Tax Returns

Should Taxpayers Consider Using Direct Deposit for Tax Refunds?

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

  • If you’re looking to receive a tax refund this season and want it expedited, consider direct deposit.
  • It’s completely free to request direct deposit on your tax return
  • You’ll receive your refund through your bank instead of via check
  • It costs the IRS more to cut a check compared to transferring the money directly to your bank account. 

It’s tax time and everyone is scrambling to get their last-minute tax appointments scheduled before the deadline. If you’re expecting a refund this year, choosing the direct deposit option may be the more viable choice. Let’s explore the benefits:

It doesn’t cost you anything 

Whether you have a tax preparer file for you or you’re filing your tax return yourself, adding your bank information is free to include on your tax return. 

Get your refund faster

When you e-file with your direct debit information on your tax return, you’ll receive your refund much quicker compared to mailing off the return and having the IRS process it.

It’s secure

Using direct deposit information prevents the risk of having a paper check lost or stolen since the funds will be transferred directly to your bank.

You don’t have to e-file

If you prefer to mail out your tax return instead of e-filing, don’t worry, you’re still able to include your direct deposit information and receive your refund through your requested bank of choice.

It will save you money

It costs the IRS more than $1 for every paper refund check issued, but only a dime for each direct deposit made.

Tax season is a busy enough time to get through without having to worry about how you’re going to receive your refund or when it’s going to come. Having your refund deposited directly into your bank account is the ideal way to receive your money because it’s secure, quick, free, and saves taxpayers money. 

If you need tax help, contact us for a free consultation.

By |My Money, Tax, Tax Planning, Tax Returns|Comments Off on Should Taxpayers Consider Using Direct Deposit for Tax Refunds?

What to Do If You Work Abroad and Owe the IRS

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

  • Working abroad doesn’t excuse citizens from paying their taxes, in fact, they are still held to the same standard as those working within the U.S. too.
  • For those working abroad, tax filing will begin on January 27th and are provided a two month extension-until June 15th-to file their tax return.
  • U.S. citizens have the choice to either mail their tax return or e-file as long as it is before the tax deadline. 

Working abroad can be an exciting adventure.  For starters, you get to experience different cultures, meet new people, and eat foods you’ve never even heard of before. It can be easy to immerse yourself in a new country and forget all the responsibilities that you had back at home. While this can be a welcome development for many, one responsibility you should try not to skirt is your taxes.  Even when you’re working abroad, you are still bound to the same tax laws, and you will need to report your income and file your tax return when you’re living in another country. If you’re an American citizen that is working abroad or are even just considering doing so, it is important to know when you should file, where you can file, and if you are able to file online.

When you should file

If you’re a U.S. citizen, resident alien, or you are in the military on duty outside of the U.S. that is working abroad, you are still obligated to file your tax return by April 15th. The only difference between someone working abroad versus someone that resides in the U.S. is that the person working abroad is provided an automatic two-month extension. This means those working outside of the U.S. are given until June 15th to prepare and file their tax return. It should also be noted that taxpayers are still required to pay any tax balance they have by April 15th or they will be charged interest.

Where to file

Working abroad can cause some confusion about how and where you are able to file your tax return. If you’re a U.S. citizen or resident alien; this includes a green card holder, you can mail your U.S. tax return to:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0215 USA

Can you e-file?

Taxpayers that have their adjusted gross income of $69,000 or less have the ability to electronically file their tax returns for free. If taxpayers have a greater adjusted gross income greater than the specified threshold, they can use the Free File Fillable Forms, the e-file by purchasing commercial software, or the Authorized IRS e-file Provider Locator Service.

If you’re a U.S. citizen looking to work abroad, it is important to know your tax duties and obligations you will still have, regardless of whether you’re working and residing elsewhere. Make sure to mark your calendar for tax filing season every year so you remember to file your tax return. It is also critical to know what your options are when it comes to filing your tax returns and what software you are able to utilize. 

