Tax Relief Solutions

The Complete Guide to Tax Relief for Small Businesses

If you own a small business, you are entitled to claim tax credits that will help reduce the total amount of taxes you may owe to the government.

Tax season for small businesses can be a confusing time for many business owners, especially if they do not know what they qualify for. Optima Tax Relief helps break down everything small businesses need to know when it comes to filing their taxes or seeking tax relief.

How much Tax does a Small Business pay?

Taxes can be complicated, which is why many small businesses struggle come tax time to understand why they have a tax liability. Some business owners may not even know the corporate income tax rate or what tax cuts they may be eligible for. In addition to income taxes, businesses are also responsible for paying their payroll taxes, unemployment taxes and many others.

According to the Small Business Administration, small businesses are expected to pay an average of 19.8% in taxes based on the type of small business they have. Small businesses with one owner can expect to pay a 13.3% tax rate on average while small businesses with more than one owner will pay an average of 23.6%. Small business corporations, such as small S corporations, will pay an average of 26.9%.

Small Business or Self Employed?

The terms “small business” and “independent contractor” are both commonly used to define a self-employed individual. These two terms are often confused with each other; here is how to tell the differences.

A small business ownership is defined by having others who work for you either as independent contractors or employees. If your business does have employees, you oversee their taxes and are responsible for obtaining Workers’ Compensation Insurance in order to meet your state’s requirements.

Self-employed individuals are responsible for filing a self-employed tax return and paying quarterly estimated taxes if they are expected to owe at the end of the tax year. Self-employment taxes are made up of Social Security and Medicare taxes that are typically withheld from a full-time employee’s paycheck.

Savvy self-employed workers might file their taxes quarterly to avoid penalties and a larger tax bill at the end of the year. For those who are in a self-employed partnership, taxes are typically paid by each member of the partnership based on their income or losses.

If you own a business or are self-employed, you can reach out to a licensed bookkeeper or accountant for guidance to get the most out of filing your taxes and to avoid ending up with a potentially avoidable large tax bill.

Top Small Business Tax Deductions

  • Advertising and promotion costs are considered miscellaneous expenses and if they are ordinary and reasonable, they can be deducted on a small business tax return.
  • Business meals can be deducted both individually and in groups with some limitations.
  • Business insurance expenses can generally be deducted for the ordinary and necessary cost of insurance if it is for your trade, business, or profession.
  • Business interest and bank fees can be deducted based on the interest charged both on business loans and business credit cards. Deductions can also be used to write off any fees and additional charges for a business bank account and credit card.
  • Car or Truck Expenses can be deducted if you own a business or are self-employed and use your vehicle for business-related purposes.
  • Depreciation can be deducted in order to reduce the value of an asset over time due to its age, wear and tear, or decay.
  • Education can be deducted if it maintains or improves skills required for your current job. Tuitions, books, supplies, lab fees, and similar items can also be deducted.
  • Employee Benefit Programs and Qualified Retirement Plans can mostly be deducted but are subject to limits on contributions that are to a retirement plan.
  • Home office expenses can be deducted if you use your residence regularly and exclusively as a principal place of business or a place to meet customer or clients.
  • Interest can be deducted on a business loan as long as you are using your loaned funds for business purposes.
  • Legal and professional fees that are related to running your business are considered deductible. This includes fees charged by lawyers, accountants, bookkeepers, tax preparers and online bookkeeping services.
  • Moving expenses directly related to the moving of business equipment, supplies, and inventory from one business location to another can be deductible.
  • Rent expenses can be deducted if the rent expense is for property solely used for business.
  • Salaries and benefits paid to an employee are tax-deductible expenses if they are deemed to be ordinary and necessary.
  • Supplies for the offices such as printers, paper, pens, computers, and work-related software can be deducted.
  • Travel expenses such as the standard mileage rate, as well as business-related tolls and parking fees can be deducted for your vehicle. Lodging and non-entertainment-related meals can also be considered deductible.
  • Utilities such as real estate taxes, repairs, maintenance, and other related business expenses can be deducted. 

