Tax Relief Solutions

Summer Travel Plans? Stay Protected From Identity Theft

 

The warm weather is finally here and with it comes the busy travel season that so many people have excitedly been anticipating. Some have been planning for months in advance, booking flights abroad and hoping to fit as many countries as they can into their itineraries.

Be cautious of being a target for identity thieves before you start to head out on your summer adventure. Travelers are an extremely attractive target for identity thieves, especially if you’re traveling to a place you’ve never ventured to before. Any locals – or scammers! – can probably pick up on this. Many travelers also rely on public Wi-Fi to look things up pertaining to their trip. Add to this the fact that you are likely carrying around more documentation than usual, and you’ve got all the makings for a sizable bull’s eye on their back.

An American Express Spending & Saving Tracker revealed that 8 in 10 Americans have summer travel plans, with 72% of these planning stateside escapes and 15% traveling overseas. No matter how you dice it, there’s going to be a lot of movement in the skies and on the roads in the coming summer months.

With millions of people packing their bags and leaving their homes for adventures, retreats and getaways, there will surely be an uptick in opportunities for identity thieves this summer. Experian’s Summer Travel and Budget survey showed that identity theft personally affects nearly one in ten travelers and that one in five people have had sensitive information lost or stolen while traveling.

Below are quick identity protection tips for each stage of your summer travels and adventures:

 BEFORE YOU GO:

  • Check for any travel warnings or alerts for your destination country. The Department of State provides the latest security messages. It’s always best to be in the know about any crime – such as pick pocketing – happening in your destination country so that you can be as vigilant as possible.
  • Put only your last name and phone number on your luggage tags. Your full name and address are one too many personal details if put in the wrong hands.
  • Notify your bank and credit card companies of your travel plans. Many such companies now place freezes on accounts when they see suspicious activity like out-of-country use as a means to prevent fraud – it’s easy to avoid this inconvenience!
  • Don’t post any vacation plans on social media. It’s okay to be excited about your trip, but you don’t need to publicize it. You never know who could be lurking behind a computer screen happy to learn that your house will be unattended for a period of time.
  • Put a hold on your mail while you’re gone. An overflowing mailbox is a jackpot for an identity thief. It not only signifies that you’re away, but thieves can then steal the pieces that contain your personally identifiable information (PII).
  • Clean out your wallet and/or purse before leaving. Remove any receipts and expired cards, along with anything else you don’t absolutely need to be carrying with you. Keep only the credit and debit cards you know you will need to use while traveling. Less is more!

WHILE TRAVELING:

  • Limit your use of public Wi-Fi as much as possible. While these networks are incredibly convenient, they are very often unsecured. This means that any information you input while connected to the hotspot could be viewed by someone else. Never access your financial account or any other sites that require a password when using public Wi-Fi.
  • Use cash when possible and credit cards over debit cards. Travelers are often warned of the dangers of carrying around large amounts of cash. However, depending on where you are traveling, some merchants still practice questionable transaction processes – making cash a safer method of payment. In most cases though, using a credit card is considered safe. Furthermore, it’s almost always recommended to use the credit option of your card versus the debit option. If your card numbers ever get into the wrong hands, most credit card companies will quickly reverse or cover fraudulent charges, while recovering funds from your drained bank account can be more complicated.
  • Be cautious when using ATMs. Inspect the machine carefully before inserting your card. Fraudsters can attach card skimmers to the slot that capture your information when you insert it; very often, these look like they are part of the machine. Also, always shield the keypad when entering your PIN – scammers can also set up hidden video recorders. The safest ATMs to use are attached to banks in well-lit areas.
  • Lock up valuables and personal documents at the hotel. This includes boarding passes, confirmation emails, passports, and jewelry. Even hotel staff have been known to go through rooms while they are cleaning and steal items. Everything is much more secure in a safe!
  • Keep your phone password-protected. If you’re not the type of person to keep a password guard on your phone, make an exception while traveling. If your phone is ever lost or stolen, an identity thief could easily access banking apps and social media accounts.

WHEN YOU RETURN:

  • Check your credit card and bank statements often for any fraudulent activity. It’s best to catch fraud as early as possible so that you can take action immediately. This minimizes damage and makes resolution that much easier.
  • Check your credit report throughout the year. Federal law requires the three major credit bureaus to provide you with a free credit report once a year. You can stagger these free reports every four months from each bureau so that you’re seeing your report somewhat regularly. Make sure you recognize everything that’s on there – if anything doesn’t ring a bell, look into it!
  • Change your PINs and passwords after a trip. This is especially important if you logged into any accounts while on the road or accessed an ATM. Traveling can open you up to all kinds of vulnerabilities; don’t take the risk with your PINs and passwords.
  • Make sure you properly dispose all trip confirmation emails and boarding passes. This means shredding them before tossing them into the recycling bin. These types of documents contain more information than most people think. Barcodes on boarding passes can actually contain your frequent flyer information, and other such documents reveal itineraries and other personally identifiable information that identity thieves would be happy to misuse.
  • Lastly, now is the time to post about your adventure on social media. Now that you’ve returned, you can share all those stunning snaps you shot. We really do want to hear about how much you enjoyed your vacation!