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |IRS Collections, My Money, Tax, Tax Planning, Tax Returns|Comments Off on What to Do If You Work Abroad and Owe the IRS

Will Interest rates remain the same for the first quarter of 2020?

With tax season creeping upon us, some people may start to panic because they haven’t yet filed their tax return; some may even wait until the very last second before filing.  One of the reasons many Americans put off filing their taxes is because they know that they’re going to owe a tax liability and simply don’t want to deal with it. For those that have a balance with the IRS, they may have questions about whether or not they will accrue interest, how much interest they could accrue, how to avoid owing a balance, or how to prepare for next tax season. If you know that you’re going to owe the IRS at the end of the year, keep reading to find out how you’ll be affected and what you can do to prepare for the next tax season.

Interest rates

According to the IRS, if you end up owing a balance this tax season, interest rates will remain the same as last year for the first calendar quarter beginning January 1, 2020. Here are the interest rates that taxpayers can expect:

  • 5% for overpayments (4% in the case of a corporation).
  • 2.5% for the portion of a corporate overpayment exceeding $10,000.
  • 5% for underpayments.
  • 7% for large corporate underpayments. 

The Internal Revenue Codes determine their interest rates on a quarterly rate. These rates that have been announced this year are computed using the federal short-term rate and will be based on daily compounding.

How to avoid interest

If you have a tax liability, you can count on the IRS to notify
you of your balance due and what tax solutions they may have for you. In addition to what you owe, the IRS will tack on interest until your balance is paid in full. Some of the main reasons taxpayers
end up owing the IRS are:

  • Incorrect withholding amounts.
  • Failure to make estimated tax payments.
  • Underreporting income on their tax return.

So how can you avoid making the same mistakes listed above? The IRS provides tax relief help and encourages taxpayers that are W2 employees to do a paycheck checkup at least one time throughout the year to ensure they are withholding the correct amount to avoid any surprises like owing money come tax time. The IRS provides a withholding calculator for taxpayers to utilize when checking to ensure they’re on the right track. 

If you are a 1099 earner or even a W2 earner and you typically owe during tax time, it may be in your best interest to start making estimated tax payments quarterly. This will make it more likely that
when it’s time to file your taxes you won’t owe a liability, and will help you avoid any interest that would have been tacked onto your balance. IRS tax help for making your estimated tax payment can be found on their website

Another way to stop interest rates is by ensuring that you include all income on your tax return. Attempting to leave any income off your return could potentially lead to an audit, and if it’s found that income has been excluded, it could possibly lead to you owing a balance in addition to interest and penalties.

You can count on the IRS to continue adding interest to any tax balance that you owe. It is the taxpayer’s responsibility to ensure they don’t owe at the end of the year in order to avoid accruing any interest; this means making regular checks that your withholdings are accurate, making estimated tax payments if you know you will owe a balance when you file, and ensuring that you are reporting all income to the IRS to avoid having both penalties and interest. 

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |IRS Collections, My Money, Tax, Tax Planning, Tax Relief Solutions, Tax Returns|Comments Off on Will Interest rates remain the same for the first quarter of 2020?

Your Financial Diet for the New Year

With each new year inevitably comes the new year resolutions. For most, this is the time of the year we aspire to make big changes in our lives and create new goals to reach by year’s end. One of the most common resolutions that people make is about money: spend less and save more. Giving your finances a fresh start and taking a break from frivolous spending can be very beneficial to you – and give some breathing room to your bank account. This article details how to make your money a priority by starting towards new goals, making a budget and cutting out impractical spending that could affect the way that you save money.

Set goals

One of the first things you should do is to create goals for yourself for the new year. A good way to start is by writing down goals that are realistic and attainable for the year. Make sure that your goals are measurable so that you’re able to track your progress every month to ensure you’re staying on track to meet your objectives.  

