CP2000 notices, at a glance:
1) You get a CP2000 notice when your tax return doesn’t match income information the IRS has about you.
2) CP2000 notices aren’t audits, but they work the same. It’s important to fully respond by the IRS deadline.
3) You have the right to contest penalties and appeal a CP2000 determination. But you must ask.
You can get expert help resolving your CP2000 notice.
What you need to know about CP2000 notices
When your tax return doesn’t match income information the IRS has (like Forms W-2 and 1099), the IRS sends a notice. It’s usually a CP2000 notice, also called an underreporter inquiry.
This notice basically proposes taxes, and possibly penalties, you might owe for missing income on your return. Sometimes, the IRS can question deductions or credits you took that don’t match information statements filed under your Social Security Number.
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But CP2000 notices are computer-generated and may not be right. You might not owe the full amount – or anything at all. In fact, many taxpayers who get a CP2000 notice don’t end up owing anything.
What to do if you get one of these notices? There’s a process. You or your tax pro will need to investigate the issue more and get back to the IRS within a certain amount of time. And, if the IRS says you owe penalties, that’s something you’ll need to take care of, too.
Here’s how it works.
How to respond to a CP2000 notice
1. Evaluate your situation and decide on the right response.
Start by validating that you owe more taxes. To do that, you’ll need to determine whether you correctly reported the income in question on your tax return. Here’s how:
Gather all the information statements under your Social Security Number. These are the forms you get at tax time reporting your income for the year (like W-2s and 1099s). Compare those statements with your tax return to see whether you left any income off your return.
If so, you’ll need to properly calculate any additional tax that you may owe. Keep in mind that you also might have additional deductions that factor into the new tax calculation.
Determine whether you agree, partially agree or disagree with the CP2000 notice.
2. Respond to the IRS.
If you agree with the notice, send the CP2000 response form back to the IRS with payment (if applicable). If you can’t pay the entire amount, you can request an installment agreement
with your CP2000 response.
If you partially agree or disagree with the CP2000 notice, you’ll need to compile and mail a response to the IRS with documents proving your position. You can attach a corrected return to help clarify your position, but don’t file an amended return. If the IRS accepts your explanation, the IRS will correct your return.
You can also address any proposed penalties in your response to the underreporter notice.
If the IRS rejects your response, consider appealing the decision.
3. Prevent future underreporting and resulting penalties.
After about eight weeks, call the IRS or analyze your transcripts to confirm that the IRS resolved your issue.
To avoid penalties on more recent returns, analyze your information statements to determine whether you made the same error in other years. If necessary, you can file an amended return on these years to avoid the additional 20% accuracy penalty.
For future returns, gather all your information before filing. You can request your information statements from the IRS (called wage and income transcripts). But beware, wage and income transcripts don’t contain all your Forms W-2 and 1099 until late May.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide
.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Thursday, February 20, 2020
Monday, February 17, 2020
FIND OUT WHICH KIND OF BACK TAX DEBT PROBLEMS YOU HAVE
Tax Debt Problems, at a glance:
The IRS issues over 200 million notices a year. Many of them are confusing, so it helps to get more information from the IRS.
Sometimes, people have more than one tax problem at one time, so it may be important to fix the problems in a certain order.
Most of the time, you’ll need to be up-to-date on your tax filings before you can resolve a problem.
You can get expert help looking into your tax notice and fixing the problem.
What you need to know about tax problems
Sometimes, when you receive one or more tax notices, it’s hard to tell what the root problem is. You may not know where to start, or even the full extent of the issue.
And the last notice you got from the IRS may not give you a full picture of what’s going on.
You or your tax professional will need to look further into your situation, identify all your options, and then follow a plan to completion by IRS deadlines.
Here’s what to do.
How to address your tax issue
1. Fully understand your situation.
Review your information, including notices, tax returns, and other documents that are relevant to the issue.
Understand exactly what the IRS is saying about the issue. This may require calling the IRS. Start with the phone number listed on your last notice. Understanding the IRS perspective on your issue is easier if you know “IRS speak” – that is, how the IRS explains the details of your tax account. A tax professional can help you navigate this step.
You may need to request your IRS transcripts to match up against your transactions. Learn how to research your IRS account.
Remember that IRS transcripts don’t show all the activity on your account. Also, interpreting transcripts can be difficult, so you may want to consult a tax expert.
2. Define what issues need to be addressed, if any.
After you have all the facts, identify the tax issue you need to address.
If there are urgent issues, such as audit deadlines, pending liens or levies, or adverse determinations, call the IRS compliance unit to ask for more time to respond.
3. Understand your options and create a plan to resolve the issue.
Research how to address your issue. You may have several options, so it’s important to select the best one for your situation.
Understand how each option works. For example, if you have an IRS penalty, you could request first-time penalty abatement to get it removed. But you’d need to understand several things about first-time abatement, such as:
It’s only an option for certain penalties and circumstances.
You can use it only once every four years, so it’s especially important to file and pay on time in the future.
If you have multiple issues, you may need to solve them in a particular order and with different IRS units. For example, if you’re dealing with an audit that results in a balance due that you can’t pay, you may need to work with the IRS Collection unit after you’ve resolved your audit with the Examination unit.
4. Execute your plan to completion.
Contact and/or respond to the IRS by any deadlines in the notice. If you miss deadlines, you could lose appeal rights. For example, if you don’t respond to an audit notice by the deadline, the IRS could charge you the taxes, and you’ll lose your rights to appeal within the IRS.
Complete your plan. If you have multiple issues or multiple tax years involved, resolve each issue completely and confirm that the IRS has addressed all tax years.
The IRS may change your deadlines, so be prepared to adjust your plan. If you need more time, ask the IRS before the deadline expires.
Two months after you resolve your issue, check back with the IRS to make sure that the IRS view on the outcome is consistent with your expectations.
Stay in compliance to avoid future issues. File and pay on time. If you get another notice, address it immediately.
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
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Wednesday, February 12, 2020
ARE YOU AN INDEPENDENT CONTRACTOR RECEIVING FORM 1099’s ? KNOW HOW TO FILE YOUR TAXES FOR 2019
Small Business Tax Preparation, Tax Debt Relief Help, Tax Attorneys
An independent contractor is generally considered self-employed and is typically defined as a business owner or contractor who provides services to other businesses.
According to the IRS, the general rule is that an individual is an independent contractor (self-employed) if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
Additionally, the IRS views an independent contractor as a self-employed person. Therefore, earnings of a person who is working as an independent contractor are subject to Self-
Employment Tax.
If you are filing taxes as an independent contractor you are treated like you have your own business – even if you did not formally start your own business. As a sole proprietor of that business, you should file your independent contractor taxes on a Schedule C to properly claim your income and related expenses.
