Can I File My Taxes Separately from My Spouse?

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.

Filing a joint tax return with your spouse has many advantages, like receiving one of the largest standard deductions every year and providing several tax breaks for those who choose to file jointly. When deciding whether or not you want to file jointly, it is important to consider both the positive and negative aspects and how you can be directly affected. 

Married Filed Joint

The advantages of filing jointly with your spouse can allow you to deduct a significant amount of your income. Couples who file together will typically qualify for the following tax credits:

  • Earned Income Tax Credit
  • American Opportunity and Lifetime Learning Education Tax Credits
  • Exclusion or credit for adoption expenses 
  • Child and Dependent Care Tax Credit

Those who file jointly receive higher income thresholds for certain taxes and deductions. If you and your spouse earn a higher amount of income, you could potentially qualify for tax breaks.

Married Filed Separate

If a couple chooses to file separately they will receive fewer tax benefits compared to those who file jointly. Those who file separately from their spouse will only receive a standard deduction of $12,200 compared to those who file jointly and receive a deduction of $24,400.

  • Filing a separate return will automatically disqualify from several tax credits and deductions.
  • Separate filers are limited to smaller IRA contribution deductions.
  • You cannot take a deduction for student loan interest.
  • The capital loss deduction limit is $1,500 each when filing separately, instead of $3,000 on a joint return.

If you are unsure of how you want to file this tax season, consider filing both separately and jointly to see which way will be beneficial for both you and your spouse. Always be sure to double check your calculations as well as the amount of income you are placing on your return and review if you have a net refund or a tax liability. This should help you decide how you should file moving forward in order to receive the most out of filing your taxes. 

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

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How long should I keep my 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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If you’ve been holding on to a stack of old tax returns because you’re afraid to throw them out just in case the IRS starts asking you questions about a return that you filed nearly ten years ago, it may be time to start reevaluating that old tax paperwork.  

Here are a few tips that will help you determine what tax paperwork you should keep and what you can throw out. 

How long should I keep my tax return for? Typically you should plan on keeping your past tax returns or any tax related documentation for at least three years following the date that you’ve filed your tax return.

Is it important to keep at least three years of tax returns? It is important to keep your tax return for three years because it is tied to the statute of limitations. This means that a taxpayer has up to 3 years to collect a refund on any unclaimed tax years up to three years from their original tax filing date. In addition, the IRS generally has only three years from the filing date or due date of a tax return to assess an additional tax. 

Are there exceptions for how long you need to keep tax documents? In some instances, it may be necessary like retirement accounts such as IRAs. These tax documents should be kept for up to seven years after filing as this is the period of time the IRS can go back and reassess tax years with this specific information.  

What type of tax records should I keep? In order to properly file your taxes, you will need supporting forms. This includes W-2s, 1099s, expense tracking, mileage logs, records supporting any itemized deductions and any other documentation that may be applicable to your business.

How should I discard my old tax return? Once the period of time to keep older tax returns is up, it is important to dispose of them carefully as you don’t want any of your sensitive information exposed to possible thieves that can use your information against you. Taxpayers should shred any important tax documents to avoid any future fraud issues.

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

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These Errors can Cause Your Tax Return to be Rejected

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.

It only takes one minor mistake on your tax return like leaving out vital information such as your name, social security number, or even claiming a credit or deduction that you don’t qualify for to completely disrupt your tax return from getting processed. 

Here’s what you can do to avoid common mistakes on your taxes:

  1. Including credits and deductions you don’t qualify for. It can become overwhelming for a taxpayer when they start reviewing the number of credits and deductions they might qualify for. When you do find credits that you feel could be placed on your tax return, make sure to read the fine print. Some credits could have phased out for you if your income exceeds the required threshold you would need in order to qualify for the credit. Or, if you have already included your tuition and fees deduction for the same expenses that you are attempting to apply for, that could also cause a rejection. Sometimes even your filing status could hinder you from qualifying for a credit or deduction.
  2. Health Care Reporting Error. There are many reporting requirements that a taxpayer must review before placing any health care information on their tax return. One of the most common errors that the IRS sees when reviewing a tax return is when a taxpayer fails to claim coverage exemption and not reconciling advance payments for the premium tax credit. 
  3. You forgot to sign your tax return. If you’re in a rush to mail in your tax return, you may just forget the most important part, signing your return. The IRS even cites this as another common mistake that a taxpayer will make when sending in their return. It’s also important to note that any unsigned tax return will not be processed by the IRS and will be considered invalid. 