Create a budget

Once you have decided what financial goals you want to focus on, it’s time to create a budget.  This will help to give yourself a visual representation of how you’re spending your money. You should start by figuring out how much income you make on a month-to-month basis. If you aren’t salaried or if you receive a commission as part of your compensation, and therefore don’t see a flat rate of pay each month, a good approach is to average out your income from the months prior to seeing what you earn on average. 

The next step is to determine what your spending habits are.  Some expenses are the same every month, such as your mortgage/rent or car payment, while other expenses vary month to month such as your utilities or groceries; you can take the average from your prior months to determine how much you can expect to spend. 

Get rid of the excess spending

After you’ve created a budget, it’s time to take a look at what you’re spending every month – and figuring out what expenses you can do without. A great way to look at where your money is going is by checking your bank statements. It may surprise you, but once you review your expenses, you’ll begin to realize how many times you’ve gone out to eat, went shopping for clothes or splurged a little extra at your favorite coffee shop. Once you are able to identify your impractical expenses, you can be more mindful of them so you can focus on putting more money in your savings. 

The new year allows you to press the restart button on any bad habits that you had previously and this includes how you are spending your money. If you’re looking to refresh your finances, make sure to make attainable money goals, make a budget to ensure that you stay on track and review your expenses regularly to avoid overspending. 

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |My Money, Savings, Tax Returns|Comments Off on Your Financial Diet for the New Year

You Received an IRS Notice, Now What?

As a taxpayer, one of the most frightening things you could receive in the mail is an IRS letter. Depending on the notice that you receive from the IRS, it can cause anxiety and fear, and you may even feel unsure about what your next move will be or what tax solutions may be available to you. The IRS does have tools available that taxpayers can utilize for IRS tax help, even if they received a notice that makes it unclear what their next steps would be. Below are some of the most common collection notices sent out to taxpayers every year. 

CP501/502

If you’ve received a CP501 notice, it means that the IRS is attempting to notify you of a past balance due. The IRS will request that you take action in order to resolve your outstanding balance. A CP502 notice also doubles as a reminder that the IRS sends about your tax balance. Typically, each notice indicates the interest and penalties that have accrued in addition to what you owe to the IRS. 

If you receive these types of notices, the IRS is letting you know of what the current balance, including interest and penalties, is owed. Once you confirm that the balance is accurate, you can either pay the balance for the tax year in question or contact the IRS to get set up on a payment plan. 

CP504

A CP504 notice is a secondary notice that the IRS will send to alert you of your tax debt if you owe a tax balance. This notice is to also notify you that they’re preparing to start collection action and to seize any tax refund you may have received. The IRS will continue their collection action against a taxpayer until their balance is paid in full. 

To avoid the IRS sending you into collections, it is important to stay compliant. You can do this by paying off your balance in full with the IRS or asking to be placed on a payment plan. It is also paramount that you continue to monitor your mail to ensure that you don’t receive any further notices from the IRS.

LT11/CP90

An LT11 is a notice to remind a taxpayer that they have an overdue payment for overdue taxes.

The IRS will send a CP90 notice if they have attempted to reach out to a taxpayer multiple times about their tax balance and have yet to receive a response. The letter states that the IRS has the intent to seize a taxpayer’s property or rights to their property if they fail to resolve their outstanding balance. 

Both these notices are a warning that the IRS will begin to take collection action against the taxpayer and it is up to the taxpayer to either continue to stay in collections with the IRS or settle their debt and get compliant. At this point in time, it is vital that you attempt to rectify the situation and get help with IRS debt by contacting them immediately to resolve your liability in addition to any interest and penalties that you have accrued.

Regardless of what notice you have received, it is important to review the notice and resolve the situation if needed. The IRS typically sends written communication to taxpayers to notify them of their tax balance and to reconcile their liability as soon as possible. If you need tax help and don’t know the first step to resolving your balance with the IRS, a tax relief company may be your best bet. A tax relief company will work with the IRS on your behalf to address your tax issues so you can be compliant moving forward.    