Of course, nothing compares to the peace of mind you will receive from Optima’s ID Protection Plan, which includes services like suspicious activity alerts and identity monitoring that will provide you with an extra boost of confidence when you return from a trip. Most importantly, if you do fall victim to identity theft, our 24/7 Identity Theft Resolution Service Team will work to restore your identity and prevent further damage.

Learn more and enroll in Optima’s ID Protection Plan at https://optimatax.idprotectiononline.com/enrollment/.

Settle Tax Debt

It is indisputable that the Internal Revenue Service is one of the most powerful collection agencies in existence. The IRS has the authority to access every U.S. financial entity in its mission to collect back taxes. The IRS can even penetrate the cloak of corporate anonymity to affix personal liability to its officers, with the ultimate authority to decide just who is responsible.

settle tax debt

The IRS “Hammers”

Although there are some constraints, the IRS has vast powers, defined in its approximately 80,000-page Tax Code. Specifically, the IRS has the authority to:

  • attach a lien on a taxpayer’s property to protect the government’s ability to collect delinquent taxes,
  • apply an outright levy, which freezes cash, securities and investment accounts, and seizes whatever property the taxpayer holds for sale to pay the tax debt, including a significant portion of a taxpayer’s paycheck.

The IRS files a lien notice at the taxpayer’s local courthouse. An IRS lien is like an 800-pound gorilla: it acts as official notification that the IRS has first dibs on the taxpayer’s property. Third parties who are entangled within an IRS lien or levy — bank officers, employers, insurance brokers for permanent life insurance policies sold to the taxpayer — have absolutely no choice but to comply with IRS legal sanctions on the delinquent taxpayer.

Facing Tax Debt Realistically

Obviously, paying income taxes on time — or later with penalties — will forestall IRS liens and levies. The IRS auditor works under the premise that if the taxpayer has assets and owes taxes, and that tax debt takes precedence over any natural desire to preserve wealth.

Time Is Not On Your Side

On the other hand, for taxpayers who are in dire financial straits, there are options in getting out of tax debt. However, those options never include trying to stonewall the IRS, because time is definitely not on the taxpayer’s side.

The IRS Paper Trail

A formal notification process begins once the IRS determines that a taxpayer owes back taxes. It takes about six weeks from the first formal notification until the final notice is issued. At that point, the taxpayer has 30 days to appeal.

Once a lien or levy has been issued, the IRS has provisions to lift or remove them. Each provision has the goal of freeing up the taxpayer’s assets to make it easier to pay off the debt.

Time Payments And Offers In Compromise

An experienced attorney can apply for a time payment plan to settle delinquent tax debts in manageable monthly installment payments. The IRS favors direct bank debits, but taxpayers may also mail in paper checks or money orders.

Another option is an IRS Offer in Compromise, which, allows taxpayers to settle their delinquent tax bills by paying only a portion of what they owe. As you might imagine, there are strict eligibility requirements to qualify. The bottom line is that taxpayers must be able to demonstrate substantial financial hardship for the IRS to accept an Offer in Compromise.

Getting Professional Tax Assistance

It’s easy to become overwhelmed when attempting to navigate complex IRS regulations, voluminous and confusing instruction booklets and forms on your own. Owing money to the IRS can be a confusing and intimidating thing. It is hard to know what you’re supposed to do to settle that tax debt.

Especially if you are faced with the immediate threat of a levy, or wish to negotiate an offer of compromise, it’s wise to seek professional help. That’s where Optima Tax Relief comes in. At Optima Tax Relief, it’s our job to be in your corner, helping you to eliminate IRS tax debt.

Let Optima Tax Relief Fight For You

We actually work with the IRS and the state authorities every day on behalf of our clients, and we use our knowledge to benefit you. From day one, our experienced staff is prepared to offer representation to provide you with full legal protection while we negotiate on your behalf. Further, we are able to help you understand what you should — and shouldn’t — say to the IRS.