Always be sure to take your time and review all the information that is placed on your tax return. Taxpayers should always review any potential credits or deductions they could potentially qualify for and if you are unsure of what those are, speak with a tax professional for assistance.

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

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Do I Need to File My 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.

Tax time is one of the most important times of the year for many Americans, but not everyone needs to file their taxes each year. If your income does not exceed a certain threshold, you may not be required to file a tax return. Here are a few things to consider if you’re wondering whether or not you qualify to avoid filing taxes with the IRS. 

Review your total income for the year. Consider the standard deductions that you qualify for on your tax return. The standard deduction as well as other available deductions can reduce your total taxable income causing you to have a low enough income that doesn’t require you to file. If you earn less than $12,200 you are not required to file a tax return. If your income increases in the future, you may need to file. 

Income thresholds for taxpayers 65 and older.  If you are at least 65 years old, you may qualify for an increase in your standard deduction, here are factors that could get you to qualify:

  • You are blind
  • Your spouse is also 65 or older
  • Your spouse is blind

Qualifying for a larger standard deduction allows you to have more income placed on your tax return and still not have to file a tax return.

Dependents may need to file a tax return. For taxpayers that are claimed as a dependent on someone’s tax return, it is important to be aware that they are subject to different IRS requirements. A tax return may be necessary if their earned income is more than their standard deduction. 

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

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Where’s my Tax Refund?

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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  • Most taxpayers will expect to receive their refunds in 21 days once their tax returns have been received by the IRS. 
  • If a tax return is amended it could take up to 16 weeks before a tax refund is received. 
  • If a refund check has not been received, a taxpayer can file a claim online to receive a replacement check. 

For most taxpayers, filing their taxes is not something they get excited about doing every year, but there is something that most look forward to receiving after filing their tax return. Receiving a tax refund means you have extra money in your pocket that you can either throw into your savings or perhaps put it towards that vacation you’ve been dreaming about all year. Whichever way you choose to spend your money, there are important details to know about your refund and how long it may take for you to receive it.

Here are a few questions taxpayers have when it comes to receiving their refund:

How quickly will I receive my refund?

Once your tax return has been filed and received by the IRS for processing, it typically takes less than 21

It’s been over 21 days and I still haven’t received my refund. Is this normal?

It sometimes takes the IRS more than 21 days to process your tax return but, it could also mean that there was an issue with your return. Here are a few that may delay you receiving a

  • Errors on your tax return.
  • Your tax return was incomplete.
  • It was flagged for identity theft or fraud.
  • Your return included the Injured Spouse Allocation form – this could take up to 14 weeks to process.

When can I start tracking my refund status?

24 hours after you’ve e-filed your tax return, you can start checking your refund status. If you mailed in your return, it could take up to four weeks before you’re able to check your status. 

Will amending my tax return prolong me from receiving a refund?

If you’ve amended your return, you can expect to receive your refund in about 16 weeks. 

What if my refund was lost, stolen, or destroyed?

You can file a claim on the IRS website. A replacement check will be mailed out if it has been more than 28 days from that date your refund was mailed off. 

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

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Would You Cheat on Your Taxes?

Would you cheat on your taxes? If you said “no,” count yourself in the majority of people who wouldn’t commit tax fraud.

According to the Taxpayer Attitude Survey, about 87% of American Taxpayers say that it is not acceptible to cheat on taxes, while more than 95% agree that it is every American’s civic duty to pay their fair share of taxes. In addition, 91% of those surveyed agreed that everyone who cheats on their taxes should be held accountable.

Think that if you look honest, you can get away with fudging your taxes? Think again.

However, actual revenues collected by the Internal Revenue Service tell a somewhat different story. The so-called “tax gap” is defined as the difference between the total income tax liability and the amount of income tax payments that are made voluntarily and on a timely basis. This tax gap totaled $450 billion in 2008 but shrank to $385 billion after late payments were posted.

Taxpayers across the country under-reported their income by an estimated $376 billion the same year, while underpayments amounted to $46 billion, and $28 billion was owed by non-filers – people who did not complete tax returns at all. All told, the compliance rate in 2008 on the estimated $2.66 trillion tax obligation was about 83 percent.

Under-reporting Income to the IRS

Most taxpayers are diligent about paying taxes on income reported on W-2 forms. After all, the IRS receives the same information, so skipping out on paying what is owed is fairly difficult. Self-employed workers who receive 1099 forms have somewhat more latitude about how much total income they report due to legitimate business-related expenses. Nonetheless, earnings listed on 1099 forms are also reported to the IRS; therefore, most self-employed workers at least acknowledge those earnings.