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
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CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
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An independent contractor is generally considered self-employed and is typically defined as a business owner or contractor who provides services to other businesses.
According to the IRS, the general rule is that an individual is an independent contractor (self-employed) if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
Additionally, the IRS views an independent contractor as a self-employed person. Therefore, earnings of a person who is working as an independent contractor are subject to Self-
Employment Tax.
If you are filing taxes as an independent contractor you are treated like you have your own business – even if you did not formally start your own business. As a sole proprietor of that business, you should file your independent contractor taxes on a Schedule C to properly claim your income and related expenses.
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Tuesday, February 11, 2020
HOW TO STOP AN IRS TAX DEBT LEVY
Tax Levy, Tax Relief, Small Business Tax Preparation
The dreaded letter has arrived in the mail. Or several of them are piling up, and you know it’s a levy from the bank. You may lose your house or the money in your bank account. Time to act, and to prevent the bank from seizing your property.
Failing to pay your taxes tends to have consequences. Usually, you have to pay interest and penalties on missed payments. When you lose your property, it tends to be the last resort on the IRS’s part, when they don’t want to send you to jail. The IRS wants to get paid and would rather not put people in jail.
An IRS tax levy is never fun. It means that, in your case of failing to pay the amount owed on your federal tax return, the IRS is seizing your property or assets to pay the debt. Wage garnishment can ensue, as can losing your tax refund, the money in your bank account, or accounts receivable for small businesses.
THE LEVY AND TAX NOTICE
Before the IRS seizes your property, they will often place a lien on it and give you a fair warning. The lien is a claim on your assets or property which will be used to pay off the debt. Usually, you get several letters and notices of the intent to levy, which is a fair warning.
There is one simple solution to avoiding a levy or a lien: pay off your tax debt if you can. Or set up a payment plan so that the installment agreement can buy you some time. If neither works, you still have options.
How To Handle The IRS Tax Levy Letter
You need to act as soon as you receive the notice. Time becomes the essence. Once you get the final notice of intent, you have a narrow window of saving your assets.
If you have a solid case, one option is to request a Collection Due Process Hearing from the Collection Appeals Program. Then you have a smaller time window to make your case and argue to save your property. This is where having a professional will come in handy. They can help assemble your paperwork.
IRS Tax Levy
You can ask to arrange an offer in compromise or an installment plan with monthly payments. The offer in compromise means that you and the IRS come to an agreement about paying a smaller amount of tax debt. You have to meet certain qualifications. The payment plan will give you some breathing room, whether or not you qualify.
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
HOW MUCH TIME DOES THE IRS HAVE TO AUDIT YOUR RETURN?
Small Business, Tax Debt Relief, Tax Preparation, Tax Attorneys
How Long Does the IRS Have to Audit Your Tax Return? There Are Two Answers.
There are two answers to this question: the legal answer and the practical answer.
Legal answer: Three years
First, the legal answer is in the tax law. Technically, except in cases of fraud or a back tax return, the IRS has three years from the date you filed your return (or April 15, whichever is later) to charge you (or, “assess”) additional taxes. This three-year time frame is called the assessment statute of limitations.
Additional taxes usually come in the form of an audit or an under reporter notice (called a CP 2000). Even though the IRS can legally audit you until the three-year assessment statute ends, in practice, it rarely works this way.
Practical answer: 26 months
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
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CALL (713)300-3965
The practical answer lies in a procedural policy at the IRS called the “examination cycle.” The Internal Revenue Manual (basically, the IRS training guide) says that IRS agents must open and close an audit within 26 months after the return was filed or due (whichever is later).
The IRM also says that IRS agents should “strictly adhere to” this guideline, to make sure that the audit and other processing needs are complete within the three-year time frame.
Most audits start a few months after you file your return
For these audits, the IRS is often freezing refunds. Because the IRS has to pay interest on refunds it pays late, the IRS tries to start and finish these audits quickly. They are usually done by mail.
Once you answer the IRS’ questions about the accuracy of your return, the IRS will release your refunds
Audits that start soon after filing usually focus on tax credits, such as the earned income tax credit and the child tax credit. The IRS often wants to verify filing status, dependents, and other return items before sending your refund.
Other IRS audits generally start within a year after you file
These are often mail and office audits related to questionable items on your return.
The most comprehensive IRS audits can start later. These are called field audits, when the IRS visits you or your business.
However, as a rule of thumb, if the IRS hasn’t audited your return within two years after you filed it, the IRS generally won’t audit your return unless there’s something egregious.
How do you know if you’re selected for audit?
If the IRS audits you, you’ll get a notice telling you that the IRS selected your return for examination.
Dealing with the IRS in an audit can be difficult. The best course of action is to respond on time, thoroughly, and advocate your tax return position. One complete response, sent on time to the IRS, will avoid confusion and lead to the best results.
Learn exactly how to handle an IRS audit.
If the IRS asks you to meet in person or go to an IRS office, you should consider hiring a professional to represent you
IRS audit procedures can be complicated and almost impossible to navigate successfully. An experienced tax professional that can “speak IRS” will likely produce a better outcome with less stress and anxiety for taxpayers under audit.
Look for a tax professional who is licensed to practice before the IRS (usually a CPA, enrolled agent, or attorney) and has experience in dealing with the IRS.
You should expect to pay a few hundred dollars for a mail or office audit for a tax pro to represent you. Field audit representation is likely more expensive because your tax professional will be spending a lot of time with the IRS.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
How Long Does the IRS Have to Audit Your Tax Return? There Are Two Answers.
There are two answers to this question: the legal answer and the practical answer.
Legal answer: Three years
First, the legal answer is in the tax law. Technically, except in cases of fraud or a back tax return, the IRS has three years from the date you filed your return (or April 15, whichever is later) to charge you (or, “assess”) additional taxes. This three-year time frame is called the assessment statute of limitations.
Additional taxes usually come in the form of an audit or an under reporter notice (called a CP 2000). Even though the IRS can legally audit you until the three-year assessment statute ends, in practice, it rarely works this way.
Practical answer: 26 months
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
The practical answer lies in a procedural policy at the IRS called the “examination cycle.” The Internal Revenue Manual (basically, the IRS training guide) says that IRS agents must open and close an audit within 26 months after the return was filed or due (whichever is later).
The IRM also says that IRS agents should “strictly adhere to” this guideline, to make sure that the audit and other processing needs are complete within the three-year time frame.
Most audits start a few months after you file your return
For these audits, the IRS is often freezing refunds. Because the IRS has to pay interest on refunds it pays late, the IRS tries to start and finish these audits quickly. They are usually done by mail.