Your tax issues are not too big or too small for us. If you need help or have questions about preparing your tax paperwork, we can help you. If you’re facing liens, levies, wage garnishments, criminal action or other penalties, we can help you with that as well. And if you need someone to negotiate on your behalf or to represent you before auditors or revenue officers, we are prepared to do so fearlessly.

Now is the time to rely on the experience and dedication offered by Optima Tax Relief. Contact us today for more information on how you can settle your tax debt.

What Is an IRS Administrative Appeal?

courtroomIf you’ve been hit with an assessment from the IRS, for instance, as the result of an audit and you disagree with the results, you are entitled to present your case in Tax Court. However, an IRS administrative appeal may produce desirable results without the need to go to court. As a taxpayer, you are entitled to dispute the results of an IRS assessment through the administrative appeal process for any reason other than religious, moral or political, conscientious objections. The professionals at Optima Tax Relief can determine whether an administrative appeal is the right course for your situation.

IRS Administrative Appeal Categories

The IRS Appeals division operates as a separate entity from IRS offices that conduct investigations. The two types of administrative appeals available are Collections Appeal Process (CAP) or Collections Due Process (CDP) hearings. Administrative appeal hearings may be conducted by mail, telephone or in person. You may represent yourself or be represented by an accountant, attorney or individual enrolled to practice before the IRS. If your tax return was prepared by a third party who is not enrolled with the IRS, he or she may be a witness, but may not represent you.

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Submitting Your Request for Administrative Review

For assessments resulting from an audit of less than $2,500, you may approach the auditor directly or submit your request through the appeals system. Protests involving assessments of less than $25,000 may be submitted as a Small Case Request. Use Form 12203 – Request for Appeals Review, available from the IRS website, or the form referenced by your assessment. You may substitute a written statement including the items to which you disagree and your reasons for disagreement. Assessments of $25,000 or more require a Formal Written Protest including all of the following items.

  • Your name, address, and a daytime telephone number.
  • A statement of intent to appeal the IRS findings to the Office of Appeals.
  • A copy of the letter showing the proposed assessment.
  • The tax period(s) or year(s) involved.
  • A detailed description of each item with which you disagree.
  • The reason(s) for your disagreement for each item.
  • Facts supporting your position for each item.
  • Any law or legal authority that supports your position on each item.
  • The following penalties of perjury statement stated exactly: “Under the penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct, and complete to the best of my knowledge and belief.”
  • Your signature beneath the penalties of perjury statement.

If your request for appeal is prepared by your representative, he or she must substitute the declaration for penalties of perjury statement for individual taxpayers with a statement that includes each of the following elements:

  • An affirmation that he or she submitted the protest and any accompanying documents, AND
  • A statement of personal knowledge of stated facts in the protest and accompanying documents and a declaration that the facts are true and correct.

Collections Appeal Processindex

CAP generally produces faster decisions than a CDP. A CAP filed to protest a wrongful levy may be filed either before or after property has been seized, but must be filed before the property is sold. Filing a request for CAP within 30 days of the rejection or termination of an installment agreement prevents the IRS from issuing or executing a levy until the appeal has been settled. However, you cannot dispute owing additional taxes through a CAP. You are also barred from proceeding to Tax Court if you disagree with the conclusions of the CAP. You must file Form 9423 – Collection Appeal Request to initiate a CAP review. CAP can be used to address the following IRS actions:

  • Prior to or after the filing of a Notice of Federal Tax Lien
  • Prior to or after levy or seizure of property by the IRS
  • Proposed or actual termination of an installment agreement
  • Rejection or modification of an installment agreement
  • Rejection of proposed trust fund recovery
  • Denial of a trust fund recovery penalty claim
  • Denial of abatement request for late payment, late filing or deposit penalties
  • Rejection of an Offer in Compromise

Collection Due Process

Unlike the CAP, a CDP hearing allows you to proceed to Tax Court if you disagree with its findings. You must file Form 12153 – Request for a Collection Due Process or Equivalent Hearing, available for download from the IRS website, or a letter containing the same information as Form 12153 to request a CDP hearing. You generally have 30 days from the date you receive your assessment or audit examination report to submit your CDP appeal. After 30 days, you may request an Equivalent Hearing, but collection activities will not be suspended. You will also not be able to request a judicial review of the results of an Equivalent Hearing; you cannot appeal the results in Tax Court. You may request a CDP or Equivalent Hearing to request a review relating to any of the processes listed below:

  • Collection proposals (e.g. installment agreements or Offers in Compromise)
  • Lien subordination (relinquishing priority claim)
  • Withdrawal of Notice of Federal Tax Lien
  • Innocent Spouse defense claims
  • Existence or amount of additional tax assessment ( ONLY if there was no notice of deficiency or other opportunity to dispute tax liability)
  • Claim of economic or other hardship resulting from collection of tax liability

IRSThe Administrative Hearing Process

After submitting your request for administrative review, you generally have at least 60 days to prepare for the hearing. Draft a rough outline of the information you wish to include in your presentation. Categorize any other relevant information in spreadsheets or in visual displays, with separate folders for each item.