How do LLCs Avoid Taxes?

Having a limited liability company, otherwise known as an LLC, is a legal entity that allows individuals to own and operate a business. LLCs are popular because they offer the same limited liability as a corporation but are much simpler and less expensive to run.

An LLC provides income tax flexibility compared to a sole proprietorship, partnership, and many other popular forms of business organizations. The taxation of an LLC is defined as a pass-through. This means that LLC’s earnings can be passed straight through to the owner or owners without having to pay corporate federal income taxes first.

The IRS also allows an LLC to determine which way their business will be taxes. Owners can choose to be taxed as a sole proprietor, a partnership, an S corporation, or a C corporation.

How can a Small Business Avoid Paying Taxes?

Here are five ways to reduce your taxable income on your small business:

  1. Employ a family member. The IRS allows a variety of options when deciding whether or not you want to employ a family member, all with the potential benefit of sheltering income from taxes. For example, if you have a sole proprietorship, you do not need to pay social security, Medicare and Federal Unemployment Tax if you are employing your children.
  2. Start a retirement plan. If you own your business, then you give up the 401(k) match that is matched by an employer. However, as a small business owner there are multiple retirement account options that can maximize retirement saving and allow you an individual to rake in the benefits.
  3. Change your business structure. Small business owners should consider a Limited Liability Company (LLC). Small business owners may be able to eliminate or decrease the employer-half of taxes for Social Security and Medicare taxes.
  4. Deduct travel expenses. You may be able to reduce your taxes if your job requires that you travel a lot. Although business travel is deductible, it is important to keep in mind that personal travel cannot be added to your business tax return.
  5. Save money for healthcare. The best way to reduce small business taxes is to put aside money for healthcare needs. Small business owners can accomplish this by using a Health Savings Account (HSA) if you have an eligible high-deductible health plan.

Hire a Tax Professional from Optima Tax Relief

Optima Tax Relief is a tax resolution firm with more than 25 years of experience that specializes in providing tax relief to individuals and small business owners that are struggling with IRS or State tax issues. Small businesses that need assistance with filing their taxes or getting out of collections should consider using Optima’s services to get compliant with the IRS.

If you need tax assistance, click here to get your free consultation.

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The Complete Guide to Hiring a Tax Professional

Most people require assistance when it comes to preparing and filing a tax return. Some may even find themselves having to provide additional information to the IRS and do not know what it is or where to find it.

Hiring a tax professional could save individuals both time and money when dealing with the IRS. Tax professionals can also prepare tax returns, help file income taxes, and assist taxpayers when it comes to dealing with the IRS, tax notices, tax liabilities, audits, and more.

The Benefits of Hiring a Tax Professional

  • Tax professionals can resolve your tax issues and answer any tax questions you may have.
  • It can save you time and money.
  • Tax code can be difficult to understand on your own.
  • Your tax issues will be resolved in a timely manner.
  • You can avoid making simple mistakes that could be costly.
  • Tax professionals can advise you on the best money-saving tax planning.
  • A tax professional can also review your past tax returns to ensure they were filed accurately.
  • You can reduce the risk of an audit.

Types of Tax Professionals

There are various types of tax professionals who specialize in focused areas of tax relief or tax prep and carry specific professional licenses.

  • Certified public accountants or CPAs can provide a variety of services such as:
    • Maintaining financial records.
    • Examining financial statements.
    • Providing auditing services.
    • Preparing tax returns.
  • Some CPAs specialize in tax planning and preparation such as:
    • Tax audits.
    • Payment and collection issues.
    • Appeals.
  • Enrolled agents are trained to find federal tax matters and are licensed by the IRS. Enrolled agents can assist with the following:
    • The preparation of both individual and business tax returns.
    • The representation of clients.
    • Other aspects of being a tax professional.
  • A tax attorney is licensed by the state to practice law. Most states require an attorney to have a law degree and pass a test administered by the state (bar exam). Tax attorneys can assist taxpayer with:
    • The preparation of tax returns.
    • Tax planning.
    • Providing advice to clients on long-range strategies for reducing their taxes.
    • Like CPAs and EAs, tax attorneys have unlimited rights to represent a client before the IRS.