Once you answer the IRS’ questions about the accuracy of your return, the IRS will release your refunds
Audits that start soon after filing usually focus on tax credits, such as the earned income tax credit and the child tax credit. The IRS often wants to verify filing status, dependents, and other return items before sending your refund.
Other IRS audits generally start within a year after you file
These are often mail and office audits related to questionable items on your return.
The most comprehensive IRS audits can start later. These are called field audits, when the IRS visits you or your business.
However, as a rule of thumb, if the IRS hasn’t audited your return within two years after you filed it, the IRS generally won’t audit your return unless there’s something egregious.
How do you know if you’re selected for audit?
If the IRS audits you, you’ll get a notice telling you that the IRS selected your return for examination.
Dealing with the IRS in an audit can be difficult. The best course of action is to respond on time, thoroughly, and advocate your tax return position. One complete response, sent on time to the IRS, will avoid confusion and lead to the best results.
Learn exactly how to handle an IRS audit.
If the IRS asks you to meet in person or go to an IRS office, you should consider hiring a professional to represent you
IRS audit procedures can be complicated and almost impossible to navigate successfully. An experienced tax professional that can “speak IRS” will likely produce a better outcome with less stress and anxiety for taxpayers under audit.
Look for a tax professional who is licensed to practice before the IRS (usually a CPA, enrolled agent, or attorney) and has experience in dealing with the IRS.
You should expect to pay a few hundred dollars for a mail or office audit for a tax pro to represent you. Field audit representation is likely more expensive because your tax professional will be spending a lot of time with the IRS.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Saturday, February 8, 2020
SIMPLE THINGS YOU CAN DO TO AVOID AN IRS AUDIT
Tax Help, Audit Help, Tax Debt Relief
IRS audits are the worst, aren’t they? So, it pays to avoid them if at all possible. The best advice is to be entirely and totally honest on your tax returns. Otherwise, if you follow these tips, you could keep the IRS from knocking on your door in the near future
1. Report ALL Income
Yes, you have to report all of your income. Taking money under the table, “forgetting” about that 1099, or leaving anything off your return is a bad idea.
Those 1099s? The IRS receives a copy, too. They expect to see it on your return.
Are you a gambler? Report all earnings as well as losses.
Don’t pad anything.
Are you an investor? Report all of your capital gains and interest. The IRS gets most of that information, too. By the way, if you dabbled in cryptocurrency, it should be treated as an investment, not currency.
Always, always, ALWAYS file on time and file everything correctly. An amended return can trigger an audit, so be sure everything is complete before you or your tax professional hit “send.”
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
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2. Report Overseas Accounts
If you have accounts in a foreign country, you must comply with the Foreign Account Tax Compliance Act, aka FATCA. And don’t forget about the Foreign Bank and Financial Accounts (FBAR), which files reports with the Financial Crimes and Enforcement Network (FinCEN). The movies are wrong, there is no such thing as a private Swiss Bank account where you can hide money from Uncle Sam.
Failure to comply with FATCA a costly proposition.
3. Watch Those Deductions and Credits
Deductions and credits are great. They can lower your taxable earnings as well as the amount you owe. Just don't abuse them. The IRS knows these are popular items, and they will find out.
Avoid claiming large itemized deductions. If your deductions are out of line with your income, the IRS notices.
Don’t take the Earned Income Credit unless you actually qualify.
Be honest about things like mortgage interest deductions because the IRS gets a copy of those forms, too.
If you are self-employed, you may write off quite a bit in supplies, equipment, and costs. But don’t get carried away.
Keep scrupulous records - you may need every supporting document possible if you do become an audit target.
We get it. Those credits and deductions look mighty tempting when you owe the feds money. But if you can’t qualify without squinting, don’t take them.
4. Take Care with Rental Losses and Real Estate Businesses
If you own rental property, you will probably suffer losses for some years. However, if your losses become a habit or are more extensive than your tax professional can stomach, be absolutely sure before you write those losses off.
The Tax Cuts and Jobs Act cut ordinary income tax rates for rental owners and kept the long-term capital gains tax for when you sell. But rental losses really complicate matters. Something else that you should know: the IRS allows you to deduct up to $25,000 in losses, but only if you actively participate in the renting of the property.
One more thing. Don't claim to be a real estate professional if you are not. To qualify, you must spend at least 750 hours a year and spend more than half your time working to be considered a real estate professional. Document every single hour you spend on your real estate business, just in case.
5. Classify Your Employees and Independent Contractors Correctly
Sure, it's tempting to call everyone who works for you an independent contractor. That way, you don't have to withhold income taxes, take care of W-2s and W-4s, or any of that other stuff. Unfortunately, if the IRS decides your “independent contractor” is actually an employee, you could be in a heap of trouble.
Independent contractors maintain their independent status by doing the work the way they want and when they want. You just control the finished product. When you start telling them exactly what to do, which tools to use, and when to work, they become employees.
6. Don’t Claim a Hobby as a Business
Hobbies are fun. Some of them are expensive. You may think you can save yourself some money by claiming it as a business and getting those nice business expense deductions.
Just stop. Don’t do it. If you can’t afford your hobby without defrauding Uncle Sam, maybe you need to find a different hobby. If gambling is your hobby, please refer to #1 above.
7. Don’t Claim Dependents You Don’t Have
So far, all attempts to have furbabies declared as dependents have failed. So, don’t claim Fifi on your taxes. Also, be sure your children actually count as your dependents. Things get tricky if custody is shared between divorced parents or a couple filing separately. You can’t both claim the little devils unless you file jointly.
Also, once they turn 19, you can no longer claim them unless they are full-time students. Too bad the deduction doesn't help pay off college, right?
8. Don’t Inflate Business Expenses
While you should report business expenses, don’t get too carried away. Make sure you have all the proper documentation and that you followed IRS rules.
If you use a vehicle for business, you can deduct mileage for work travel.
Home office supplies, equipment, and certain costs are eligible. Just be sure to follow the rules.
Don’t try to write off meals or entertainment unless you can prove they are business-related.
As always, meticulous record-keeping is your defense.
9. Give to Charity, but Don’t Overdo It
Like business expenses, don’t inflate charitable gifts, either. (By the way, political contributions don’t count.)
For all donations, cash, goods, or services, get a receipt. Also, make a record of everything you donated.
10. Only Submit Error-Free Returns
Double and triple check your returns. You want no math errors and no blanks, especially where your signature should be. It's incredible that people do all the work of preparing a tax return and then forget to sign, but it happens.
As honesty is the best policy, make sure your reported income matches your tax documents. Don’t fall for any of the IRS Dirty Dozen tax scams that leave you holding the bag.
