IRS has jurisdiction over you as a taxpayer. If you don't pay taxes on property, earnings, capital gains, etc., you will encounter IRS issues.
The IRS has no jurisdiction over some people. In this excerpt from the case of Economy Plumbing and Heating Co. vs. The United States, it explains that non-taxpayers are excluded from the IRS's rules and regulations:
"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to non-taxpayers. The latter are without their scope. No procedure is prescribed for non-taxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them [non-taxpayers] Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue laws."
By visiting the IRS website or your state's tax website, you can avoid IRS problems and figure out if you are a non-taxpayer.
To negate the IRS's jurisdiction, tax protesters insist that the 16th Amendment giving Congress the power to collect taxes on income wasn't officially ratified. The 16th Amendment was indeed ratified with a majority vote.
Another argument is that the IRS isn't a government agency at all, and thus, has no jurisdiction or authority over anyone. This is a ridiculous argument because the Secretary of the Treasury has power to maintain and enforce internal revenue laws. Because of this power, the IRS was founded. Arguments like these can lead honest people to suffer serious IRS problems. Taxpayers are indeed under the jurisdiction of the IRS.
IRS issues result from failure to truthfully declare income or pay taxes. If you're a taxpayer, you are under the jurisdiction of the IRS.
Saturday, May 24, 2008
You and Your Tax Lawyer
There are professionals qualified to help you if you are daunted by the tax laws' complex rules. Tax attorneys from Tampa can help you with the deductions and the various forms to fill out so you'll grasp them better.
A Tampa Tax lawyer can be a need and a gem in several circumstances. You will require a qualified professional in these situations:
* If you are building a business. Business tax laws are more complicated than personal taxes.
* The IRS is investigating you.
* A Tampa tax attorney can help with back tax problems and audits.
* Help with real estate or property taxes.
* If your wages have been garnished or bank accounts levied.
Though you can choose to represent yourself, hiring an experienced Tampa tax attorney definitely has benefits. A tax lawyer has the skills and knowledge to deal with the IRS, which would assist you if it's your first time.
Your tax lawyer from Tampa will protect your rights to privacy by only furnishing the IRS with the needed details. They also understand the tax laws by heart so they can negatiate better in your stead.
Your stress levels will be minimized if you get a tax lawyer from Tampa. The proceeding becomes a negotiation among professionals so it is no longer an emotional crisis for you.
The IRS would prefer dealing with a tax attorney and not think you are guilty because you had one. A solution could be easily arrived at if you assert your rights and employ a representative to speak for you.
In court or in negotiations, you have a valuable ally in a tax lawyer who is familiar with the tax system. Your lawyer will examine your situation and advise you of the best course of action. You'll also enjoy attorney-client privileges.
In a tax lawyer, what must you look for? First, they have to be licensed in your state to practice law. They should also possess advanced training in tax law, like a Master's of Law degree in taxation or background in accounting. Some tax lawyers are also CPAs (Certified Public Accountants). Make sure any Tampa tax attorney you are considering getting has extensive experience in your type of situation. Find out straight out and also Google him/her.
When you have IRS problems, sometimes the only solution is to hire a Tampa tax attorney. Let someone else take a portion of your stress and deal with the IRS.
A Tampa Tax lawyer can be a need and a gem in several circumstances. You will require a qualified professional in these situations:
* If you are building a business. Business tax laws are more complicated than personal taxes.
* The IRS is investigating you.
* A Tampa tax attorney can help with back tax problems and audits.
* Help with real estate or property taxes.
* If your wages have been garnished or bank accounts levied.
Though you can choose to represent yourself, hiring an experienced Tampa tax attorney definitely has benefits. A tax lawyer has the skills and knowledge to deal with the IRS, which would assist you if it's your first time.
Your tax lawyer from Tampa will protect your rights to privacy by only furnishing the IRS with the needed details. They also understand the tax laws by heart so they can negatiate better in your stead.