Areas of expertise

There are a range of services that tax professionals can provide to taxpayers that can help them understand their taxes better. Based on what service you need, choosing the right tax professional or tax preparer can help you get back on track with your taxes, small business, and much more.

  • Enrolled Agents are IRS-authorized tax professionals who work alongside the U.S. Department of the Treasury by providing representation to individuals who need tax assistance.
  • Certified Public Accountants (CPAs) have state certifications to practice accounting. These experts can help individuals navigate certain tax situations. CPAs are licensed to represent taxpayers before the IRS.
  • Retirement tax professionals can help individuals know how their retirement options will impact their taxes. These types of tax professionals have received advanced training in tax preparations specifically for retirement plan contributions, distributions, and rollovers.
  • Small Business/Sole Proprietor tax professionals specialize in working with small businesses’ tax returns and educate their clients on how to properly prepare both their personal and company returns. These types of tax professionals have specialized training in sole proprietors, partnerships, and S corporations.
  • Investment Income tax professionals specialize in big or small investments, and gains or losses. These tax professionals also show your current and future tax situations.
  • International Taxation tax professionals assist individuals who have lived or worked abroad. These tax professionals are trained in international taxation which includes, claiming foreign earned income exclusions, the foreign tax credit, or treaty benefits for nonresident aliens.

Professional Licenses

Enrolled Agents (EAs) and Certified Public Accountants (CPAs) are both experienced professionals who maintain high ethical standards. The main difference between an EA and CPA is that an EA specializes specifically in taxation. CPAs can provide a wider scope of tax services for individuals.

Working with an EA would be beneficial for those who have IRS issues such as individuals who are in collections or dealing with an audit with the IRS. An EA would be best suited for someone who needs assistance with the IRS to help them with their tax concerns. EAs are also a great option for those who need tax preparation assistance and planning advice for both individuals and businesses.

CPAs specialize in tax preparation that can help individuals identify both their credits and deductions that can help them qualify for an increase in their refund or help lower their tax bill. CPAs are also beneficial if someone needs their tax information compiled, reviewed, or audited. 

When should I hire a Tax Professional?

You should hire a tax professional if you are short on time, are unsure how to file your taxes correctly, or feel overwhelmed by IRS forms with preparing your taxes. Tax professionals can help answer tax questions that you may have and even resolve most tax issues you may have.

The tax code can be very complicated and if you are unsure on how to handle your tax matters, a tax professional can assist. For example, a tax professional can help reduce the risk of any audit and know how to deal with the IRS on your behalf if you do end up being audited. Tax professionals can also help taxpayers avoid making costly mistakes on their tax return such as missed deductions or triggering an IRS letter. Tax professionals can also review previous tax returns to see if there were any errors and needs to be amended.

How to find the right Tax Professional for you

Individuals searching for tax assistance should follow these steps in order to find a tax professional who best fits their needs:

  1. Confirm your preparer has a tax identification number (ITIN).
  2. Make sure to confirm tax fees to ensure you are not being overcharged.
  3. Avoid tax preparers who do not e-file tax returns.
  4. Make sure that your tax preparer signs their name and provides their Preparer Tax Identification Number (PTIN) on your tax return.
  5. Make sure your tax professional can respond to the IRS. Enrolled agents, CPAs and attorneys that have a PTIN can represent you when it comes to IRS audits, payments, and collection issues.

10 Questions to ask a Tax Professional

  1. Do you have an IRS-issued Preparer Tax Identification Number (PTIN)?
  2. How do you keep up with the latest tax law? Are you regularly taking education courses?
  3. Do you offer a free initial consultation?
  4. Will you be the one preparing my return or someone in your office?
  5. Do you offer IRS e-file, and will my tax return be submitted to the IRS electronically?
  6. Will you keep my records and receipts on file? How long will you keep my records for?
  7. When do you require payment?
  8. When can I expect to receive my completed tax return?
  9. What happens if I get audited?
  10. Do you outsource your tax preparation?