This isn’t an exhaustive list of ways to keep out of trouble with the U.S. government. But it can get you started down the right road. Report everything, pad nothing, and remember to sign before sending your return
Oh, and filing paper returns seems to get IRS attention these days, so you’d better e-file. Let us know if you need audit representation.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
IRS audits are the worst, aren’t they? So, it pays to avoid them if at all possible. The best advice is to be entirely and totally honest on your tax returns. Otherwise, if you follow these tips, you could keep the IRS from knocking on your door in the near future
1. Report ALL Income
Yes, you have to report all of your income. Taking money under the table, “forgetting” about that 1099, or leaving anything off your return is a bad idea.
Those 1099s? The IRS receives a copy, too. They expect to see it on your return.
Are you a gambler? Report all earnings as well as losses.
Don’t pad anything.
Are you an investor? Report all of your capital gains and interest. The IRS gets most of that information, too. By the way, if you dabbled in cryptocurrency, it should be treated as an investment, not currency.
Always, always, ALWAYS file on time and file everything correctly. An amended return can trigger an audit, so be sure everything is complete before you or your tax professional hit “send.”
NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
2. Report Overseas Accounts
If you have accounts in a foreign country, you must comply with the Foreign Account Tax Compliance Act, aka FATCA. And don’t forget about the Foreign Bank and Financial Accounts (FBAR), which files reports with the Financial Crimes and Enforcement Network (FinCEN). The movies are wrong, there is no such thing as a private Swiss Bank account where you can hide money from Uncle Sam.
Failure to comply with FATCA a costly proposition.
3. Watch Those Deductions and Credits
Deductions and credits are great. They can lower your taxable earnings as well as the amount you owe. Just don't abuse them. The IRS knows these are popular items, and they will find out.
Avoid claiming large itemized deductions. If your deductions are out of line with your income, the IRS notices.
Don’t take the Earned Income Credit unless you actually qualify.
Be honest about things like mortgage interest deductions because the IRS gets a copy of those forms, too.
If you are self-employed, you may write off quite a bit in supplies, equipment, and costs. But don’t get carried away.
Keep scrupulous records - you may need every supporting document possible if you do become an audit target.
We get it. Those credits and deductions look mighty tempting when you owe the feds money. But if you can’t qualify without squinting, don’t take them.
4. Take Care with Rental Losses and Real Estate Businesses
If you own rental property, you will probably suffer losses for some years. However, if your losses become a habit or are more extensive than your tax professional can stomach, be absolutely sure before you write those losses off.
The Tax Cuts and Jobs Act cut ordinary income tax rates for rental owners and kept the long-term capital gains tax for when you sell. But rental losses really complicate matters. Something else that you should know: the IRS allows you to deduct up to $25,000 in losses, but only if you actively participate in the renting of the property.
One more thing. Don't claim to be a real estate professional if you are not. To qualify, you must spend at least 750 hours a year and spend more than half your time working to be considered a real estate professional. Document every single hour you spend on your real estate business, just in case.
5. Classify Your Employees and Independent Contractors Correctly
Sure, it's tempting to call everyone who works for you an independent contractor. That way, you don't have to withhold income taxes, take care of W-2s and W-4s, or any of that other stuff. Unfortunately, if the IRS decides your “independent contractor” is actually an employee, you could be in a heap of trouble.
Independent contractors maintain their independent status by doing the work the way they want and when they want. You just control the finished product. When you start telling them exactly what to do, which tools to use, and when to work, they become employees.
6. Don’t Claim a Hobby as a Business
Hobbies are fun. Some of them are expensive. You may think you can save yourself some money by claiming it as a business and getting those nice business expense deductions.
Just stop. Don’t do it. If you can’t afford your hobby without defrauding Uncle Sam, maybe you need to find a different hobby. If gambling is your hobby, please refer to #1 above.
7. Don’t Claim Dependents You Don’t Have
So far, all attempts to have furbabies declared as dependents have failed. So, don’t claim Fifi on your taxes. Also, be sure your children actually count as your dependents. Things get tricky if custody is shared between divorced parents or a couple filing separately. You can’t both claim the little devils unless you file jointly.
Also, once they turn 19, you can no longer claim them unless they are full-time students. Too bad the deduction doesn't help pay off college, right?
8. Don’t Inflate Business Expenses
While you should report business expenses, don’t get too carried away. Make sure you have all the proper documentation and that you followed IRS rules.
If you use a vehicle for business, you can deduct mileage for work travel.
Home office supplies, equipment, and certain costs are eligible. Just be sure to follow the rules.
Don’t try to write off meals or entertainment unless you can prove they are business-related.
As always, meticulous record-keeping is your defense.
9. Give to Charity, but Don’t Overdo It
Like business expenses, don’t inflate charitable gifts, either. (By the way, political contributions don’t count.)
For all donations, cash, goods, or services, get a receipt. Also, make a record of everything you donated.
10. Only Submit Error-Free Returns
Double and triple check your returns. You want no math errors and no blanks, especially where your signature should be. It's incredible that people do all the work of preparing a tax return and then forget to sign, but it happens.
As honesty is the best policy, make sure your reported income matches your tax documents. Don’t fall for any of the IRS Dirty Dozen tax scams that leave you holding the bag.
This isn’t an exhaustive list of ways to keep out of trouble with the U.S. government. But it can get you started down the right road. Report everything, pad nothing, and remember to sign before sending your return
Oh, and filing paper returns seems to get IRS attention these days, so you’d better e-file. Let us know if you need audit representation.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Friday, February 7, 2020
HAVE IRS TAX DEBTS? WHAT YOU SHOULD NOT DO!
Tax Debt Help, Tax Attorney
If you owe the IRS money, you should trust that they know about it and are expecting prompt payment. The agency is not known for backing down when there's tax money to be collected, and you shouldn't count on qualifying for an offer in compromise to reduce your tax bill.
Unfortunately, there are always those who want to hide their heads in the sand, thinking that if they ignore it, it will go away.
No such luck. Here’s what else you should NOT do if you owe the IRS.
FILE LATE OR NOT FILE AT ALL
Filing late because you don’t have everything together does nothing more than increase the amount you eventually pay. The IRS charges a failure to file penalty of 5% of the amount you owe for each month you are late. If there’s any good news, it’s that the penalty is capped at 25%. However, paying an additional quarter of the amount of taxes doesn’t make things any better.
NEED HELP WITH IRS BACK TAXES, FORM 941’S BACK TAX ISSUES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
At the very least, file for an extension by Tax Day if you are not ready to file your return. Requesting an extension gives you extra time to get your return completed accurately, and you won’t incur a failure to file penalty if you request the extension before the April deadline.