On the other hand, a significant amount of cash income is never reported to the IRS. If you were paid $100 to fix someone’s computer, you will probably get by with not reporting that income. However, if you collect a cool $5,000 on the side through your online storefront, you shouldn’t expect to fly under the IRS radar if you don’t acknowledge the sum on the following year’s tax return.

Questionable Tax Deductions

There is nothing wrong with claiming every penny to which you are entitled through legitimate tax credits and deductions. This is not regarded as cheating on your taxes. If you are self-employed and you have established an authentic home office, you should absolutely claim the home office deduction. If you are a wage earner whose boss expects you to call on out-of-town clients on your own dime, go ahead and claim the deduction for work-related travel. As long as you can document your claim, you won’t be accused of tax fraud – even if you are audited by the IRS.

On the other hand, taking a vacation in Hawaii and claiming a deduction because you attended a seminar during the trip likely won’t pass muster with the IRS. Likewise, the cost of your daily commute from your home to your cubicle is also unlikely to be deductible. If you have doubts about whether a deduction or credit is legitimate, it’s best to check with a tax attorney or with a certified public accountant to avoid being accused of cheating on your taxes.

Discredited Tax Protests

A persistent movement exists among a small group of individuals who claim that federal income taxes are unconstitutional because the Sixteenth Amendment to the Constitution (which was ratified in 1913) was improperly ratified. These tax protesters insist that they are exempt from paying income taxes as a result. The IRS has repeatedly dismissed such claims, frequently charging delinquent taxpayers with filing frivolous returns.

One of the more prominent figures snagged for adhering to discredited tax protester claims is actor Wesley Snipes. Snipes was released from federal prison in 2013 after serving nearly three years for misdemeanor charges related to willfully failing to file tax returns. Snipes claimed that he was misled into believing that his actions were legal by his co-defendants, tax-protesters Eddie Kahn and Douglas Rosile. Federal prosecutors had also pursued felony charges against the three for tax fraud and conspiracy, alleging that Snipes had shipped more than $15 million overseas in an illegal bid to avoid paying taxes. Kahn and Rosile were convicted of those charges, but Snipes was acquitted.

Straight-Up Tax Scams

While the actions described above can be described as questionable claims and gray-area tax-related behavior by otherwise honest citizens, straight up tax evasion scams are also prevalent. Such tactics as strictly paying employees in cash and setting up questionable business and family trusts are among the more common tax evasion schemes attempted by both individuals and companies attempting to skirt paying income taxes.

While a case can sometimes be made for leniency concerning unwitting tax evasion, the IRS frequently takes a dim view of defendants that in its view have deliberately attempted to commit fraud. Outright scams, once uncovered by the IRS, are likely to result in criminal tax evasion charges and long prison sentences upon conviction. This contrasts with civil tax evasion, which can carry hefty fines but no jail time.

What is the Penalty for Cheating on Your Taxes?

Even if you get away with underpaying your taxes (or failing to file returns at all) for a short period, the odds are good that you will be caught eventually. The statute of limitations for federal tax audits is doubled from three to six years if you fail to report at least 25 percent of your income, or if you have income on undisclosed foreign assets that totals $5,000 or more. There is no statute of limitations on IRS audits for filing fraudulent returns or unlawfully failing to file tax returns, which means that you could be looking over your shoulder for years – or even the rest of your life.

Optima Tax Relief offers a range of tax relief services to help you prepare your taxes. Schedule a tax consultation with one of our licensed professionals today to discover how we can help you.

How IRS Debt Can Ruin Your Travel Plans (and Jeopardize Your Passport)

The stress of owing the IRS can be overwhelming. The ever-present threat of having a lien placed on your assets, the fear every time you check your bank account to discover it has been levied dry, the strain of having the IRS garnish your monthly wages; these are just a few of the things that millions of Americans go through every day. Now, the IRS has made further changes to crack down on Americans who have not paid their taxes.

As of February 2018, Americans who owe the IRS more than $50,000 are at risk of having their passports revoked. If you have unpaid taxes owed to the IRS, it is important to either pay your balance in full or go on a monthly installment agreement in order to avoid having these travel restrictions placed on you. The State Department is now working alongside the IRS to not only revoke existing passports but to also deny any passport application for those with seriously delinquent tax debt.  (If you are overseas and your passport is denied, the State may issue a temporary passport that has limited validity to return to the United States.)  Essentially, until the tax debt is settled with the IRS, people will be placed on this new “No Passport” list.