It’s wise to request a copy of the auditor’s file under the Freedom of Information Act (FOIA) immediately; FOIA requests can take at least a month to process. The letter should cover all relevant tax years and provide an offer to cover copying costs. Send the letter by certified mail or other traceable means.

The hearing itself will be fairly informal. You are entitled to take notes or record the hearing if you wish. Be prepared for requests for further information. If that happens, don’t hesitate to ask for more time.

If you reach a verbal settlement during the hearing, the settlement will be transcribed onto IRS Form 870 – Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, which can require months to show up in the mail. Double check all the figures and do not sign the form unless you understand and agree with everything contained within it. The professionals at Optima Tax Relief can address any questions you may have regarding this process.

Likewise, do not sign the form if you’ve found other mistakes by the auditor or appeals officer. Once you sign the form, you are barred from making further appeal to the Tax Court.

It’s Worth the EffortLeslie Haviland

The administrative review process can be daunting, but the odds of winning your case are very good. Investopedia reports that according to at least one edition of the book Stand Up to the IRS, published by legal portal Nolo, claims that taxpayers who appeal their audits have their assessments reduced by an average of 40 percent. With Optima Tax Relief on your side, you have a good chance of achieving favorable results, too.

Suffered a Loss Due to Theft or Catastrophe? Uncle Sam Will Give You a Break

Losing your property through theft or catastrophe is tough. If your losses were extensive, you may wonder if you will ever recover.

While nothing can completely negate the effects of a natural disaster or theft, you may be able to get some relief from Uncle Sam. Even if your losses are greater than your income for the year, you might still qualify for a tax break.

Determining Your Loss

During the past year a hurricane or tornado blew through your town and pretty much leveled everything. Fortunately you and your family were all right, but you lost everything. And you have insurance, but your policy only covers the fair market value of your items.

The fair market value means you’ll only get the depreciated value of your items rather than what you paid for them, or what you would have to pay to replace them with new items.

In this case, it would be unlikely that you would qualify for an additional tax deduction. The IRS only allows deductions that equal the value of your items at the time that they were stolen or destroyed rather than the replacement value for new items. (IRS.gov)

But if you had no insurance, or if your insurance carried a very high deductible, then you most likely would qualify for a tax deduction. Likewise, if your car was stolen or your house was burglarized and your family’s heirloom jewelry was stolen, you would likely qualify if you were not otherwise compensated for your loss.

Calculating Your Deduction

Once you have calculated the fair market value of your lost or stolen items, less any reimbursement you may have received from your insurance company, your work is not done.

You must deduct $100 from the total amount of your losses for each incident of catastrophe or theft. For instance, if your house suffered major damage from a tornado and your car was stolen during the same calendar year, you would subtract $100 for each incident from amount of your losses for a total of $200.

To claim a tax deduction for theft or catastrophic loss, you must itemize rather than taking the standard deduction. This means completing a separate Form 4684 for each incident of theft or catastrophic loss and entering the appropriate total amount on Schedule A, which you would then file with your federal income tax return.

Even then, you will only be able to claim the amount of your losses that exceed 10 percent of you adjusted gross income for the year. As you can see, your losses would truly have to be substantial to qualify for the deduction.

Net Operating Losses (NOL)

If your losses from a natural disaster were truly catastrophic, or if a burglar cleaned out your entire house, it is conceivable that your losses could actually exceed your income. In such cases, you would record a Net Operating Loss (NOL) for the year. Under ordinary circumstances, reporting an NOL is limited to earnings from business or self employment. But this limitation is waived for losses that occur due to a casualty such as a natural disaster.

Any NOL that you have would first apply to the tax year in which your losses occurred. Any amount that exceeds your taxable income for the year can be carried forward or carried backward to reduce your taxable income for past or future years. NOLs resulting from natural disasters can be applied up to three years prior to the present tax year and up to 20 years forward from the current tax year. (IRS.gov)

Getting Back What You Have Lost

Properly calculating your losses from a natural disaster or theft can be complex. If you have questions, consult with a tax professional. Our experts at Optima Tax Relief can make sure that you receive the largest deduction to which you are entitled.