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |IRS Collections, My Money, Tax Returns|Comments Off on You Received an IRS Notice, Now What?

Out with the Old, in With the New: How to Prepare for Tax Season

Now that the holidays are over, it’s time to start preparing for the next season. This can be a very stressful time for most taxpayers because of the fear they will owe the IRS or they will not receive as big of a refund as they had received for the previous years. There are ways to ensure that you are more than ready for tax season so you don’t have to scramble to be prepared for whatever your CPA asks you for. Some of the most important things you can do to get ready to file your tax return are having the appropriate information for your return to be filed, knowing what deductions you qualify for, and understanding which filing status you’re going to pick.

Gather your personal information 

Most CPAs will ask that you bring your previous tax return and any forms such as W2s, 1099s, rental income, or any other source of income you have received. You should also bring your social security card or tax ID card as well as your driver’s license to ensure your tax return is filed properly. Ensuring that you bring all the applicable items is vital for your return to be filed accurately. Some additional items you may need to bring if applicable:

  • Dependent information
  • Childcare payment records
  • Death certificates
  • Alimony payments

Make note of any deductions

Any deduction applied to your tax return is considered a reduction in your income and in turn, could potentially reduce the total amount of income tax you would have owed after filing your tax return. If you are looking to itemize your deductions, it is important to keep a record of all the expenses you may have. Deductions can range from:

  • Self-employed 
  • Rental homes
  • Investments
  • Real estate
  • Property taxes
  • Charitable donations
  • Medical expenses

Figure out how you want to file

If you just got married, how you typically file your tax return will change. Your filing status is typically based on what will result in lowering what you owe in taxes; your marital status or family situation. If you’re married, you have the choice to either file jointly with your spouse or separately. If you file head of household, it is required that you are not married, a qualifying person has lived with you for more than half the year and that you’ve paid more than half the cost of keeping up a home for the year. 

Getting a head start on the most stressful time of the year, tax season can be extremely beneficial for you. Understanding what you want to be placed on your tax return is important and dependent on how much of a refund or how much you will owe at the end of the year. If you are having difficulty understanding what you can and can’t place on your tax return, talk to a CPA to see what is allowable to ensure that your tax return is filed properly.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |IRS Collections, My Money, Tax, Tax Planning, Tax Returns|Comments Off on Out with the Old, in With the New: How to Prepare for Tax Season

Don’t Let the Grinch Steal Your Holiday Pay: Tax Tips to Survive the Season

The holidays can be a very expensive time for everyone, especially when it comes to purchasing gifts for family and friends. In order to make ends meet, this may mean that you might pick up some extra shifts at your job, change your withholding status so less is taxed from each paycheck, or perhaps you did so well at your job that you even received a holiday bonus. Regardless of what helps you make more money this holiday season, be cautious of any tax implications it may cause when filing your next tax return. 

Work more overtime 

With the holidays around the corner, you can expect that most employers will ask that you work overtime. This is an easy way to make more money in exchange for working more hours. It is important to keep in mind that overtime will be considered part of your adjusted gross income for the year and if you work enough overtime throughout the year, this could move you into the next tax bracket – which could lead you to owe. If you do end up owing, you will only pay the higher tax rate on the portion of your income that exceeds the income threshold for the next highest tax bracket. 

Going Exempt

Some taxpayers will choose to go exempt for the holidays, meaning they stop withholding to the government and State in order to receive a bigger paycheck back from their employer. Although you’ll be receiving more money back in the short term, it is important to not stay at exempt for too long, as it could potentially lead to you owing the IRS next filing season. If you’re looking for a way to pay fewer taxes on your holiday bonus, consider maximizing your year-end contribution with your 401(k), IRA or a qualifying charitable organization to get a tax deduction. 