There are a few exceptions to be aware of.  You won’t be at risk of being placed on the “No Passport” list if you are currently going through bankruptcy, if the IRS acknowledges you have been the victim of identity theft, or if there is a natural disaster declared on a federal level.  You may also be able to keep or renew your passport if you have a request pending for an installment agreement, have a pending offer in compromise with the IRS or if the IRS has accepted an adjustment that will satisfy your debt. And if you are placed on the “No Passport” list, the IRS will hold your application for 90 days to allow you to resolve your tax liability, pay your balance in full or enter into an installment agreement before revoking your passport.

This is yet another sign that the IRS is escalating their collection efforts against Americans who have unpaid taxes and another reasovn for you, as a taxpayer,  to stay current and compliant with their IRS filings.  If you are in the unfortunate situation of having delinquent IRS debt, it is wise to speak to a qualified tax professional who can help you evaluate your options sooner rather than later. Because when it comes to owing money to the IRS, delaying is almost always a losing strategy. For more information regarding on the IRS passport revocation and denial policy, click here!

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 Tips for Uber Drivers and those Working in the Gig Economy

So you just joined Uber. Now you have a little extra cash, and you’re the one picking up the tab at dinner when you go out with friends and family. There couldn’t possibly be a downside to earning this additional income, right? Well, while there isn’t necessarily a drawback to having more money in your pocket, there are a few factors to being an Uber driver that you should consider from a tax standpoint. Here are some common questions and tax tips that first time Uber drivers should think about before getting started.

What is the difference between a 1099 earner versus a W2 earner?
If you have taxes being deducted out of every paycheck, you are most likely a W2 earner. At the end of the year, a W2 earner will receive a form that will state their annual wages along with a breakdown of the taxes that were withheld throughout the year.

A 1099 earner, however, does not have any taxes withheld from their income. The total amount of pay you received from Uber (or any other person or entity for whom you were a 1099 earner) during the year will be reported on a 1099 form. It is the responsibility of the 1099 earner to either make estimated tax payments (more on this below) or pay any balance in full at the end of the tax year.

What are estimated tax payments and can they help me avoid owing at the end of the year?
Estimated tax payments, or ETPs, are based on the amount of income that you expect to have earned in the current tax year. ETPs are usually made if a taxpayer believes that they will have a tax balance at the end of the year. A taxpayer may also wish to make ETPs if they are not withholding enough taxes from their paycheck, or if taxes are not being deducted from their income at all. A 1099 earner (or even a W2 earner who does not have enough withholdings listed) has the choice to pay their estimated tax payments bi-weekly, monthly or even quarterly. ETPs must be made in order to avoid owing at the end of the year, and it is even possible to receive a penalty if ETPs are not being made. The IRS allows you to make your estimated tax payments by either mailing a payment in, paying over the phone, or even paying online.

What are tax write-offs and how do I keep track of all my business expenses?
Being that you are a 1099 earner for Uber, it’s a little like running your own business. And just like if you were running your own business, you must document and report any income you have received and expenses you have made. Many of these expenses are tax write-offs. Some expenses that you may experience as an Uber driver include car maintenance, gas, and mileage. You will need to keep proof of your expenses throughout the tax year in order to write them off with the IRS. In order to do this accurately, you will need to keep track of how much of your mileage is used for business and how much is used for your personal life. There are multiple downloadable apps on the market designed to keep track of this for you. If you forgot to do this, don’t worry – you can request this information directly from Uber. Once you know what percentage of your mileage is used for business, you can calculate what percentage of your gas and maintenance can be listed as a tax write-off. Don’t forget to save those receipts; you will need them in case you are ever audited by the IRS!

Whether you’re using Uber to pay the bills or to give you a little extra income on the side, paying your taxes doesn’t have to be scary. Following the steps above and stashing away a little bit of your income can help ensure you don’t get blindsided come tax season. Now get out there and have some fun with your extra cash and remember, drive safe!

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.

Medical Identity Fraud – A Risk to Your Health and Wealth

Imagine this scenario: you’re sitting in a doctor’s office with a long-lasting fever after your camping trip. Because it may be an infection from a tick bite, the doctor decides to give you an antibiotic shot. She glances at your records, swabs your arm with alcohol, picks up the syringe and says “this little dose of penicillin should help…” and you interrupt: “wait, I’m allergic to penicillin.” “But, that’s not what your records say… we gave you penicillin last time you were here.”

Frightening? Yes. Impossible? Not at all.

Medical identity theft is on the rise and it can not only have crippling effects on your finances but can seriously put your health in jeopardy.

