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Archive for November, 2012

Tax Hike Would Impact Consumer Economy

November 30th

Faced with the pending tax hikes next year, Americans could see an increase in their tax debt liability of upto $5,700 annually. This means overall, Americans would spend nearly $200 billion less on consumer goods than they otherwise would have in 2013, according to President Obama’s team of economists.

Tax Breaks Fiscal Cliff

This reduction of $200 billion is about four times the total amount that 226 million shoppers spent on Black Friday weekend this year. The growth of real consumer spending could dip by 1.7 percentage points in 2013, according to the National Economic Council and a report released this week by the White House.

The spending reductions and tax debt increases are known as the “fiscal cliff “, an economic phrase coined in Washington.  The report indicates if middle-class tax rates are allowed to expire this would add an additional speed bump to the economic recovery.  Congress has to the end of the year to settle the 2013 tax breaks.

The report primarily focused on the impact of Bush-era tax cuts and deductions expiring for middle-income Americans who make less than $250,000 per year. If you think you will owe more than expected for your 2012 taxes, consult with a qualified tax debt attorney before end of the year to review your repayment options.


Nicolas Cage Pays Off 600,000 Tax Debt

November 21st

Nicolas Cage recently paid another $600,000 installment agreement and chipped further away at his massive tax debt. The actor is slowly paying back the original $13 million owed in back taxes after splurges on elaborate purchases and gifts between 2004 and 2009.

Half Way There

He still owes an approximate $6 million thanks to his love of expensive gadgets, despite already having paid off over half of the original amount by April 2012. The actor filed a lawsuit against his former business manager Sam Levin in 2009 claiming he had led him ”down a path of financial ruin”. Nicolas once splashed out $276,000 on a 67-million-year-old dinosaur skull, outbidding Leonardo DiCaprio.

Cage’s assets still include a jet, two yachts, three castles and several mansions. The 48-year-old had already been forced to sell his extensive comic book collection in 1997 for $1.6 million. The ‘National Treasure’ star confessed in 2010: ”Over the course of my career I have paid at least $70 million in taxes. Unfortunately, due to a recent legal situation, another approximate $14 million is owed to the Internal Revenue Service (IRS), however, I am under new business management and am happy to say that I am current for 2009.” Cage is fairly confident about his monetary situation. The actor has taken on dozens of roles recently to generate income to continue  his tax repayment.


The Future Of Mortgage Interest Tax Deduction

November 16th

Now that the election is over the White House has some pressing matters to attend to, one of which is the fate of the mortgage interest tax deduction. Although each political party holds different ideas as to how to proceed with the deduction  in the coming years, the good news is that it will live to see another day.

 Program Revisions

One thing has been clear for politicians of all sides, the mortgage interest deduction is extremely important for the health of the housing market and economy. Accounting for nearly 35% of total itemized deductions among most home owning Americans, losing such an important piece of tax benefit could have been detrimental. Not only does the deduction help reduce the tax bill for many taxpayers, it keeps tax debt problems at bay when people can depend on such benefit.

Although no decisions have been made as to exactly what the revised mortgage interest deduction could look like in the coming year(s), a few ideas are being tossed around. Some of the proposed plans for revision include:

  • A cap of $500,000 home value
  • Limiting the deduction to primary residences only
  • An overall  limit of $25,000 in savings
  • Disqualifying taxpayers who earn more than $250,000 annually from eligibility to claim the deduction



Back Tax Negotiation Tactics

November 2nd

Owing the IRS money is serious business. In fact, the IRS is notorious for steep consequences on those who dodge their tax debt liabilities. Wage garnishment, asset seizure and even tax liens are all fair game when it comes time to collect. Ignoring collection efforts will only get you into further trouble. The best defense is negotiation for repayment.

Finding An Agreement

First, understand that your power in negotiating with the IRS is limited. Why? Because your tax liabilities are your civic duty. However, the IRS does understand that people experience financial hardships, which is why they are willing to offer some assistance.

When looking to negotiate your tax debts there are really two forms of help offered by the IRS; a payment plan that spreads out payments over the course of a few years or a settlement plan that allows for the taxpayer to pay less than is actually owed. The qualification standards for each of these options varies, which is why knowing your options ahead of time can save you time and money in penalty fees. It is a good idea to determine how much you can afford to pay each month, and whether you have the ability to settle with a lump sum payment before you contact the IRS to discuss your options.

Anyone considering negotiations with the IRS should contact a tax debt lawyer. Having a professional represent you in negotiations can boost your chances at success and keep you from having more serious consequences applied due to lack of payment.


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