That being said, if you can’t pay your taxes in full, you will incur a failure to pay penalty on the outstanding balance.
FAIL TO PAY
Like failing to file, failing to pay increases your tax bill. If it’s any consolation, the penalty is lower - 0.5% of the balance up to 25% for every month you are in arrears. However, if you skip paying your taxes, you are committing a crime. It’s a misdemeanor, which doesn’t sound bad, but you can be fined up to $25,000 for each year you are delinquent.
If you ever wondered how back taxes can grow so fast, there’s your answer. Oh, you could also get sent to prison for up to a year. Probably not the way you want to spend your vacation.
REFUSE TO SET UP A PAYMENT PLAN
Uncle Sam isn’t a complete ogre. The IRS has several payment options available to you if you can’t afford to pay your entire tax bill at once. If you don’t take advantage of a payment plan, you are shooting yourself in the foot.
You may be eligible for an installment or another type of payment plan if you owe less than $50,000 in income taxes, penalties, and interest. Even if you don’t qualify because you owe too much, you can apply to your local IRS office for other options. Just fill out and mail Form 9465.
Depending on the plan and the amount of your tax bill, you may have up to 72 months (5 years) to pay your tax debt in full. Remember, though, that you will continue to accrue penalties and interest until the balance is paid off.
If you are owed a refund during the time you are paying off taxes under a multi-year installment plan, the IRS can apply it to your tax bill, reducing the amount that way.
If you are unable ever to pay off the entire amount, you may be eligible for an offer in compromise, in which you pay a fraction of your tax bill and the IRS calls it even.
NEGLECT TO COMPARE YOUR PAYMENT OPTIONS
If you decide to pay your taxes some other way than applying for an installment plan, make sure you know how much each option costs you in the long run. Some taxpayers choose to pay using a credit card, a home equity loan, or a personal loan.
While those payment options will take care of your tax bill all at once, you need to add up how much you wind up paying in interest, fees, and repayment terms for each option. Not all payment options are the same. Tread carefully and read the fine print.
BUT WAIT - MAYBE YOU HAVE “REASONABLE CAUSE”
Actually, there are some times when the federal government cuts you some slack. However, you need to be able to prove you are covered by a reasonable cause. Reasonable cause includes:
Fire, casualty, natural disaster, or other disturbance.
The inability to obtain records (maybe because of the first reason).
Death, serious illness, incapacitation, or unavoidable absence of the taxpayer or member of the immediate family.
Other reasons establishing you used all “ordinary” business care and prudence to meet your tax obligations by were nevertheless unable to do so.
Be ready with court records, a physician’s letter, or other documentation for proof. None of these gets you completely free of taxes. You still have to pay for every year you missed, but you might be able to get a waiver of the penalties.
If You Owe, the IRS Will Let You Know
First of all, be aware of certain types of scams that are common. The IRS even has a letter to help you understand how the IRS will and will not contact you.
The IRS will first contact you with a letter.
You receive at least two billing notices from the IRS.
Only then does the IRS begin a collection process if you do not respond and set up payment.
The IRS does not email you, text you, or call you on the phone. It will always begin to conduct business by mail. Of course, scammers have figured this out, so if you have any doubts about a communication you receive that purports to be from the IRS, don't hesitate to contact your local IRS office to check it out.
THERE ARE OTHER WAYS TO MAKE YOU PAY
The IRS has other carrots and sticks up its sleeve can help convince you of the wisdom of paying your tax debts.
Your passport can be canceled. Good-bye, European vacation.
The IRS may place a lien against your property, typically your home if you own one. You won’t be able to sell it unless you cut a deal with Uncle Sam.
Your wages could be garnished until your balance is paid. You might have to cut back on a few expenses if this happens.
Just so you know, the IRS has up to six years to press criminal charges. And there is no limit on how long they can spend chasing down unpaid taxes.
Now, do you get it? Do you understand what you should not do now? If you owe the IRS, get it taken care of with all due haste. File an extension to avoid failure to file penalties. Get a payment plan set up if you can't pay in full.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
If you owe the IRS money, you should trust that they know about it and are expecting prompt payment. The agency is not known for backing down when there's tax money to be collected, and you shouldn't count on qualifying for an offer in compromise to reduce your tax bill.
Unfortunately, there are always those who want to hide their heads in the sand, thinking that if they ignore it, it will go away.
No such luck. Here’s what else you should NOT do if you owe the IRS.
FILE LATE OR NOT FILE AT ALL
Filing late because you don’t have everything together does nothing more than increase the amount you eventually pay. The IRS charges a failure to file penalty of 5% of the amount you owe for each month you are late. If there’s any good news, it’s that the penalty is capped at 25%. However, paying an additional quarter of the amount of taxes doesn’t make things any better.
NEED HELP WITH IRS BACK TAXES, FORM 941’S BACK TAX ISSUES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
At the very least, file for an extension by Tax Day if you are not ready to file your return. Requesting an extension gives you extra time to get your return completed accurately, and you won’t incur a failure to file penalty if you request the extension before the April deadline.
That being said, if you can’t pay your taxes in full, you will incur a failure to pay penalty on the outstanding balance.
FAIL TO PAY
Like failing to file, failing to pay increases your tax bill. If it’s any consolation, the penalty is lower - 0.5% of the balance up to 25% for every month you are in arrears. However, if you skip paying your taxes, you are committing a crime. It’s a misdemeanor, which doesn’t sound bad, but you can be fined up to $25,000 for each year you are delinquent.
If you ever wondered how back taxes can grow so fast, there’s your answer. Oh, you could also get sent to prison for up to a year. Probably not the way you want to spend your vacation.
REFUSE TO SET UP A PAYMENT PLAN
Uncle Sam isn’t a complete ogre. The IRS has several payment options available to you if you can’t afford to pay your entire tax bill at once. If you don’t take advantage of a payment plan, you are shooting yourself in the foot.
You may be eligible for an installment or another type of payment plan if you owe less than $50,000 in income taxes, penalties, and interest. Even if you don’t qualify because you owe too much, you can apply to your local IRS office for other options. Just fill out and mail Form 9465.
Depending on the plan and the amount of your tax bill, you may have up to 72 months (5 years) to pay your tax debt in full. Remember, though, that you will continue to accrue penalties and interest until the balance is paid off.
If you are owed a refund during the time you are paying off taxes under a multi-year installment plan, the IRS can apply it to your tax bill, reducing the amount that way.
If you are unable ever to pay off the entire amount, you may be eligible for an offer in compromise, in which you pay a fraction of your tax bill and the IRS calls it even.