The Medical Identity Fraud Alliance, a group of concerned corporate and non-profit partners,  speculate that over 2 million Americans were put at risk of medical identity theft in 2014, a figure that leaped 22% from previous research. This doesn’t even take into account the nearly 80 million individuals affected by the Anthem data breach in 2015 – the country’s largest healthcare breach.

Identity thieves steal personal health information (PHI) such as social security numbers and medical insurance identification numbers for two main reasons:

  • For financial gain by filing fraudulent claims to your health insurer (including Medicaid/Medicare) in order to receive a reimbursement check
  • Free medical care of high cost or elective procedures or to secure prescription medication – specifically narcotics that can be abused or sold on the black market

Financial fraud such as a stolen credit card can be frustrating, but can be quickly resolved since it’s easier to detect, and often doesn’t have significant long-term financial impacts. Medical identity fraud, on the other hand can cost a victim $13,500 on average and be notoriously difficult to resolve.

Because of advancement in electronic communication and collaboration in the healthcare industry, PHI is more exposed and accessible. At the same time, this doesn’t always mean that your health provider is on the same page with your insurer. PHI is rarely tracked across multiple networks and this gap can make stealing and using it feasible.

Here are a few things you can do to minimize your risk of medical identity fraud:

  • Carefully read all correspondence from your medical provider and Health Insurance Company. Treat each line item like you might for a bank statement and ensure that each charge or claim is valid.
  • Safeguard your Social Security number and healthcare data. Make sure that when you provide it, it’s absolutely necessary. It’s always okay to ask.
  • Avoid putting medical procedures and hospital stays on social media. You never know who’s looking and this piece of data could be the last one that the thief needs to commit their crime.

Our identity protection program provides comprehensive, proactive monitoring for several data points, including your medical information. To learn more about how we can help you minimize your risk of medical identity theft, visit


Identity Safety And Staying Secure With Wearable Devices

The increasingly connected world brings new conveniences that greatly benefit our everyday lives. No new connected device seems more ubiquitous than wearable devices – nearly 33 million were in use in the U.S. in 2015 by an estimated 20 million people. Smartwatches like Pebble and Apple watch allow us to access the internet with a flick of a wrist. Wearable health tech like the Fitbit and the gadget-class favorite Jawbone help improve the livelihoods of millions.

As much as wearables bring value to our lives, they also create a new opportunity for criminals to extract personally identifiable information. Like many other new technologies, security vulnerabilities in wearables are being exposed and potentially exploited.

The more information that’s collected, the easier it is to identify account numbers and passwords as well as medical ID numbers and tax return data. Better understanding the individual’s routines and habits ensures that criminal activity will go unnoticed for longer periods of time.

But some wearable data can provide quicker wins for identity thieves:

Most wearable devices use an accelerometer and gyroscope to track forward motion and directional orientation. Some even contain an altimeter to measure altitude for hikers and climbers. All of this data is crunched into code that orients the user’s specific location and tracks their activity – sometimes down to a few inches. Shockingly, new research found that ATM PIN codes could be discerned from the data in wearables’ sensors with 80% accuracy on one try and 90% accuracy after three tries.

A flash survey conducted by corporate identity management firm Centrify exposed some worrying trends:

  • 69% of wearable device owners don’t utilize login credentials such as passwords, fingerprint scans, or voice recognition to access their device, and
  • 56% of wearable owners use their device to access corporate applications such as Outlook, Dropbox, and Salesforce.
  • While the sample size was small, the survey was conducted at the RSA Conference, one of the world’s largest gatherings of information security professionals. If those on the frontline of data security leave their personal and corporate data at risk, it’s easy to imagine that the population at large may be even less cautious – jeopardizing their identities and your corporate data security.

Staying Secure With Wearable Devices

While wearables (and all technology, for that matter) are never 100% secure, there are a number of tactics that can be undertaken to minimize the risk of data theft:

  • Opt-out of automatic data transmission that will continually upload information via Wi-Fi or other networks.
  • When using a Wi-Fi, stick to known and/or secure networks.
  • Enable passwords and change them regularly. If available, use two-step authentication.
  • Physically secure the device if it’s not in use. Particularly, when traveling, utilize hotel safes.
  • Take time to learn how to remotely erase data so that the device can be “cleaned” if it’s lost or stolen.
  • Make sure to regularly update the operating system in order to patch known security gaps.

Looking for ways to minimize your risk of identity theft? Maintain a peace of mind while using your wearable device by enrolling in Optima’s ID Protection Plan at