You received a bonus

Employers giving their employees extra cash is common around the holidays and can help pay for presents. If you do receive a bonus, this will be considered a supplemental wage, meaning it will also be considered income when it comes time for filing your tax return. Additional types of pay that could be considered income is severance pay, vacation pay, bonuses, moving expenses, overtime and any commission that is received.

 Always be aware of how working overtime, changing your withholdings and receiving a bonus will affect you when it comes time for filing your taxes. Working more hours this holiday season will mean that you most likely get a bigger paycheck and it will also mean that it could move you into a higher tax bracket. Even if you choose to go exempt this holiday season to have more money in your pocketbook, it may lead to you owing at the end of the year. Finally, if you receive a bonus at the end of the year, it will be considered an additional income and will be reported on your tax return. 

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |Tax Returns|Comments Off on Don’t Let the Grinch Steal Your Holiday Pay: Tax Tips to Survive the Season

What is Tax Evasion and How can it Affect You?

For some, it can be a terrifying ordeal to file your tax return, especially if you forget to include vital information when filing. It is important for taxpayers to double-check whatever they have placed on their return in order to avoid the IRS further looking into your tax return. The IRS will flag a taxpayer’s return if they notice that the income reported in inaccurate, if there are too many credits and deductions placed on the return, or if a taxpayer has not filed a required tax return. Although the IRS does not pursue many tax evasion cases, it is the taxpayer’s responsibility to ensure they are filing correctly to avoid the IRS investigating them – and finding something that can send them to jail. If you still have questions on what should be included in your tax return and how to properly file, here are some ways to avoid the IRS coming after you.

The IRS will usually start off with an audit process rather than taking immediate action against a taxpayer. During the audit process, the IRS will review the tax return(s) filed by a taxpayer to see what errors were knowingly made. If the IRS sees that a taxpayer has repeatedly made the same mistakes on several of their tax returns, such as not fully disclosing large amounts of income they had been receiving throughout multiple years, it could be seen as tax evasion. If a taxpayer continuously makes false statements and hides records like bank statements from an IRS auditor, it could potentially lead to criminal prosecution.

To avoid running into trouble with the IRS, specifically avoiding an audit, or being charged with tax evasion it is important to understand what you should include on your tax return. Whatever income you are earning needs to be included on your tax return. This means that if you have a full-time job as well as a side job, you must report both sources of income. If you also meet the filing requirements, you must file your tax return with the IRS. Avoiding filing a return for multiple years could be considered tax evasion by the IRS. This could also lead to the IRS looking further into the unfiled years and file a tax return on your behalf, which could cause any owed liability to increase on top of the penalties and interest you accrue for not filing in the first place. 

Understanding the IRS as well as their rules will help you navigate the tax filing system put into place. It is up to every taxpayer to keep themselves informed on any tax changes that may occur throughout the year and to also be transparent on their tax return by disclosing any information that may be vital for the IRS to know. If you are unsure of how to file and need further assistance, you can ask the advice of a tax attorney or a tax relief company that can provide you with the necessary assistance you need in order to get compliant with the IRS.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |IRS Collections, My Money, Savings, Tax Planning, Tax Relief Solutions, Tax Returns|Comments Off on What is Tax Evasion and How can it Affect You?

Planning Thanksgiving on a Budget

With the holiday season around the corner, things can start to get expensive. It can be overwhelming shelling out a bunch of cash on presents and food every year, especially if you don’t have a set spending limit. So, what can you do to cut costs but still make the most of your time with friends and family? Setting a budget for yourself is one of the best ways you can have an amazing holiday that won’t hurt your wallet. Below are a few tips and tricks to make sure you get to overeat without overspending this Thanksgiving.

Create a budget

Making an honest budget that sets parameters for how much you can comfortably spend will give you a better idea of how much wiggle room you actually have when buying food and presents for your friends and loved ones. Recycling decor from previous holidays and searching for the best sales going on at your local grocery store can help save you money but will still give you the Thanksgiving that everyone will be raving about for years to come.  