NEGLECT TO COMPARE YOUR PAYMENT OPTIONS
If you decide to pay your taxes some other way than applying for an installment plan, make sure you know how much each option costs you in the long run. Some taxpayers choose to pay using a credit card, a home equity loan, or a personal loan.
While those payment options will take care of your tax bill all at once, you need to add up how much you wind up paying in interest, fees, and repayment terms for each option. Not all payment options are the same. Tread carefully and read the fine print.
BUT WAIT - MAYBE YOU HAVE “REASONABLE CAUSE”
Actually, there are some times when the federal government cuts you some slack. However, you need to be able to prove you are covered by a reasonable cause. Reasonable cause includes:
Fire, casualty, natural disaster, or other disturbance.
The inability to obtain records (maybe because of the first reason).
Death, serious illness, incapacitation, or unavoidable absence of the taxpayer or member of the immediate family.
Other reasons establishing you used all “ordinary” business care and prudence to meet your tax obligations by were nevertheless unable to do so.
Be ready with court records, a physician’s letter, or other documentation for proof. None of these gets you completely free of taxes. You still have to pay for every year you missed, but you might be able to get a waiver of the penalties.
If You Owe, the IRS Will Let You Know
First of all, be aware of certain types of scams that are common. The IRS even has a letter to help you understand how the IRS will and will not contact you.
The IRS will first contact you with a letter.
You receive at least two billing notices from the IRS.
Only then does the IRS begin a collection process if you do not respond and set up payment.
The IRS does not email you, text you, or call you on the phone. It will always begin to conduct business by mail. Of course, scammers have figured this out, so if you have any doubts about a communication you receive that purports to be from the IRS, don't hesitate to contact your local IRS office to check it out.
THERE ARE OTHER WAYS TO MAKE YOU PAY
The IRS has other carrots and sticks up its sleeve can help convince you of the wisdom of paying your tax debts.
Your passport can be canceled. Good-bye, European vacation.
The IRS may place a lien against your property, typically your home if you own one. You won’t be able to sell it unless you cut a deal with Uncle Sam.
Your wages could be garnished until your balance is paid. You might have to cut back on a few expenses if this happens.
Just so you know, the IRS has up to six years to press criminal charges. And there is no limit on how long they can spend chasing down unpaid taxes.
Now, do you get it? Do you understand what you should not do now? If you owe the IRS, get it taken care of with all due haste. File an extension to avoid failure to file penalties. Get a payment plan set up if you can't pay in full.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Wednesday, February 5, 2020
OWN A BUSINESS OR SELF EMPLOYED? MOST POPULAR SMALL BUSINESS TAX DEDUCTIONS FOR 2019 AND 2020
Small Business Tax Preparation, Tax Debt Relief
The self-employed make up 35% of the workforce in America – and by 2020 it’s predicted that the rate will rise to 50%. While the self-employed and small business owners are educated on many areas of the business, for many it’s still a gray area.
In fact, according to a study conducted by SCORE, 40% of small business owners cited bookkeeping and taxes as the worst part of owning a business.
So, we’re here to help. We’ve compiled a list of 10 most popular small business tax deductions for side hustlers, freelancers, and entrepreneurs you may not know you are capable of claiming.
1 Home Office Use
If you use part of your home for exclusively business, you can deduct certain expenses like a percentage or your mortgage interest, insurance, utilities, and repairs. You will also depreciate the portion of your home used as a home office. You also have the option to deduct these expenses using a standard or simplified method of $5 per square foot on up to 300 square feet.
2 Vehicle Use
Most business owners use a car, light truck, or van. If your vehicle is used exclusively for business, you can deduct certain expenses. Two things to keep in mind: If you use your car for both business and personal purposes, you must divide expenses based on the percentage of actual mileage driven for each use. Also, the cost of operating the business vehicle is deductible only if there are required records to prove business usage, so maintain records!
3 Taxes
You may deduct certain federal, state, local, and foreign taxes directly related to your business as an expense.
4 Employee and Contract Worker Wages
As a small business owner, your income from the business is not deductible, but payroll for your employees (W-2 employees) or contract labor (1099-MISC contractors) is deductible.
If you know you will be paying a contractor more than $600, send them a 1099-MISC form and track your payments to them!
5 Rent on Business Property
The cost of renting a business office space — like a storefront or office — is deductible.
6 Advertising Costs
A big part of growing a small business is publicizing it. Thankfully, ordinary advertising costs are deductible. Business cards, online advertising costs, billboards, mailers, signs, giveaway items (subject to certain limits), your business website, postcards, magazine advertisements, and marketing agency fees are some of the examples of acceptable business deductions.
7 Professional Fees
As a small business owner, it’s common that you’ll need professional legal, tax and even business coaching services. These are all tax deductible expenses.
8 Supplies
Generally, the cost of materials and supplies used in the course of a trade or business may be deducted as a business expense in the tax year they are used, according to the IRS. Items acceptable for a deduction include things like cleaning supplies, paper, and even supplies used to produce or ship products.
This is another important area to show documentation to the IRS, pending an audit. Make sure to document everything.
9 Insurance Fees
Many small business owners hedge risk by having insurance. (Think umbrella policies, business liability insurance, malpractice coverage, any insurance related to your trade, business, or profession, but not life insurance for the business owner).
Also, if you self-fund your healthcare insurance, you may write it off on your taxes. However, there are two rules to note for health coverage.
A small business may qualify to claim a tax credit for up to 50% of the premiums (a better tax break than a deduction). Also the cost of health coverage for self-employed individuals and more-than-2% S corporation shareholders is not a business deduction. Instead, the premiums are deducted on the owner’s personal tax return.
10 Business Travel
If you travel for business exclusively, the cost of transportation (airfare, train, bus, etc.), baggage feels, lodging, and meals is deductible subject to a 50% limit. But, you must meet substantiation requirements explained in IRS Publication 463 to claim any travel deduction.
Final Words
Remember: as a small business owner, not all business expenses qualify as a tax deduction – they must be ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
The self-employed make up 35% of the workforce in America – and by 2020 it’s predicted that the rate will rise to 50%. While the self-employed and small business owners are educated on many areas of the business, for many it’s still a gray area.
In fact, according to a study conducted by SCORE, 40% of small business owners cited bookkeeping and taxes as the worst part of owning a business.
So, we’re here to help. We’ve compiled a list of 10 most popular small business tax deductions for side hustlers, freelancers, and entrepreneurs you may not know you are capable of claiming.
1 Home Office Use
If you use part of your home for exclusively business, you can deduct certain expenses like a percentage or your mortgage interest, insurance, utilities, and repairs. You will also depreciate the portion of your home used as a home office. You also have the option to deduct these expenses using a standard or simplified method of $5 per square foot on up to 300 square feet.