How To Avoid A Tax Lien : 5 Simple Ways

A tax lien, not to be confused with a tax levy,  is a hold that the IRS places against some or all your assets. By doing so, the IRS is attempting to ensure that it receives payment for the unpaid taxes that you owe.

But there are five circumstances by which taxpayers can potentially avoid an IRS tax lien. A tax professional like those from Optima Tax Relief can help you determine the best method to avoid a tax lien or a more serious tax levy.

1. Pay the Taxes You Owe in Full

If you can afford to pay the taxes that you owe in full, you can stop an IRS lien in its tracks. The IRS allows you to make payments directly from your bank account or by debit or credit card through a third-party processing service. You may also use the Electronic Federal Tax Payment System (EFTPS) to make a secure electronic payment. Or you may go the low-tech route and mail a check or money order, or deliver your payment in person to your local IRS office.

2. Enter into a Guaranteed Installment Agreement

If you cannot pay your entire tax balance in full, but owe less than $10,000, you may still avoid a tax lien. By entering into a Guaranteed Installment Agreement, you set an agreement by which the IRS will receive your entire tax balance due in monthly installment payments. The amount of each monthly payment and the length of the entire installment agreement vary according to how much tax you owe.

3. Enter into a Streamlined Installment Agreement

If you owe between $10,000 and $25,000 in unpaid taxes, you can still avoid a tax lien from the IRS. A Streamlined Installment Agreement works much the same way as a Guaranteed Installment Agreement. The end result is the same; you eventually pay your entire amount that you owe in federal income taxes.

4. Pay Down Your Balance

If you owe more than $25,000 in back taxes to the IRS, you must pay down your balance to less than $25,000 to avoid a federal tax lien. This payment must take place before a lien is imposed. Once your unpaid tax balance is below $25,000, you may enter into a Streamlined Installment Agreement.

5. File an Offer in Compromise

If you can only afford to pay a portion of your back federal taxes, you may still avoid a tax lien by filing an Offer in Compromise. If accepted, an Offer in Compromise allows you to settle your tax obligation with the IRS for less than the total federal taxes owed. But you should be forewarned: the IRS is stringent about accepting Offers in Compromise. The process for reviewing Offer in Compromise applications can be lengthy. There is also no guarantee that the IRS would not impose a tax lien while you are waiting for a decision on your Offer in Compromise application.

Top 10 benefits of working with a professional tax relief firm

Having an outstanding tax debt is becoming a growing issue that many Americans face. The number of Federal tax liens and levies filed by the IRS has grown significantly in recent years.  In 2011, nearly 4 million tax levies were served on third parties, a 456% increase when compared to the same IRS reports from 2001. Similarly, the IRS issued over one million Federal tax liens in 2011, up 145% from a decade earlier.

The IRS is usually relentless in their pursuit of collecting outstanding tax debt. The stress and pressure that is often placed on individuals and families can be overwhelming. Professional tax relief firms can be an incredible source of assistance when it comes to dealing with the IRS (or other State Tax Authorities) regarding back tax amounts owed or a wide range of other tax related challenges. Here are the top 10 benefits of working with one of these organizations.

1.  You don’t have to face the IRS alone

One of the major benefits of using a tax relief company is the fact that they have many professionals with different educational backgrounds to help you. By having a wide range of experts who understand how the IRS works (such as attorneys, CPA’s, or other specialists), they are able to put that knowledge to work for you so that you can reach the best possible settlement or solution for your tax problems.  After all, when dealing with the IRS or State Tax Authority, you can never have too many professionals working on your side.

2.  Reduce the overall balance you owe

The total amount you owe the IRS is often compounded by additional penalties and interest, and may involve more than one tax period or issue. These penalties and interests are automatically assessed to your account by their computer system; however you may not actually have to pay the additional fees.

A professional tax relief firm can evaluate your situation, and depending on the circumstances behind why you owe the debt, can oftentimes have these penalties removed from the total balance owed. This applies to the interest accruing on your balance as well, which can really add up over any length of time.

3. Avoid losing your home or other property from an IRS seizure

In some extreme cases, people have lost their home or other property because of past due tax debts. Although property seizure is one method that the IRS can use to collect amounts owed, it is usually a last resort for them.

However the number of IRS property seizures has increased dramatically in the last decade. In 2011, the IRS conducted 776 property seizures (compared to 234 seizures in 2001), resulting in a 230% increase in this form of enforcement in just 10 years. An experienced tax relief organization can help you avoid becoming one of these alarming statistics.

4. Avoid having your bank account levied

Similar to a property seizure, the IRS can also implement other actions to collect past due taxes. One more common method used is to levy your bank account. This action will occur after the IRS sends several written notices and warnings, yet still takes many people by surprise when they find out their bank account has been cleared out overnight.