Create a shopping list and stick to it

When we think about the holidays, many of us picture ourselves eating an exorbitant amount of food. If you’re hosting a holiday dinner, or even just attending one, don’t go overboard while shopping for groceries. Create a shopping list of what you want to purchase and then make sure you stick to it. Try looking for sales a store is having, specifically on non-perishable items and bread. Typically, items that are in season will either be on sale or cheaper, so try picking up these types of items so you won’t have to pay for food items that may currently be valued at a higher, out-of-season price.

Prioritize what’s important

Making your menu from scratch may end up saving you more money than buying something that was pre-made. You can even check to see what’s in your kitchen cabinets, as most recipes call for ingredients that you already have. There seems to be a stigma about cooking a meal where people feel that it will take them hours.  If you’re not a fan of cooking or don’t feel very experienced at it, then you can stick to cooking easy side dishes that will complement the main courses. If you’re on a really tight budget, you may want to consider cutting out the cost of alcohol since it is on the pricier side. If you would like to have wine with your meal, you can always ask friends and family to bring a bottle or two. You can also alleviate some of the costs by hosting a potluck-style Thanksgiving and asking your friends and family to bring their favorite dish.

Thanksgiving can still be fun even if you have a budget in place. While it can be expensive trying to buy food for the whole family during the holidays, being mindful of how much money you will be spending this November is essential to avoiding a different kind of holiday hangover – a financial one.  And don’t forget that the most important part of Thanksgiving isn’t about all the food you eat, it’s about spending time with loved ones.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |Tax Returns|Comments Off on Planning Thanksgiving on a Budget

How to Prepare for a Recession

A thriving economy is something all taxpayers rely on in order to purchase goods and provide for their families. That is, until the economy takes a turn and it slides into a recession.  When a recession hits, it can leave taxpayers scrambling as they try to pick up the pieces of their lives and figure out what options they have for their next move.  For many, a recession is the worst thing that could happen to them, as it could put your job is at risk, lower your wages and bring your employment growth to an abrupt stop. With current talks of a possible recession, it is a scary time for many Americans who do not know what the future holds. Here are a few tips to help prepare for a recession in order to protect yourself.

Make sure you have emergency savings

We can’t emphasize this enough! Having emergency savings can give you the cushion you need if the economy takes a downturn or if you lose your job. However, we all know accruing a large sum of money in a savings account is easier said than done. If you want to beef up your savings, there are options available to you, and getting a side gig such as driving for companies like Uber or Lyft can also help boost your savings. 

Pay down your debt

If you have credit card debt, vehicle loans, student loans, or other kinds of debt, it is important that you focus on paying this down. The faster you pay it off, the less you will have to pay in additional interest, which could prolong the amount of time you are holding onto your debt obligation. Lowering your total debt will allow you to have much more disposable income which could be placed in your savings that can be used in times of emergency or hardship.

Live within your means

The holiday season is in our midst, which means family gatherings and plenty of food. Everyone also looks forward to the holidays because of all the shopping that gets done! With Black Friday and Cyber Monday just around the corner, everyone is getting ready to spend big on presents for both themselves and their family. It is important to remind yourself that you don’t want to bleed your wallet dry.  Instead, try to be cautious of the frivolous spending that is often done during this time. Regardless if you are celebrating a holiday or not, it is recommended that you set up a budget for yourself to ensure that you’re not overspending. Just doing this can help save people money – and prevent them from going further in debt.

With just a few simple adjustments to your spending habits, you can have more money in your pocket in case the economy turns south. It is important to have a savings plan in mind to prepare for worst-case scenario situations. Whether you are worried about a recession or not, you should always put money aside and these several tips will help you build a solid financial foundation regardless of how the economy is doing.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

By |Tax Returns|Comments Off on How to Prepare for a Recession