Your stress levels will be minimized if you get a tax lawyer from Tampa. The proceeding becomes a negotiation among professionals so it is no longer an emotional crisis for you.
The IRS would prefer dealing with a tax attorney and not think you are guilty because you had one. A solution could be easily arrived at if you assert your rights and employ a representative to speak for you.
In court or in negotiations, you have a valuable ally in a tax lawyer who is familiar with the tax system. Your lawyer will examine your situation and advise you of the best course of action. You'll also enjoy attorney-client privileges.
In a tax lawyer, what must you look for? First, they have to be licensed in your state to practice law. They should also possess advanced training in tax law, like a Master's of Law degree in taxation or background in accounting. Some tax lawyers are also CPAs (Certified Public Accountants). Make sure any Tampa tax attorney you are considering getting has extensive experience in your type of situation. Find out straight out and also Google him/her.
When you have IRS problems, sometimes the only solution is to hire a Tampa tax attorney. Let someone else take a portion of your stress and deal with the IRS.
Wednesday, May 21, 2008
The Penalties of Not Filing Your Taxes
You may think that what you do will be unnoticed by the IRS because of the millions of other taxpayers. You convince yourself that it does not matter even if you don't pay your taxes. You are not right, unfortunately, as the IRS will notice. What are the consequences for not filing your taxes? Where can you go for advise - can the IRS help?
You will probably believe that not filing for your taxes is a small thing but the government perceives this as stealing and considers it an offense. There are different levels of penalties depending on your tax status:
* Filing for taxes late
* Not filing for taxes at all
* Not paying taxes
The penalties for filing your taxes late are by far the easiest to deal with. The IRS tacks on a penalty of 5% per month. For instance, a 15% interest will be charged to you if you filed on June and it is supposed to be submitted on April 15.Your maximum penalty is 25%.
What should you do if April 15 is almost near, and you still did not file your tax return?
Should your circumstances call for an extension in filing for your taxes, you may call the IRS. You can process this request by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. An approved request grants you up to August 15, instead of April 15, to take care of your tax returns. If you need more time, you can use Form 2688. It is imperative that you file for an extension as doing otherwise automatically gives you the 5% interest.
Requesting for an extension, on the other hand, is not tantamount to saying that you have more time to pay for the taxes that you owe. The law requires that you should settle at least 90% of the total taxable income otherwise you will be given a monthly penalty of 0.5% This then brings us to the next type of penalty.
Certainly, it is more preferred not to pay the whole amount than not file at all. Let us use the example that you owe $5000. Paying only $1000 results to a mere $20 charge, which is 0.5% multiplied by $4000. Thus, it is important that you file and pay your taxes whatever way you can.
The IRS may make use of more severe measures should the agency see that you continue to be a delinquent tax payer. First, the penalty increases 1% a month. Then, the IRS may urge you to mortgage assets or file for a loan. Third, they can use more rigorous collection techniques like wage garnishment and levying bank accounts.
The IRS can really help you before your situation gets out of control. given. Installment plans, temporary delays and Offer in Compromise are yet other choices that can be tried out. For additional information, visit the IRS site. All these only reveal that the IRS, indeed, is nothing like the way they are portrayed to be.
Not even bothering to file your taxes gives you the most burdensome consequences. You will be charged 5% of the amount you owe, per month. The maximum penalty for this infraction, however, is 25%. Say you owe $5000 and have been five months late in filing. To calculate your penalty, you need to multiply 5000 by 25%. This tacks on another $1250 to your bill. In this situation, it is more difficult get IRS assistance.
The IRS may accomplish a return and mail the bills and fees to a tax payer who, over time, refuses to file. This option, on the other hand, forfeits the deductions he should have been entitled to.The IRS may press for criminal or civil charges should the above option prove to be futile. To refrain from reaching at these unfavorable situations, ask for the assistance of the IRS. There are always ways that you can arrange to pay what you owe without incurring serious consequences.