Things to look out for when hiring a Tax Professional

Taxpayers should be aware of any red flags they experience when looking to hire a tax relief professional. Here is what individuals should look out for before hiring a tax professional:

  • Check the preparer’s qualifications.
  • Review the preparer’s history.
  • Ask about services and fees.
  • Make sure that the preparer offers e-filing.
  • Ensure your preparer has open availability if you have additional questions regarding your taxes.
  • Never sign a return if your preparer has added their name or PTIN.

How much does it cost to hire a Tax Professional?

The average cost of hiring a tax professional will depend on the complexity of the case that they are working on.

Consequences of not Hiring a Tax Professional

The federal tax penalties you could face by not hiring a tax professional to help you prepare your taxes could far outweigh the cost of soliciting tax help. Here are the repercussions individuals could face if they choose to not hire a tax professional:

  • Filing your own taxes could be time-consuming and confusing if you have never filed before.
  • You can miss out on tax preparation fees that could have been deductible.
  • You could miss out on certain credits or deductions if you are not aware of them.
  • If you get audited, you will not have a tax professional that can assist you through the process.
  • Filing your own taxes could lead to you making avoidable mistakes that could cause you problems with the IRS down the road.

Tax Relief Services at Optima Tax Relief

Optima Tax Relief offers tax relief services to individuals who are struggling with their IRS or state tax debt. Taxpayers that need assistance with tax preparation, setting up a payment plan with the IRS, getting out of collections, resolving an audit, or are looking to see if they qualify for a possible reduction in their total tax debt, should consider using Optima’s services.

You can sign up here to get a free consultation from one of our experienced tax professionals.

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Tax Implications when Buying and Selling Stocks During a Market Downturn

The stock market can be extremely volatile, especially throughout the entirety of this year due to the pandemic, businesses closing down, and unemployment numbers increasing, and of course, the presidential election that just took place.

Millions of American invested in the stock market and took advantage of stock prices when they hit their lowest while millions of others chose to sell the current stock they had in order to avoid any additional losses they could face in the near future.

If you currently invest in the stock market or sold your stocks this year, you may be wondering if you will face any tax implications when it comes time to file your taxes. Here is everything you need to know about reporting your stocks on your tax return.

Taxes on Capital Gains

Shares of stock that were sold at a higher rate compared to when you purchased them means that you will be responsible for reporting and perhaps paying on any capital gains you may have created. One thing to consider when selling during a downturn is how long you’ve had your stock for. You may have a tidy gain even if it has fallen from its previous highs.

Long-term vs. Short-term Capital Gains

Taxpayers that have a gain on a sale of security they have held for over a year will receive the benefit of lower long-term capital gains tax rates depending on their income. However, if their gains come from the sale of a stock that has been held for one year or less, their stock sale will be taxed as a short term capital gain.

Offsetting Capital Gains with Capital Losses

If you’ve sold losing stock and have a capital loss, you can offset your losses with your capital gains. This is also known as tax-loss harvesting meaning investors analyze their capital losses so they can offset their capital gains.

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 Taxpayers need to know about Their Right to Finality

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.

For taxpayers who have been working with the IRS, it is important for them to know that they have a right to finality. Specifically those who have had their tax return(s) audited by the IRS should know that there is a Taxpayer Bill of Rights in place to protect them.

