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Archive for January, 2012

Tax Fraud Warnings

January 25th

Tax time is no doubt one of the most stressful times of year for most of us. Between itemized deductions, multiple W-2s and the threat of owing the IRS money, many Americans seek the help of qualified tax professional to help. However, tax time is prime time for tax scams that can quickly victimize the unsuspecting taxpayer.

The Warning Signs

Tax debt is serious business and while the IRS is committed to collecting on what is owed, taxpayers should be warned that owing the IRS money isn’t half a serious as committing tax fraud.  Before getting sucked into a scam, watch out for these warning signs of a potential scam:

  • Unlicensed employees, staff that are not a certified public accountants or tax lawyers.
  • Requiring payment for their services up front or do not offer money back guarantees.
  • Request direct access to your bank accounts or offer to pay tax debts on your behalf.
  • Failure to offer tax audit protection or guarantees.
  • Recommend ignoring the IRS or avoiding communication with tax officials.









Changes For The 2012 Tax Season

January 18th

This year might be the last for consumers and homeowners to talk advantage of a few key tax deductions. Because tax deductions are the main source for lowering tax liability, many taxpayers may find that they owe the IRS come next year. A look at these changes to the 2012 tax code reveals some interesting changes that could affect whether you will carry a tax debt next year or not.

Tax Deductions

Many of the changes to be implemented for the 2012 tax season are taxpayer friendly. The bulk of the changes are offering an increase in deductions to account for the cost of inflation. For example, the personal and dependent exemptions will increase by $100 to a total of $3,800. Standard deductions for all categories will increase by $100-300. Retirement account plan limits will be boosted to $17,000, up from $16,500. Tax bracket thresholds will also be pushed a bit higher to allow for more Americans to qualify for the more affordable middle class bracket.

However, not all of the changes will be taken favorably by many consumers. There will be an increase in the income phase out level for married couples claiming their student loan interest as a tax deduction, making it harder for people paying high interest to qualify for this deduction. One of the most discussed deduction cuts is to mortgage insurance premiums , which will not be eligible to be claimed for a deduction starting in 2012 unless Congress reinstates the deduction before the end of the year.




Tax Refund Loan Cautions

January 11th

As tax season approaches we all begin to think about the outcome of our filing for the 2011 year. Will we be getting money back? Will we owe the IRS? and What about my old tax debts? All of these questions become highly important as we begin to crunch the numbers.

One aspect of tax season that is becoming increasingly popular for many are tax refund loans. While these loans are not inherently bad, there are a few things to consider before you accept that loan based on your expected tax refund.

Inaccurate Calculations

The most obvious concern is based on the accuracy of your current tax return. If you accept a refund loan  for the amount you anticipate receiving in your return, you could be setting yourself up for bigger problems. If there are any inaccuracies, or the IRS disputes your refund calculations, you will still be liable for repaying that loan in the full amount.

Repayment Terms

What many people fail to consider are the details behind the terms and conditions of these loans. It isn’t uncommon for these loans to carry high interest rates, large penalty fees and even charge up-front fees for processing the loan. In some cases, you may still be liable for a 10-20 percent fee simply for accepting the loan even if you repay it as soon as your tax refund is returned. Further, if you default on your repayment schedule you can expect to see huge fees and costs associated with non-payment, even if the delay was the fault of the IRS.


Tax Debt Solutions

January 4th

Unpaid taxes are a surprisingly common occurrence. Most people do not set out to owe the IRS money, but end up in tax debt due to unforeseen tax liabilities or financial hardships. In either case, the IRS can be very persistent when collecting their money and may even apply steep tax penalties. Luckily, the IRS offers several ways for taxpayers to resolve their debts.

Solutions Ahead

If you suspect your tax liabilities are simply inaccurate, you can request a tax liability review. The IRS is willing to conduct a review of your taxes in order to check for accuracy. You may also want to consult a tax lawyer who can help determine if any mistakes have been made or assist you in finding a tax debt payment solution.

If your taxes are accurate, but you have had numerous penalties applied to your debts, you may  be able to request an abatement. The IRS Penalty Abatement Program may remove a portion, or all, of the tax penalties applied to your overall debt liability. However, you will be required to prove financial hardship in order for the IRS to lower or eliminate penalties and interest.

If you know your debts are accurate and you cannot afford to repay your debt, the IRS offers two plans to assist in debt repayment. An installment plan allows you to repay your debts in monthly payments over a two to three year period. An offer in compromise is a type of tax debt settlement plan in which you negotiate a lowered tax debt liability bill to be paid over time.  Both plans are designed to meet the needs of taxpayers experiencing financial hardships.



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