2 Vehicle Use
Most business owners use a car, light truck, or van. If your vehicle is used exclusively for business, you can deduct certain expenses. Two things to keep in mind: If you use your car for both business and personal purposes, you must divide expenses based on the percentage of actual mileage driven for each use. Also, the cost of operating the business vehicle is deductible only if there are required records to prove business usage, so maintain records!
3 Taxes
You may deduct certain federal, state, local, and foreign taxes directly related to your business as an expense.
4 Employee and Contract Worker Wages
As a small business owner, your income from the business is not deductible, but payroll for your employees (W-2 employees) or contract labor (1099-MISC contractors) is deductible.
If you know you will be paying a contractor more than $600, send them a 1099-MISC form and track your payments to them!
5 Rent on Business Property
The cost of renting a business office space — like a storefront or office — is deductible.
6 Advertising Costs
A big part of growing a small business is publicizing it. Thankfully, ordinary advertising costs are deductible. Business cards, online advertising costs, billboards, mailers, signs, giveaway items (subject to certain limits), your business website, postcards, magazine advertisements, and marketing agency fees are some of the examples of acceptable business deductions.
7 Professional Fees
As a small business owner, it’s common that you’ll need professional legal, tax and even business coaching services. These are all tax deductible expenses.
8 Supplies
Generally, the cost of materials and supplies used in the course of a trade or business may be deducted as a business expense in the tax year they are used, according to the IRS. Items acceptable for a deduction include things like cleaning supplies, paper, and even supplies used to produce or ship products.
This is another important area to show documentation to the IRS, pending an audit. Make sure to document everything.
9 Insurance Fees
Many small business owners hedge risk by having insurance. (Think umbrella policies, business liability insurance, malpractice coverage, any insurance related to your trade, business, or profession, but not life insurance for the business owner).
Also, if you self-fund your healthcare insurance, you may write it off on your taxes. However, there are two rules to note for health coverage.
A small business may qualify to claim a tax credit for up to 50% of the premiums (a better tax break than a deduction). Also the cost of health coverage for self-employed individuals and more-than-2% S corporation shareholders is not a business deduction. Instead, the premiums are deducted on the owner’s personal tax return.
10 Business Travel
If you travel for business exclusively, the cost of transportation (airfare, train, bus, etc.), baggage feels, lodging, and meals is deductible subject to a 50% limit. But, you must meet substantiation requirements explained in IRS Publication 463 to claim any travel deduction.
Final Words
Remember: as a small business owner, not all business expenses qualify as a tax deduction – they must be ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
Monday, February 3, 2020
WHAT IS A “HARDSHIP STATUS” WITH THE IRS?
Currently Not Collectible, Economic hardship, IRS Financial Statements, IRS levies and property seizures, Offer in compromise, Statute of limitations on collections
If you cannot pay your delinquent taxes because of an economic hardship, the IRS can suspend collection efforts against you. This does not mean your debt is forgiven; just that the IRS will defer collection and not take your wages or bank account.
Internal Revenue Service Policy Statement 5-71 permits hardship status on IRS accounts, as follows:
If there are limited assets or income but it is determined that levy action would create a hardship, the liability may be reported as currently not collectible. A hardship exists if the levy action prevents the taxpayer from meeting necessary living expenses. In each case a determination must be made as to whether the levy would result in actual hardship, as distinguished from mere inconvenience to the taxpayer. If, after taking all steps in the collection process, it is determined that an account receivable is currently not collectible, it should be so reported in order to remove it from active inventory.
Internally within the IRS, hardship aka currently not collectible, is known as a “53” case, for the transaction code the IRS inputs into your account to indicate a suspension of collection activities.
To obtain hardship status, the IRS requires a complete financial disclosure of your monthly income and living expenses, as well as a valuation of your assets and liabilities. The IRS will compare your monthly expenses to their charts of food and clothing, housing and utilities and car expenses. For example, if you have a $600 monthly car payment, the IRS will object to hardship status. Your car payment, according to their charts, would be too high for you to claim a hardship.
The IRS requires you to have no cash flow to be a hardship. You may think you have a zero budget; the IRS may feel differently. There are procedures to give you time and opportunity to adjust your budget.
For those who cannot adjust expenses to the satisfaction of the IRS, sometimes a Chapter 7 or Chapter 13 bankruptcy is a better option to eliminate the taxes. You can learn a little more on bankruptcy and the IRS here.
Economic hardship does not forgive interest and penalties.
Expect the amount you owe to double every five years from the running of interest and penalties.
In many situations, being on a continued hardship status is an effective method for resolution of an IRS liability. The IRS has 10 years to collect the amount you owe. After the 10 years lapses, the IRS will clear the account balances to zero, as required by law (read more on that here).
The IRS can also settle a hardship case by submission of an offer in compromise rather than have it linger in the system.
A comparison between the pros and cons of resolution by sitting on a hardship status, filing bankruptcy or submitting an offer in compromise is essential to resolving a tax delinquency. No option should stand alone.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
If you cannot pay your delinquent taxes because of an economic hardship, the IRS can suspend collection efforts against you. This does not mean your debt is forgiven; just that the IRS will defer collection and not take your wages or bank account.
Internal Revenue Service Policy Statement 5-71 permits hardship status on IRS accounts, as follows:
If there are limited assets or income but it is determined that levy action would create a hardship, the liability may be reported as currently not collectible. A hardship exists if the levy action prevents the taxpayer from meeting necessary living expenses. In each case a determination must be made as to whether the levy would result in actual hardship, as distinguished from mere inconvenience to the taxpayer. If, after taking all steps in the collection process, it is determined that an account receivable is currently not collectible, it should be so reported in order to remove it from active inventory.
Internally within the IRS, hardship aka currently not collectible, is known as a “53” case, for the transaction code the IRS inputs into your account to indicate a suspension of collection activities.
To obtain hardship status, the IRS requires a complete financial disclosure of your monthly income and living expenses, as well as a valuation of your assets and liabilities. The IRS will compare your monthly expenses to their charts of food and clothing, housing and utilities and car expenses. For example, if you have a $600 monthly car payment, the IRS will object to hardship status. Your car payment, according to their charts, would be too high for you to claim a hardship.
The IRS requires you to have no cash flow to be a hardship. You may think you have a zero budget; the IRS may feel differently. There are procedures to give you time and opportunity to adjust your budget.
For those who cannot adjust expenses to the satisfaction of the IRS, sometimes a Chapter 7 or Chapter 13 bankruptcy is a better option to eliminate the taxes. You can learn a little more on bankruptcy and the IRS here.