You will probably believe that not filing for your taxes is a small thing but the government perceives this as stealing and considers it an offense. There are different levels of penalties depending on your tax status:
* Filing for taxes late
* Not filing for taxes at all
* Not paying taxes
The penalties for filing your taxes late are by far the easiest to deal with. The IRS tacks on a penalty of 5% per month. For instance, a 15% interest will be charged to you if you filed on June and it is supposed to be submitted on April 15.Your maximum penalty is 25%.
What should you do if April 15 is almost near, and you still did not file your tax return?
Should your circumstances call for an extension in filing for your taxes, you may call the IRS. You can process this request by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. An approved request grants you up to August 15, instead of April 15, to take care of your tax returns. If you need more time, you can use Form 2688. It is imperative that you file for an extension as doing otherwise automatically gives you the 5% interest.
Requesting for an extension, on the other hand, is not tantamount to saying that you have more time to pay for the taxes that you owe. The law requires that you should settle at least 90% of the total taxable income otherwise you will be given a monthly penalty of 0.5% This then brings us to the next type of penalty.
Certainly, it is more preferred not to pay the whole amount than not file at all. Let us use the example that you owe $5000. Paying only $1000 results to a mere $20 charge, which is 0.5% multiplied by $4000. Thus, it is important that you file and pay your taxes whatever way you can.
The IRS may make use of more severe measures should the agency see that you continue to be a delinquent tax payer. First, the penalty increases 1% a month. Then, the IRS may urge you to mortgage assets or file for a loan. Third, they can use more rigorous collection techniques like wage garnishment and levying bank accounts.
The IRS can really help you before your situation gets out of control. given. Installment plans, temporary delays and Offer in Compromise are yet other choices that can be tried out. For additional information, visit the IRS site. All these only reveal that the IRS, indeed, is nothing like the way they are portrayed to be.
Not even bothering to file your taxes gives you the most burdensome consequences. You will be charged 5% of the amount you owe, per month. The maximum penalty for this infraction, however, is 25%. Say you owe $5000 and have been five months late in filing. To calculate your penalty, you need to multiply 5000 by 25%. This tacks on another $1250 to your bill. In this situation, it is more difficult get IRS assistance.
The IRS may accomplish a return and mail the bills and fees to a tax payer who, over time, refuses to file. This option, on the other hand, forfeits the deductions he should have been entitled to.The IRS may press for criminal or civil charges should the above option prove to be futile. To refrain from reaching at these unfavorable situations, ask for the assistance of the IRS. There are always ways that you can arrange to pay what you owe without incurring serious consequences.
Sunday, May 18, 2008
Rightful Ways of Reducing Your Taxes
For many, especially those who are non-accountants and non-tax attorneys, tax time and understanding our deductions is a tall order. We are torn between taking the standard deductions or itemizing them. Let us try to examine what the common deductions are, how these are defined, how to identify if you qualify and how to benefit from these. When the water gets murky, you can always consult an accountant for more detailed IRS help.
Tax deductions are useful in reducing your total taxable income as they are expenses subtracted from your gross income. Tax deductions are incurred by a taxpayer from a number of reasons and purposes.
Standardized and Itemized deductions are the two kinds of tax deductions. Standard deductions, which are dependent on a person's civil status: single, married, head of household, are fixed amounts subtracted from the gross income. This article will, on the other hand, focus on itemized deduction, which is a corresponding amount for certain pre-determined expenses. Asking for IRS or professional assistance will surely be of great help if you are in doubt as to which type of deduction you can file for.
You can also take advantage of tax credits, which can be obtained from a variety of reasons like having children, adopting children, paying college tuition, earned income tax credit and energy efficiency. Unlike tax deductions, these are taken from your total taxable income. Guidelines in checking for your eligibility to certain tax credits can be found in the tax forms and IRS website
Here are some of the most common tax deductions that we can avail of:
* Professional and business-related association fees
* Costs of job-hunting
* Job agency fees
* Fees for professional books and publications
* Union fees
* Business attire and uniforms
* Home and office expenses
* Alimony and other legal fees to collect taxable income
* Tax preparation and advice charges
* Moving to a new job expenses
* IRA set-up and administration fees
* Other legal fees
* Charitable donations
* Business liability costs and insurance premiums
* Tuition fees for job-related classes
To avoid overpayment, it is important that you look for IRS assistance when calculating your taxes. Should you opt to do it on your own, read the IRS booklet, utilize the online tax preparation service and contact the IRS for assistance in your itemization.