For taxpayers currently in the audit process, here is what you need to know about your right to finality:

  • Taxpayers have the right to know
    • The maximum amount of time they have to challenge the IRS’s position.
    • The maximum amount of time the IRS has to audit a tax year or collect a tax debt.
    • When the IRS has finished an audit.
  • The IRS typically has three years from the date that a taxpayer files their return to review for an additional tax for the year in question.
  • There are very few exceptions when it comes to the three-year rule. An exception would be considered if a taxpayer fails to file a return or files a fraudulent return. In either case, the IRS would have an unlimited amount of time to assess tax for the tax years in question.
  • The IRS generally has 10 years from the date of assessment to collect unpaid taxes. It is important for a taxpayer to know that the 10-year period cannot be extended unless a taxpayer enters into a payment plan or the IRS obtains court judgments.
  • A 10-year collection period may be suspended when the IRS cannot collect money because a taxpayer has an ongoing bankruptcy or there’s a collection due process proceeding involving the taxpayer.
  • A taxpayer will only be subject to one audit per tax year. The IRS has the ability to reopen an audit for a previous tax year if the IRS deems it necessary.

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

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How Long does it Take to be Placed on an IRS Agreement?

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.

Dealing with the IRS can be a stressful ordeal, especially if you owe a tax liability. When attempting to set up an installment agreement with the IRS, it can take anywhere from a few hours to a few months depending on the type of agreement you’re attempting to qualify for. 

The IRS allows taxpayers to set up payment plans, such as extensions to pay and “streamlined” installment agreements. For more complicated agreements, the IRS will require that you provide financial information in order to verify whether or not you qualify.

Here are your options when attempting to get on a payment agreement with the IRS:

Request an extension. If you need more time to pay off your tax liability, the IRS allows taxpayers to request an extension for up to 120 days. The IRS will grant this extension for any tax balance amount as long as taxpayers pay their balance owed before the deadline. If the bill is not reconciled before the due date, the IRS will place the taxpayer in question back into collections. 

Set up a simple payment plan. These agreements are typically called streamline installment agreements and can be set up by a taxpayer that has a tax bill of up to $50,000. Taxpayers must pay their balance back within six years and generally the IRS does not file a tax lien. 

If you were previously set up on an agreement and defaulted, you may need to contact the IRS to set up another one and provide your current financial information.

Taxpayers that owe between $25,000 and $50,000 will be required to pay by direct debit or a payroll deduction in order to avoid a lien being filed against them. The typical time frame to set up this agreement is between 4-6 weeks.

Request a payment plan for a tax bill over $100,000 OR currently not collectible status. For those who have a tax balance over $100,000 or you’re financially strapped and unable to pay back the IRS within an 84 month period, the IRS does provide assistance. A taxpayer can request a currently not collectable status if they are in financial hardship and don’t have the ability to pay their tax liability. 

A taxpayer must submit their financials and prove that they are in a hardship in order to qualify for this agreement. The IRS typically files a tax lien for those who owe more than $10,000.

The agreement can be requested over the phone however, it can take months to complete. This is because the IRS requires a taxpayer’s most current financials as well as additional detailed information. If this agreement is requested via mail, it will typically take the IRS 1-2 months to consider your request and could even ask that a taxpayer forward more information if they deem the documentation they have on file is insufficient. 

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

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Why You Might Owe After Filing Your Taxes

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.

There are many reasons why you might owe a tax balance when it comes time to file your taxes. You may wonder how this could have happened, and you may not even be sure of what you can do to avoid the same problem next year. There are solutions to ensure you don’t accrue a liability when you file in the future; here are the five most common reasons why you might owe a tax balance and how you can prevent owing the IRS again come next tax season.

  1. You didn’t withhold enough from your pay. Double check your federal and state withholdings on your paycheck to see how much is taken out every time you get paid. The IRS offers tools for taxpayers to use when they want to adjust their withholdings but don’t know how much to take out.  
  2. Income that is not subject to withholding. If you invest in stocks, sell stocks, or even if you receive unemployment benefits, this will make your income appear to be much bigger than it actually is. This could potentially lead to you owing a tax balance when you file your taxes.
  3. Failure to make estimated tax payments. If you are self-employed/1099 earner, you typically don’t have taxes withheld from your earnings. It is up to the taxpayer to determine how much taxes they should be withholding and making these estimated tax payments to the IRS either monthly or quarterly.
  4. Filing Changes. If you’ve had big life changes within the last year such as getting married, divorced or having a dependent, it can affect your filing status and what credits/write-offs you’re eligible for.
  5. You filled out your W-4 wrong. If you just got a job or are in the middle of a job change, it’s important to carefully fill out your W-4 information. A common mistake that a taxpayer makes when filling out this form is failing to put in their correct withholding, which could lead to owing a tax balance at tax time.