According to the IRS, over $55 billion dollars was collected as a result of enforcement actions in 2011, up 63.3% from a decade before. Imagine the nightmare of waking up one morning only to find that the IRS followed through with their threat of levying your bank account, and realizing that the money in your account that you were going to use for bills, rent, or other items, is no longer yours to spend.

But this is just another example of a situation that can be avoided by having a professional tax relief service help you. You should contact them the moment you receive that first threatening letter from the IRS.

5. Stop or prevent an IRS wage garnishment

Garnishing your wages is yet another tool the IRS can implement to collect past due amounts owed to them. This adjustment to your paycheck can be financially devastating to your household income, usually taking somewhere between 30-75% of your NET paycheck before it makes it into your hands.

The IRS legally requires an employer to comply with their collection efforts and the wage order stays in effect until the IRS releases it, usually not until the entire amount owed to them has been collected.

A skilled tax relief firm can appeal to the IRS on your behalf and have the garnishment of your earnings reduced to a more reasonable amount or oftentimes stopped altogether.

6. Settle your outstanding tax debt for much less than you actually owe

Oftentimes the IRS is willing to negotiate with tax payers in regards to outstanding debts that are owed. This is true largely because of the fact that they would rather collect a lesser amount than nothing at all. But entering into a settlement negotiation with the IRS can be risky territory, especially if you are not fully aware of all of your rights or settlement programs that exist to reduce your overall debt.

This is another area where a company that specializes in tax resolution can assist you. By negotiating with the IRS on your behalf, they can usually reach an agreement that not only significantly lowers the total amount you owe, but also makes the terms of payment simple and for a shorter period of time.

7. Get caught up on past returns

It is estimated that 1 in 6 Americans (26 million people) is currently struggling with tax problems. Many people let these problems grow and compound over years and end up failing to file new tax returns, figuring they are already in enough trouble with the IRS as it is. Working with a professional tax relief organization can also offer benefits by helping you get caught up on any back tax returns you may still need to file.

8. Assistance during audits

One nightmare than many people fear is being audited by the IRS. A reputable tax relief firm will stand by you through this process and make sure that everything you need to have is covered. The chances of being selected for an audit are relatively low with only around 1% of tax returns being selected for this process each year. Furthermore, of those returns that are audited, only about an additional 1% of them are for individual tax payers. So while the odds of being audited are low, it is nice to know you have someone on your side if you need them.

9. Avoid dings in your credit score due to unpaid tax issues

While the IRS is not currently providing information to the 3 major credit bureaus about any unpaid taxes you may owe, it is something they have strongly considered recently. Additionally, if the IRS files a lien because of outstanding debt owed, that information could show up on your credit report since it is considered a judgment, and will remain on your credit report for 7 years after you have repaid it or 10 years if you ignore it. This information can definitely affect your overall credit score and sometimes even potential employment.

10. Enjoy a little piece of mind again

The stress and pressure that can be placed on an individual or family because of outstanding tax debt can be so overwhelming and can even cause major problems in the lives of people who are struggling with it. It can seem like the easiest solution is to run and hide from the problem, but let’s face it, the IRS is one powerful and relentless authority and when they want their money, chances are they will find you.

These issues will not go away on their own. The only way to make them disappear is to face them and address them as they arise. Having an experienced tax relief firm on your side to help with all the complicated policies and procedures can help your overall mental health dramatically.

Although facing the IRS and State Tax Authorities can be a very scary and intimidating experience for many people, it doesn’t have to be so difficult. There are many options to help reduce or sometimes eliminate the debt you owe, but trying to handle it on your own can be equally challenging. Working with a professional tax relief firm is often your best bet. These knowledgeable and skilled individuals can help you handle everything necessary to get your tax related problems resolved once and for all.

How to Remove Tax Lien from Credit Report

A new tax lien policy recently approved by the IRS gives hope to many taxpayers plagued by the stigmas long attached to their negative credit reports. In this article, we’ll discuss how to remove tax lien from credit reports.

New Tax Lien Policy

It’s a well-known fact that federal tax liens have a habit of sticking around on credit reports like the inevitable albatross around debtors’ necks for the entire time it takes to pay off the loan, plus an additional seven year penance (thank you Fair Credit Reporting Act!). Purgatory some may say, others indentured servitude, but the awful reality is they have been here to stay, no matter what way one looks at it.