How do you avail of these deductions? For manual computation of taxes, notes in the instruction booklet will help you determine your eligibility. If you go online, the system will help you through the process. A professional tax preparer will also be a useful resource for checking for the deductions you qualify for IRS help is also available through their list of miscellaneous deductions posted online.
Increasing the amount for refund or reducing the amount of taxes due are lawfully addressed through tax deductions. To ensure that you are claiming all the deductions to which you are eligible to - or not mistakenly claiming for deductions- IRS assistance or expert help is always helpful. Otherwise, take time to conscientiously go over the instructions in your booklet. In reality, many have overpaid, so be mindful of the deductions that you are entitled to.
Tax deductions are useful in reducing your total taxable income as they are expenses subtracted from your gross income. Tax deductions are incurred by a taxpayer from a number of reasons and purposes.
Standardized and Itemized deductions are the two kinds of tax deductions. Standard deductions, which are dependent on a person's civil status: single, married, head of household, are fixed amounts subtracted from the gross income. This article will, on the other hand, focus on itemized deduction, which is a corresponding amount for certain pre-determined expenses. Asking for IRS or professional assistance will surely be of great help if you are in doubt as to which type of deduction you can file for.
You can also take advantage of tax credits, which can be obtained from a variety of reasons like having children, adopting children, paying college tuition, earned income tax credit and energy efficiency. Unlike tax deductions, these are taken from your total taxable income. Guidelines in checking for your eligibility to certain tax credits can be found in the tax forms and IRS website
Here are some of the most common tax deductions that we can avail of:
* Professional and business-related association fees
* Costs of job-hunting
* Job agency fees
* Fees for professional books and publications
* Union fees
* Business attire and uniforms
* Home and office expenses
* Alimony and other legal fees to collect taxable income
* Tax preparation and advice charges
* Moving to a new job expenses
* IRA set-up and administration fees
* Other legal fees
* Charitable donations
* Business liability costs and insurance premiums
* Tuition fees for job-related classes
To avoid overpayment, it is important that you look for IRS assistance when calculating your taxes. Should you opt to do it on your own, read the IRS booklet, utilize the online tax preparation service and contact the IRS for assistance in your itemization.
How do you avail of these deductions? For manual computation of taxes, notes in the instruction booklet will help you determine your eligibility. If you go online, the system will help you through the process. A professional tax preparer will also be a useful resource for checking for the deductions you qualify for IRS help is also available through their list of miscellaneous deductions posted online.
Increasing the amount for refund or reducing the amount of taxes due are lawfully addressed through tax deductions. To ensure that you are claiming all the deductions to which you are eligible to - or not mistakenly claiming for deductions- IRS assistance or expert help is always helpful. Otherwise, take time to conscientiously go over the instructions in your booklet. In reality, many have overpaid, so be mindful of the deductions that you are entitled to.
Wednesday, May 14, 2008
What Deductions Are Considered By The IRS?
People uncover their creative imaginations when tax time comes around. For instance, a man made a fallout shelter for fear of a nuclear war. He decided to deduct the costs as a "preventative medical expense." A woman purchased a $5000 mink coat and declared it as a business expense, claiming she needed it to visit customers. The best is a business owner who hired an arsonist to burn his store. He then attempted to deduct the $10,000 "arsonist fee" from his taxes. The IRS denied that deduction, naturally.
Take a peek at the common IRS deductions that you can take. To decide which deductions the IRS take, consult a Tampa tax lawyer.