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

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Is a Tax Relief Company Beneficial for You?

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 unable to afford paying your taxes on time and fear that the IRS will penalize you because of it, hiring a tax relief company may be the best choice for you. So what should you look for when you are exploring which tax relief company may be the best fit for you?

Here are the tax relief options you should look out for before choosing a company:

Release of Liens and Levies: Typically a tax relief company will offer a service where they will either assist in releasing any liens or levies that have been placed against you or work towards avoiding having them ever be placed on you.  Typically they can do this in two ways, one by filing your taxes to ensure that you are fully compliant with the IRS and two, negotiating a payment plan to get you out of collections. 

Payment Plan: One of the main services you should also be on the lookout for is whether or not the tax relief service offers to negotiate a payment plan with the IRS on your behalf. Typically, they will attempt to get you the best resolution possible by providing a compilation of all necessary expenses to the IRS in order to prove you are unable to pay your tax balance in full.

You can expect a payment plan to be a monthly expense that you will take on until your liability has been paid in full. 

Offer in Compromise: If you are facing true financial hardship and don’t have the means to pay back your IRS debt, then an Offer in Compromise (OIC) might be something you could possibly qualify for. If you do qualify, you could settle with the IRS for a lot less than what you owed – or the IRS might wipe all your debt away altogether. When searching for a tax relief company, inquire if they review their clients for OIC and if they do this at an additional charge.

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

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How to Find a Good Tax Lawyer

When looking for tax relief, how to find a good tax lawyer is critical.

Tax law is complicated and highly technical. In the legal world, the field of tax law is considered one of the more demanding specialties. Tax lawyers deal with a wide range of situations and the rules and laws are continually changing. Not only does a tax lawyer need to have superlative legal skills to succeed, they also need certain personality traits. Find a good tax attorney to help you with tax relief and avoid dealing with the IRS directly.

What qualities make a good attorney?

Consider these academic and professional guidelines for tax attorneys when looking for tax relief.

  • A good tax attorney has specific experience in the field of taxation. For example, are your tax issues related to a real estate transaction? Or are you running a business and need assistance with a sales tax challenge? Or with filing your income tax? A good tax lawyer will concentrate within certain fields and will be familiar with the laws and the protocols needed to address those particular areas of tax relief.
  • Being associated with an office that is exclusively focused on tax related matters is another important quality for a tax attorney.
  • Having an LLM (Masters Legal Degree in Law) in taxation is a sign that your attorney is serious about his profession and is academically qualified to work within the field of tax law.
  • A good tax lawyer has firsthand experience working with the IRS.
  • Successful tax attorneys are continually refreshing their knowledge and keeping up with the continually changing nature of tax law.
  • Tax lawyers should be in good standing with the Better Business Bureau and their local state bar.
  • Good tax attorneys keep their clients informed and up-to-date during the tax relief process.

Skills of a Good Tax Lawyer

Tax attorneys also need to have certain personal skills and abilities to succeed in the area of tax relief. Consider these skills when finding a tax lawyer.

  • A good tax lawyer has high level oral communication skills. They are the intermediary between you and the tax authorities. They need to be able to explain complicated issues and represent your case in a clear manner.
  • Above average written communication skills are another important qualification of a good tax attorney. Tax lawyers write complaints, documents and lawsuit responses.
  • Critical thinking skills are necessary when your attorney is working on a tax relief case. A good tax lawyer can take a look at a case, pick up on any weaknesses, and choose which course of action to take based on the specifics of the case.
  • Having an analytical and organized personality is highly important for a tax attorney. Tax relief cases are usually very complicated and involve numbers and specific, detailed information. A good tax attorney will be able to stay on top of all the elements of the case.
  • Good interpersonal skills are critical for a tax attorney to work effectively with a client in a tax relief case. They need to be able to communicate effectively with both the client and with the tax authorities.
  • Having a committed and persevering personality are necessary qualities for the person who will be representing your tax relief case.

