Tax Planning

Avoid any Tax-Time Surprises by Following these Simple Rules

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.

  • Taxpayers could potentially qualify for credits on their tax return that could either lower their tax balance or produce a larger tax refund. 
  • The IRS recommends that taxpayers check their withholdings throughout the year to ensure they are on the right track.
  • If you’re a 1099 earner or you’re not withholding enough from your paychecks, you will most likely need to make estimated tax payments throughout the year.

Tax filing season is upon us which means there may be some surprises you encounter along the way that may or may not be unpleasant. So what can you do to avoid being caught off guard when filing your taxes? 

Below are a few ways to prepare to get the most out of filing your tax return:

Understand what you qualify for. There are a vast amount of tax credits that you could potentially qualify for. The IRS isn’t going to tell you what you’re allowed to place on your tax return, so it is up to you as a taxpayer to do your own research or inquire with a tax professional to see if the type of expenses you have incurred can possibly go on your return. A few types of credits that you may qualify could be the following:

  1. Lifetime learning credit– this is to help offset the costs of post-secondary education; eligible students could earn up to $2,000. The credit is available to those who make $58,000 or less, or for married couples earning $116,000 or less. 
  2. Child and dependent care credit – this is to help offset the cost of babysitting and daycare. This is available to taxpayers who have children under the age of 13.
  3. Savers tax credit – Those who qualify have made eligible contributions to retirement plans such as a 401K. Taxpayers with the least income will qualify for a larger credit – up to $1,000 for those filing as single, or $2,000 for those filing jointly.

Do a withholding checkup. The IRS recommends that taxpayers check their withholdings throughout the year to ensure they are on the right track to receive a refund and to avoid owing at the end of the year. If your income has increased during the year, it is advised that you do a checkup to ensure that you are withholding enough or if more needs to be taken out of your paycheck. 

Make estimated tax payments. If you’re a 1099 earner or you’re not withholding enough from your paychecks, you will most likely need to make estimated tax payments throughout the year to ensure you don’t owe a tax liability come next filing season. The IRS allows taxpayers to make their payments via ground mail or online. Taxpayers are required to make their payments quarterly or monthly to ensure they do not receive a penalty when they file their taxes. If you need assistance calculating your estimated tax payments, the IRS encourages you to use their withholding estimator to see how much you should be making in payments. 

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

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Why You Should Review Your Tax Return Before Signing Off

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.

  • When reviewing your tax return, double-check that all income you received has been properly reported.
  • Ensure your name, social security number, and your accounting and routing number are accurate.
  • If your tax return is missing or contains inaccurate information after you signed off on it and it has already been filed, you may need to get it amended.

If you are getting ready to file your taxes, it is important to understand that as a taxpayer, you are fully liable for the information placed on your tax return once you sign off on the dotted line. Although you may have gone to a tax preparer to file on your behalf, it is still your responsibility to ensure that everything adds up correctly and that the information entered is accurate. Should you fail to do so, you could potentially face consequences with the IRS down the road. 

Here are a few ways to make sure that your tax return is accurate before sending it off to the IRS:

Double-check that all your information is on your tax return. Do not just sign off on a completed tax return, take the time to actually review the information that has been placed on it. If there is any information that is missing, especially your income, you could run into some issues with the IRS and it may also cost you more money. When reviewing your tax return, double-check that all income you received has been properly reported. You can double-check the amounts by reviewing your W2 or 1099 forms provided to you by your current or past employers. 

Look for incorrect information. Something else that you should check before signing off on your tax return is if your name, social security number, and your accounting and routing number are accurate. Ensuring that all your information is correct on your tax return will help you avoid any delays in your tax return and allow you to get your tax refund as quickly as possible.

Avoid having to have your tax return amended. If you realize your tax return is missing or contains inaccurate information after you signed off on it and it has already been filed, you may need to get it amended. In order to avoid raising any red flags with the IRS, make sure that you’ve provided all tax relevant information to your preparer so they can include it on your return. In the event that you fail to provide certain information to your tax preparer, you will need to request that the tax preparer amend your tax return to include the missing information. This will not only cost you more money but also your time.    

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

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Why Taxpayers Should be Prepared for Natural Disasters

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.

  • Learn how to recover lost or stolen tax documents in order to file your taxes. 
  • Reach out to the tax preparer that filed your returns and request copies.
  • If you used a tax filing software to file your taxes, you can log back in and review past returns that you previously filed.
  • Request a copy of your transcripts from the IRS either electronically or by mail.
  • Upload digital copies of your past tax years onto a secure server.

Tax season is such a chaotic time of the year, especially when it comes to scheduling tax appointments, finding the right tax preparer, and getting all your documents in order. What most people can’t plan for is when a natural disaster hits that could potentially devastate their community, their home, and any important documentation that was stored in their home. 