Economic hardship does not forgive interest and penalties.
Expect the amount you owe to double every five years from the running of interest and penalties.
In many situations, being on a continued hardship status is an effective method for resolution of an IRS liability. The IRS has 10 years to collect the amount you owe. After the 10 years lapses, the IRS will clear the account balances to zero, as required by law (read more on that here).
The IRS can also settle a hardship case by submission of an offer in compromise rather than have it linger in the system.
A comparison between the pros and cons of resolution by sitting on a hardship status, filing bankruptcy or submitting an offer in compromise is essential to resolving a tax delinquency. No option should stand alone.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
DO YOU FLIP HOMES? WHAT REAL ESTATE INVESTORS MUST KNOW TO AVOID HAVING TAX PROBLEMS
Flipping a house often means becoming a small business owner, which adds a level of complexity to most people’s tax situation.
A new house flipper needs to realize there are three basic things to keep in mind; what it means to be self-employed, how to treat this venture like the business it is and track expenses, and what a loss or a profit will do to a tax outcome.
KNOW THE RULES FOR BEING SELF- EMPLOYED
Among the things for new house flippers to know is that they now own a business and they need to learn how to manage being self-employed. Here are some things to keep in mind:
As the owner of an unincorporated business, income and expenses associated with this business should be reported on Schedule C or Schedule C-EZ with Form 1040
Estimated income and self-employment taxes are due quarterly in April, June, September and January (self-employment taxes apply for those who make $400 or more in net profit annually)
If there are other employees in the small business, the owner must pay must pay employment taxes, including unemployment tax and Social Security and Medicare taxes and must withhold and remit federal income tax and the employee portion of Social Security and Medicare taxes.
Also, the expenses of operating a business can directly offset income as tax deductions.
TRACK YOUR BUSINESS EXPENSES
Because the house to be rehabbed is not the owner’s personal residence, the usual deductions, such as mortgage interest and points paid to borrow money to buy the property aren’t claimed as itemized deductions. Instead, they are capitalized and deducted in the year the home is sold.
All ordinary and necessary rehab expenses are tax deductible, which could include supplies, labor costs, fees for permits and professional services (e.g., fees for real estate agents, lawyers and bookkeepers). Keep track of invoices and receipts for these expenses and of business-use asset information (cost, date placed in service, etc.) for depreciation.
Use of a personal vehicle for business purposes is also deductible. Keeping a log of the purpose, length and date of those trips can serve as proof in case of an audit.
Costs associated with a home office are eligible tax deductions when the taxpayer uses the area exclusively and regularly for conducting their business.
UNDERSTAND THE BOTTOM LINE
In addition to understanding how to file tax returns as someone who is self-employed, house flippers also need to know how to track their profits and losses.
Basically, if the price paid to purchase the house plus what was spent to improve it are less than what the property is re-sold for, a profit has been made. A loss happens if what was paid for the property plus how much was spent to improve it are more than the re-sale price.
When a taxpayer sustains a loss from an activity year after year, the IRS may consider the “business” to be a hobby. The taxpayer’s profit motive, expertise, time devoted to house flipping, and other factors are all considered to determine if the activity is a business or hobby. Hobby income is reported on Form 1040 and expenses are deductible only up to income as miscellaneous itemized deductions subject to the 2 percent of adjusted gross income limitation.
Also, some taxpayers occasionally buy and sell houses or other real estate as an investment rather than as a business. Facts and circumstances, including the number and frequency of houses bought and sold, the taxpayer’s involvement in any rehab decisions, and the taxpayer’s intent determine whether the activity is an investment.
As with any business, it is important to understand the business itself and the financial side of the endeavor, which includes taxes. So before making big business decisions consider the money end and if needed, get professional advice on the potential tax situation.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief
#TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
A new house flipper needs to realize there are three basic things to keep in mind; what it means to be self-employed, how to treat this venture like the business it is and track expenses, and what a loss or a profit will do to a tax outcome.
KNOW THE RULES FOR BEING SELF- EMPLOYED
Among the things for new house flippers to know is that they now own a business and they need to learn how to manage being self-employed. Here are some things to keep in mind:
As the owner of an unincorporated business, income and expenses associated with this business should be reported on Schedule C or Schedule C-EZ with Form 1040
Estimated income and self-employment taxes are due quarterly in April, June, September and January (self-employment taxes apply for those who make $400 or more in net profit annually)
If there are other employees in the small business, the owner must pay must pay employment taxes, including unemployment tax and Social Security and Medicare taxes and must withhold and remit federal income tax and the employee portion of Social Security and Medicare taxes.
Also, the expenses of operating a business can directly offset income as tax deductions.
TRACK YOUR BUSINESS EXPENSES
Because the house to be rehabbed is not the owner’s personal residence, the usual deductions, such as mortgage interest and points paid to borrow money to buy the property aren’t claimed as itemized deductions. Instead, they are capitalized and deducted in the year the home is sold.
All ordinary and necessary rehab expenses are tax deductible, which could include supplies, labor costs, fees for permits and professional services (e.g., fees for real estate agents, lawyers and bookkeepers). Keep track of invoices and receipts for these expenses and of business-use asset information (cost, date placed in service, etc.) for depreciation.
Use of a personal vehicle for business purposes is also deductible. Keeping a log of the purpose, length and date of those trips can serve as proof in case of an audit.
Costs associated with a home office are eligible tax deductions when the taxpayer uses the area exclusively and regularly for conducting their business.
UNDERSTAND THE BOTTOM LINE
In addition to understanding how to file tax returns as someone who is self-employed, house flippers also need to know how to track their profits and losses.
Basically, if the price paid to purchase the house plus what was spent to improve it are less than what the property is re-sold for, a profit has been made. A loss happens if what was paid for the property plus how much was spent to improve it are more than the re-sale price.
When a taxpayer sustains a loss from an activity year after year, the IRS may consider the “business” to be a hobby. The taxpayer’s profit motive, expertise, time devoted to house flipping, and other factors are all considered to determine if the activity is a business or hobby. Hobby income is reported on Form 1040 and expenses are deductible only up to income as miscellaneous itemized deductions subject to the 2 percent of adjusted gross income limitation.
Also, some taxpayers occasionally buy and sell houses or other real estate as an investment rather than as a business. Facts and circumstances, including the number and frequency of houses bought and sold, the taxpayer’s involvement in any rehab decisions, and the taxpayer’s intent determine whether the activity is an investment.
As with any business, it is important to understand the business itself and the financial side of the endeavor, which includes taxes. So before making big business decisions consider the money end and if needed, get professional advice on the potential tax situation.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated one of the best tax relief companies nationwide.
#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief
#TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp
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