Taxes are complicated and the laws are constantly changing. Your financial future is often at stake in a legal situation involving taxes. Getting appropriate representation for tax relief is very important and knowing what makes a good tax lawyer is a very important first step in getting a resolution.

Need some tax relief? Solutions start here. Learn about tax reduction strategies with Optima Tax Relief. Contact us for a tax consultation today.

Is Working with the IRS Your Only Option?

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 have the option to work with the IRS directly or hire a tax professional to help resolve their tax situation.
  • Working directly with the IRS to settle tax debt could prove to be extremely time intensive. 
  • A tax professional will work with the IRS on your behalf to get you compliant and to negotiate the best possible outcome for you.

If you just found out you owe a tax liability or you’ve known for some time that you’ve had an outstanding balance with the IRS and you have no idea how you’re going to pay them back, don’t freak out. There
are options the IRS provides for taxpayers to get compliant as well as tax professionals who can walk you through every step of how to get you on the right track with your tax debt. 

Should you choose to work directly with the IRS, they will require that you have filed all your taxes, including the current tax year. If you have some tax years that have yet to be filed, you may have to either file your own taxes or go to a tax preparer to file for you. Once this is complete, the IRS will request proof of your most recent income to review what payment agreement you qualify for. The IRS will then present you with options you have for a monthly payment plan. Although the IRS will review some of your expenses and consider them as a factor when deciding how high your payment plan should be, the process to see if you can get it reduced can be extensive and time-consuming.

If you decide to go with a tax firm, they will negotiate on your behalf so you don’t have to deal with the IRS. If you have unfiled tax years that need to be filed, a tax firm will typically assist you with all your unfiled years and make sure that you’re up to date with all your taxes. Once your returns are filed and your financials have been reviewed, a tax professional will usually go over payment plan options you may qualify for and explain to you why you qualify for those options. After your options have been discussed with you, a tax professional will begin negotiations with an IRS agent and will attempt to get you the best possible outcome.

If you have a tax balance that you’re looking to settle with the IRS, weigh your options. Research whether it is more feasible to negotiate with the IRS directly or to have a tax professional assist you throughout the process. Whichever you decide to go with, it will still be beneficial to you since both will get you out of collections and compliant with
the IRS.

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

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How to Avoid Getting Scammed by a Tax Preparer

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.

worried man
  • Be wary of scammers pretending to be tax preparers.
  • Look for a tax preparer that is available year-round to assist you with all your tax questions.
  • Make sure that your tax preparer has a PTIN.
  • Don’t give any personal information away to a tax preparer if you’re still shopping around.

Tax season is hard enough to get through with all the documents you have to provide and the constant worry if you’re going to owe a tax debt. For most, it never crosses their mind that their tax preparer could be the one that is committing fraud by stealing their client’s personal information, refunds, or identity. 

Here are a few things to lookout for when choosing a tax preparer:

  • Do your research. When searching for a tax preparer make sure to verify that they have a history of working with clients and have successfully filed their taxes.
  • Check their availability. It is recommended that you find a tax preparer that works year-round to answer any questions that may arise about your tax return. 
  • Ask for their PTIN. Ask your tax preparer for their Preparation Tax Identification Number (PTIN). Paid tax preparers are required to register with the IRS and must include their PTIN on tax returns they have filed. 
  • Ask about their fees. Look out for tax preparers who charge fees based on the percentage of your refund or boast that they can give you a larger refund compared to other tax preparers. 
  • Don’t be quick to give your information away. Avoid giving personal information away like your social security number to tax preparers when you are just requesting a quote. 

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

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