So what can you do if a natural disaster has caused you to lose tax documents? Here are a few ways that will help you recover your important information and get back on track with filing your tax return:

  • Contact the IRS. If your area has been federally declared a disaster area, you can call 866-562-5227 and speak with an IRS agent who is specialized to assist taxpayers affected by natural disasters.
  • Get a copy of your tax return. If you are in need of past tax returns because they were damaged in a natural disaster, you can always reach out to the tax preparer that filed your returns and request copies. If you used a tax filing software to file your taxes, you can log back in and review past returns that you previously filed.
  • Request a transcript. If you are unable to access your previous tax years, you can always request a copy of your transcripts from the IRS either electronically or by mail. 
  • Create digital copies. Upload digital copies of your past tax years onto a secure server so if a natural disaster ever occurs you will have back-up copies on file to refer back to.

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

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How to make a payment to 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.

  • Taxpayers can pay the IRS directly via their savings or checking account.
  • The IRS allows taxpayers to use their debit or credit cards to make online payments. 
  • If a taxpayer is unable to pay back their tax debt, they can negotiate a payment plan with the IRS. 

If you owe the IRS, or know that you will owe after filing your taxes, you need to be aware of the options for paying back the IRS to avoid falling into collections. The IRS provides several payment options where a taxpayer can either pay the IRS right away or make arrangements to be on a monthly payment plan. 

Here are a few ways you can make payment to the IRS:

  • Pay in full from checking or savings accounts. Taxpayers have the ability to pay their tax bills in full by directly using their checking or savings account and paying online on the IRS website. You can schedule up to 30 days in advance and can cancel your payment or switch your method of payment up to two business days before your payment is taken out. 
  • Use credit or debit cards. The IRS allows taxpayers to use their debit or credit cards to make payments either online or over the phone. The IRS does not charge any hidden fees, although the convenience fees may vary depending on the type of credit card that is used. 
  • Setting up an installment agreement. If a taxpayer is unable to pay back their tax liability to the IRS, the IRS will provide the option of a monthly payment plan so they can make controlled, manageable payments until their tax debt has been satisfied. Taxpayers are required to file all required tax returns before negotiating an agreement. 

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

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How to Avoid Tax Fraud During Tax Season

man working late at night

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.

  • Tax Season leaves many taxpayers vulnerable to identity theft and scammers.
  • Scammers can pose as tax preparers and steal your personal information. 
  • Protect your social security and bank information to ensure it does not end up in the wrong hands. 
  • Ask your tax preparer how you can avoid your personal information getting leaked if there is a data breach. 

Most people don’t realize how vulnerable they are to fraud during tax season.  The scary truth is that during this time of year, many identities are stolen and fraudulent tax returns are unwittingly filed on behalf of a taxpayer. In order to protect yourself, it is vital to exercise caution and provide only the documents and information that are absolutely necessary. Below are a few scams to be aware of during tax time to help avoid becoming a fraudster’s next victim.

Phone and Email Scams

The most obvious way to protect yourself against scammers is to never give out your personal information to someone you don’t know, especially over the phone. If someone from the “IRS” is attempting to contact you over the phone or by email and asks for your social security or card information, don’t give it to them. The IRS almost never contacts via phone, instead preferring to send notices via mail.  Even if you do receive a call from the IRS, they won’t ask for your social security number – they already have that information.  If you feel uncomfortable about the validity of a call, hang up and call the IRS yourself – that way you know if what they’re telling you is true.

Accountant fraud

Be wary of scammers who will pose as a tax preparer and then rip off customers through refund fraud or identity theft. These phony accountants will tell you that they can get you a large tax refund and typically prey on low-income and non-English speaking taxpayers. 

Even if you go to a legitimate tax preparer, your information can still be exposed if there is a data breach. To avoid this happening – and being left vulnerable – ask your tax preparer what more you can do to protect your information in case of a breach.

Identity theft

Make sure to protect your social security number at all costs. Identity thieves will attempt to steal this information in order to steal not only your identity but your tax refund too. As long as you notify the IRS that your information has been compromised and your refund has been stolen, the IRS will work with you to provide your refund. However, it will take extensive time and paperwork to prove that your information was stolen.

Tax Season is now upon us, and it’s important to protect your personal information and ensure that it can’t be compromised. Always be wary of phone calls or emails that you receive claiming to be from the IRS, especially when they’re asking for your bank information or social security number. Also, do your research when looking for a tax preparer to file your taxes for you, and make sure they have their license, as well as positive reviews from previous clients. Lastly, make sure to monitor your social security number to ensure that your data has not been breached and your identity hasn’t been stolen. 

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

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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.

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What is the Minimum Income to File Taxes?

More than 43% of Americans don’t have to file a federal tax return–are you one of them?

While the IRS expects to receive more than 150 million tax returns to be filed this year, it is estimated that nearly 43% of Americans don’t have to file a federal tax return according to the IRS.

So how are millions of Americans avoiding this annual tedious task of having to prepare and file a tax return? Is there minimum income to file taxes?

Do I Need to Pay Federal Income Taxes?

The recent recession had a lot to do with the fact that nearly half the country is off the hook when it comes to filing a tax return. Many people faced a drastic reduction in their earned income, and now simply do not make enough money to meet the minimum requirements to file. Additionally, President Obama teamed up with Congress to boost existing credits and create new stimulus measures which have resulted in many people qualifying for tax benefits and credits which eliminate their tax obligation entirely.