Under IRS rule, these business expenses are deductible:
* Business tools (Because they were vital to her work, an "adult performer" deducted her breast implant price successfully. Deductible for the rest of us are stuff such as work boots and clothes.)
* Membership dues or union dues for professional associations or organizations.
* Job-related education.
* Job search expenses.
* Expenses spent on business trips that are not refunded by your company.
* Dry cleaning of work clothes for nurses, police officers, and security guards, like lab coats is deductible.
* Home office.
Deductible work expenses take up a long list. To ensure you take advantage of the deductions appropriate for you, contact a tax attorney. Some common tax deductibles include:
* Student loan interests.
* Health premiums that are at least 7.5% of your income. Because the rules vary for this, ask a tax lawyer.
* Fuel-efficient vehicles.
* Secured loans mortgage interests.
There are not-so-common deductions that are legitimate. So you do not miss out on deductions that are legal, consult with a tax professional.
* Tax deductions for natural disasters.
* Your first job's moving expenses.
* Non-cash charitable donations such as materials for a charity bake sale.
* Expenses spent by teachers that are not refunded by the employers totaling $250.
* Snacks for your employees as long as these are not considered compensation or wages for work.
* Yearly college tuition of up to $4000.
What deductions are you entitled to? You can always look online, which is particularly convenient if you do your taxes with an online tax preparation service. Often, the service will walk you through deductions to see if you are right for it. If you'd like a bit more help, consult with an accountant or Tampa tax attorney.
Knowing what you can and cannot claim is important. The IRS considered a deduction by a dairy farmer who claimed his African safari. His claim was that it was needed for work because he was learning about wild animals. The IRS seemed to believe this was completely acceptable. Be careful, however. A male model attempted to write off his entire designer wardrobe on the grounds that he needed to look good at all times. They weren't official company clothes, even if it was valid. If you're unsure, you are not alone. Talk with a Tampa tax attorney and have all the deductions you require.
Take a peek at the common IRS deductions that you can take. To decide which deductions the IRS take, consult a Tampa tax lawyer.
Under IRS rule, these business expenses are deductible:
* Business tools (Because they were vital to her work, an "adult performer" deducted her breast implant price successfully. Deductible for the rest of us are stuff such as work boots and clothes.)
* Membership dues or union dues for professional associations or organizations.
* Job-related education.
* Job search expenses.
* Expenses spent on business trips that are not refunded by your company.
* Dry cleaning of work clothes for nurses, police officers, and security guards, like lab coats is deductible.
* Home office.
Deductible work expenses take up a long list. To ensure you take advantage of the deductions appropriate for you, contact a tax attorney. Some common tax deductibles include:
* Student loan interests.
* Health premiums that are at least 7.5% of your income. Because the rules vary for this, ask a tax lawyer.
* Fuel-efficient vehicles.
* Secured loans mortgage interests.
There are not-so-common deductions that are legitimate. So you do not miss out on deductions that are legal, consult with a tax professional.
* Tax deductions for natural disasters.
* Your first job's moving expenses.
* Non-cash charitable donations such as materials for a charity bake sale.
* Expenses spent by teachers that are not refunded by the employers totaling $250.
* Snacks for your employees as long as these are not considered compensation or wages for work.
* Yearly college tuition of up to $4000.
What deductions are you entitled to? You can always look online, which is particularly convenient if you do your taxes with an online tax preparation service. Often, the service will walk you through deductions to see if you are right for it. If you'd like a bit more help, consult with an accountant or Tampa tax attorney.
Knowing what you can and cannot claim is important. The IRS considered a deduction by a dairy farmer who claimed his African safari. His claim was that it was needed for work because he was learning about wild animals. The IRS seemed to believe this was completely acceptable. Be careful, however. A male model attempted to write off his entire designer wardrobe on the grounds that he needed to look good at all times. They weren't official company clothes, even if it was valid. If you're unsure, you are not alone. Talk with a Tampa tax attorney and have all the deductions you require.
Subscribe to:
Posts (Atom)