Enter the new policy recently passed, announcing that federal tax liens are now approved for removal and will be erased from credit reports faster than any other detrimental issue. How? The process by which the IRS has termed “withdrawal.” Withdrawal occurs when the taxpayer’s lien is paid in full, OR the taxpayer signs up for a payment program that is scheduled for periodic installments until the account is up to date and closed.

How To Remove Tax Liens From Credit Reports?

Either of these scenarios can now result in the IRS formally withdrawing a tax lien, along with the stigma mark on one’s credit report. In order to achieve this, the taxpayer must make a formal request to the IRS (using IRS Form 12277, also known as Application for Withdrawal of Filed Form 668(y), Notice of Federal Lien). Once this request is filed, the IRS will return a form 10916(c), which is the magic word to open the door to cleared credit.

It is important to note that this new policy does not include tax liens held at the state levels. These liens will still be evident on your credit reports. Also not subject to complete withdrawal are tax settlements. Such settlements, commonly called “offers in compromise,” are present when a taxpayer and the IRS settle on terms of a lien where less than what is actually owed is considered adequate payment. Due to this not being an exact repayment in full, the IRS grants what they call a “release” rather than an actual withdrawal. As such, unfortunately, the credit report will still show such releases for a full seven years after the date paid.

A Win-Win

On all counts, it seems that this new policy is a win-win situation. The IRS benefits because debtors who may have normally attempted to settle their debts may now be more willing to step up to the plate to pay, since now such actions could help their credit. The taxpayers, obviously, reap the reward of having not having a black cloud of doom hanging over their credit reports when applying for credit in the future.

Tax Tip: Move to a Cheaper State

Facebook co-founder Eduardo Saverin gave up his United States citizenship last year in favor of citizenship in Singapore to avoid the increase in federal income taxes mandated by the end of the Bush-era tax cuts for the top tier of income earners. You may not be willing to give up your American passport to avoid taxes, but what if you were to move to a cheaper state? Between 2000 and 2010, Illinois, New York and Ohio lost millions in population while Texas, Florida and Arizona all gained residents, according to the Tax Foundation.

During that period, New York State lost $45.6 billion in income as workers moved to other states. California lost $29.4 billion, Illinois lost $20.4 billion, New Jersey lost $15.7 billion and Ohio lost $14.7 billion. By contrast, during the same period, Florida gained a whopping $67.3 billion in income, Arizona gained $17.7 billion and Texas gained $17.6 billion in income as workers migrated into those states.

Cold Weather, Heavy Tax Burdens

No doubt, there were several factors involved, including the loss of heavy manufacturing jobs, along with cold weather climates in states like New York and Illinois, contrasted to warm-weather states like Florida, Arizona and Texas. Nonetheless, a primary motivator for many of these interstate moves was a desire to reduce state tax burdens.

Heavy regulatory burdens and a hostile business tax climate also figured into the equation. The Mercatus Center at George Mason University ranks New Jersey forty-eighth in business tax burden and last among the fifty states in freedom from excessive regulation. California ranks forty-fifth in tax burden and last in regulatory freedom and New York ranks dead last in tax burden and forty-seventh in freedom from excessive regulations, according to the Mercatus Center.

A Tax Deduction for Moving Expenses

If you decide to pull up stakes and move from your high-tax state to a state with a lower tax burden, you’ll incur significant expenses, not the least of which being the actual move to your new location. You may be able to reduce the financial bite through federal tax deductions. To be eligible for the deduction, you must satisfy two tests: the distance test and the time test.

The distance test requires your new workplace must be located at least fifty miles further away from your old home than the distance between your old workplace and your old home. If you were unemployed before the move, your new job location must be at least fifty miles away from your old home. This test is the same whether you work for an employer or you are self-employed.

The time test requires employees to work full-time at a job for at least thirty-nine weeks during the first twelve months immediately following the move. If you are self-employed or a small business owner, you must work full-time for at least thirty-nine weeks during the first twelve months after your move and a total of seventy-eight weeks during the first twenty-four months after your move.

To take the deduction, you will need to complete Form 3903 (Moving Expenses) and submit it with Form 1040. Your moving expenses will count as an adjustment to your income. Publication 521, Moving Expenses, distinguishes deductible from nondeductible expenses and provides instructions on how to properly complete Form 3903 so that you can claim the greatest amount of legitimate deductions.

If you live in a state with high taxes and heavy regulation for businesses and you’re ready to make a move, it’s clear that you’re in good company. If you are financially and personally able to move to a cheaper state, and doing so will improve your circumstances, few people would blame you for getting out of dodge. Just be smart about making your move. Besides scouting out job opportunities and neighborhoods, let Uncle Sam ease the financial burden of your relocation if possible.

Photo: Great Beyond

Is Your State Making a Big Tax Change?