What is the Minimum Income to File Taxes?

There is a minimum income to file taxes. If you are age 64 or younger, are filing as single and earned more than $10,000.00 in 2013 ($11,500.00 if age 65 or older), then you are among those who have to file a tax return with the IRS this year. If you were married at the end of 2013 and you plan on filing separate returns, you must file if you earned more than $3,900.00 in 2013.

* Is there a minimum income to file taxes for children?

These days there are more and more children working each year, oftentimes earning enough throughout the year to require that they file a return as well. This can be a complicated matter when trying to decide if the child should file a return and how that could affect their parents claiming them as dependents on their own return. Basically, a child must file a tax return if their earned income was over $6,100, however parents are still able to claim these children as dependents on their tax return if the child lived with them.

Even if you’re not required to file…

One important thing to consider is even if you are not required to file a federal tax return for 2013, you may want to still file a return as it may result in a refund owed to you. If you had income tax withheld from your paycheck or if you qualify for the EITC, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit, filing a return will most likely result in the IRS sending you a refund check.

A major tax credit that helps Americans reduce their tax liability is the Earned Income Tax Credit (EITC). The EITC was originally approved by Congress in 1975 to help working Americans (with a low to moderate income level) keep more of what they earned. According to the TPC, about 1 in 5 tax returns (close to 28 million) that were filed in 2010 claimed the EITC, resulting in over 60 million dollars in credit to Americans. For the 2013 tax year, working families with children that have annual incomes below $37,870 to $51,567 (depending on number of children) will be eligible for the federal EITC, as well as those without children that have incomes below $14,340.

According to the IRS, about three out of four people who file a tax return this year will receive a refund. Last year taxpayers received an average refund of $2,744, and the IRS is typically able to process that refund within 3 weeks. To get your refund from the IRS the quickest, be sure to e-file your tax return and opt for direct depositing your refund into your bank account.

Filing your annual income tax return can be a complicated and tedious task, but there are many benefits and credits available now to help reduce or even eliminate your tax liability. Even if you are not required to file a return, these tax credits can result in an unexpected refund from Uncle Sam. However, you have to file the return to receive the cash, so be sure to explore all of the available credits and deductions when preparing your return this year.

Need some help filing taxes? Optima Tax Relief offers tax consultation.

The Tax Mistake That Cost Me Thousands

Via LearnVest By Cheryl Lock ~

A tax mistake could cost you thousands. When my pay was direct-deposited into my checking account every two weeks while I was working my first full-time freelance job, I’d think, “Wow, that’s a decent amount of money. I can totally live off this!”

No one ever told me (and I never bothered to ask) why my paycheck seemed so large, so I lived it up for an entire year—eating out, going to plays, buying new clothes and taking trips. Then April rolled around: tax time. In all fairness, I knew that I hadn’t been paying freelance taxes on the money I was making as a freelancer. I just had no idea how much I actually should have been setting aside from each paycheck. I now know that I should have been saving at least 33% to 35% of every paycheck to put toward taxes. Hindsight … you know what they say.

In the end, I owed a little over $3,000. My accountant practically cried when she gave me the news—and a full-blown panic attack.

Well, it turns out that I’m not the only one befuddled by taxes—especially now that the new tax rules have been put in place.

Another Tax Mistake – a $40K Tax Mistake

In 2010, Heidi Saucedo’s husband was working in Egypt for two months. While he was away, Saucedo received an envelope from the IRS, which revealed a bill for $40,000.

“After I picked myself up off the floor, I had to contact the hubby … by Facebook chat,” she says. “Can you imagine going through all the back-and-forth required for that via chat?”

The problem was that Heidi and her husband had not filed a tax return in five years since money was tight while she stayed home with their two children. “I just didn’t understand that we could possibly owe nothing—I thought we would be charged for everything we owned,” Saucedo says. “I knew this was foolish, but we were living paycheck to paycheck, and we were too proud to ask for assistance.”

Her husband was also working under a 1099—meaning that he wasn’t a full-time employee, so he was taxed at the end of the year instead of out of every paycheck. “Apparently, I had ‘known’ this (my husband says that we discussed it), but to this day, I swear I had no clue,” Saucedo says.

After using TurboTax to figure out the tax deductions that hadn’t been included in that $40,000 bill (like standard deductions and the child tax credit), it turned out that they didn’t owe anything. “At the time, I chose not to go to a professional since the gist of the letter from the IRS was that all we needed to do was file our taxes,” Saucedo says. “I was pretty overwhelmed, and I didn’t have any money to pay a CPA, so I signed up for TurboTax.”

“The good thing was that when I began the search for anything and everything that I could get my hands on to rectify the situation,” Saucedo adds, “I realized that I love doing taxes. Never again will there be an unfiled return!”

LearnVest is the leading lifestyle and personal finance website for women.

The post The Tax Mistake That Cost Me Thousands appeared first on SuperMoney!. Need a tax attorney? Find one today with Optima Tax Relief.

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

tax time

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.

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

man at automotive shop

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.

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