Via LearnVest By Cheryl Lock ~

Unless you’ve been living under a rock, you know it’s tax time. This season, while you’re gathering up your papers and receipts and your W-2s, DailyFinance is reporting that eight states either already have passed or could soon be passing changes to their state income tax codes.

California

In the sunny state of California, the approval of Proposition 30 ushered in two different tax increases. The first is a quarter-percentage-point increase in sales tax, along with an income-tax increase for taxpayers who file as single and make more than $250,000, and for joint filers making $500,000 or more. An additional 1 to 3 percentage points will be added to the existing top tax bracket through 2018.

Kansas

This year the top tax bracket has been reduced from 6.45% to 4.9% in Kansas. The law also eliminates income taxes on small business income for hundreds of thousands of businesses.

Louisiana

Although it hasn’t passed yet, Governor Bobby Jindal’s tax swap would get rid of the state’s income and corporate taxes in exchange for higher sales taxes.

Maryland

In a law effective for the 2012 tax year, new tax rates on high-income residents means higher taxes for single filers making more than $100,000 and for joint filers making $150,000 or more.

Massachusetts

A proposed new tax plan for the state would boost the income tax rate one percentage point to 6.25% but lower sales taxes from 6.25% to 4.5%.

Minnesota

Governor Mark Dayton of Minnesota is attempting to raise the state income tax rate in order to lower sales and property taxes. The lack of support Gov. Dayton has received for his proposal has many thinking he’ll drop parts, if not all, of his tax reform plan.

Nebraska

The great state of Nebraska would like to get rid of its income tax entirely, thank you very much. Gov. Dave Heineman has said he would scale back sales-tax exemptions to finance the reduction in income-tax.

North Carolina

In North Carolina, legislators would also like to see the state’s income tax eliminated in order to keep them competitive for individuals and businesses that may be looking to relocate.

 

 

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

The post Is Your State Making a Big Tax Change? appeared first on SuperMoney!.

What to Do if You Can’t Afford to Pay Your Taxes

Via LearnVest By Alden Wicker ~

If you owe money to the IRS for taxes this season, but you don’t have enough cash in your bank account to cut the check, all is not lost. First things first: Make sure to file your return. That way, you avoid the failure-to-file penalty.

Next, decide how much you can pay. The more you pay down now, the less you will pay in interest and the monthly late payment penalty.

Then, depending on your circumstances, you can request an extra 120 days to pay, either through the Online Payment Agreement application or by calling 800-829-1040.

It’s important you address this now, because if you don’t pay or get an extension, the IRS will send you a bill for the amount you owe, which starts the collection process, somewhere you don’t want to be–both for your emotional and financial state.

If you don’t think you can make the deadline, you have several options:

If You Owe …

Less Than $300: Put It on Your Credit Card

This is the easiest way to do it. If you are just waiting for a paycheck and can pay it off at the end of the month, there’s no reason not to put it on your credit card. If you think you will be carrying a balance if you use your credit card to pay, use this calculator to figure out how much it will cost you to pay the interest on it. A good rule of thumb is that if you owe the IRS less than $300 and you plan on paying it off within the year, this is a good option.

Between $300 and $1,000: Take Out a Loan

You could consider taking out a personal loan, but make sure you are getting it from a good source such as a credit union, which can give you a loan at about 11%. This is a good choice if what you owe to the IRS is less than $1,000 and you’re planning on paying it back within the year. You’ll pay about $88 a month to pay it off over a year, adding up to $56 in interest.

More Than $1,000: Set Up an Installment Plan

The IRS will charge you a fee for setting up an installment program, so we only recommend this if you owe more than $1,000 or so. If you do a direct debit agreement, where regular amounts are transferred directly from your financial institution, the fee is $52. If you do a standard agreement or payroll deduction, the fee is $105. Or, if your income is below a certain threshold based on the federal poverty guidelines, it will cost you $43. You’ll have to apply to qualify for the reduced fee.

If You Can’t Pay at All

If you are unable to pay the IRS at all for what you owe, you may request a temporary delay in the collections process or apply for an Offer in Compromise. You can only use these options if there is doubt as to whether the amount you owe is correct, what you owe is larger than your assets and future income together or you are currently suffering economic hardship. Call the IRS using the number on your bill to talk to a representative about doing this, or find all the forms here.

Whatever your situation, don’t ever just ignore your tax bill!  Contact the IRS right away so that you don’t get nailed with big penalties on top of what is owed, and you’ll have one less stress in your life!

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

The post What to Do if You Can’t Afford to Pay Your Taxes appeared first on SuperMoney!.