Income Tax Information — Never Ignore A Letter From The IRS
April 25, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
If you owe a significant amount of money to the IRS, there are plenty of places to get income tax help from certified tax advisors. Section 7122 of the Internal Revenue Code stipulates that the IRS may accept a smaller amount as full payment of a tax debt if you don’t have enough money to pay what you owe, and you are not realistically able to make payment in the future. In such situations, the tax law encourages you to make a compromise offer to the IRS.
Can you make a deal with the IRS? Yes, you can—the law encourages you to try. Here are some things to keep in mind if you need income tax help to settle a debt with the IRS:
1. Many delinquent taxpayers are able to negotiate a very favorable deal. You might be able to pay off your back taxes, including interest and penalties, for less than fifteen cents on every dollar you owe. That means a $50,000 tax liability could be written off for no more than $7,500.
2. The IRS won’t make such a favorable deal if they think they can get you to pay more by other means. The IRS uses a formula based on your net worth to determine how easily they’ll let you off the hook. How they arrive at a decision is beyond the scope of this brief article, so ask a tax advisor if you feel it’s in your best interest to make a compromise offer to the IRS.
3. If you default on the terms of a tax settlement, the IRS has a legal right to terminate the agreement and seek payment of the entire amount originally owed in back taxes, interest, and penalties. When you make a deal with the IRS, follow through on the agreement. No amount of income tax help from the best advisor in the country will bail you out if you fail to keep your end of the deal.
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1040 Tax Form Reviews & Tips
February 5, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
The 1040 tax form should be your starting point for your personal IRS income tax returns. It’s designed to help you calculate the amount of tax you need to pay based on the amount of income you’ve declared.
By using this form regularly as your income changes, you’ll be more aware of whether you need to take steps to reduce your potential tax penalty or you might actually calculate that you’ll receive a return.
This is the ‘long form’ or the more complete version and should be used if you have complicated tax issues to calculate. Things like investment income or loss, capital gain or loss or multiple itemized deductions should be entered individually on your 1040 tax form to help you get a clearer idea of the amount of tax you should be paid or withholding.
Although the form could be only 2 main pages, they have 11 different attachments or schedules that follow with it. Each different schedule covers a specific aspect of your tax return, so that you may not need all.
1040A Tax Form
The 1040A Tax Form is the form that helps you to estimate tax return for the fiscal year. If you do not have complex tax toting up for the year as capital gains or deductions on individual itemized, then the short form will be ideal for you.
1040EZ Tax Form
The 1040EZ tax form is a more simplified version of the longer form of 1040 and is still able to help you determine what your tax bill could be the end of the year very quickly. Again, this is ideal for those with no tax issues not complicated to explain.
1040NR Tax Form
The 1040NR tax form designed to facilitate non-resident aliens to calculate the total of IRS tax return. For non-resident alien who has been in the United States for less than five years and has an income on which tax must be paid has to use this form.
This form shows the IRS the original figures you submitted and then highlights what those figures should have been according to your calculations. In some cases the irs help can help you to increase the amount of tax refund you were due or it might even reduce a pending tax penalty you might incur.
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US Expat Taxes- 25 Questions you need to Ask Now!
December 4, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
The Internet super-highway opens up marvelous opportunities for expatriates to harvest expat tax advice and information from some of the greatest minds at reasonable prices from anywhere in the world. But it also emphasizes a crucial question: How do you know whom to trust? Sharing your intimate, personal financial information with a stranger is problematic at best.
Here are 25 questions to help any expat choose a tax and financial professional you can trust.
1. Physical office. is there a US location that you can visit? Even if you never have to meet them face-to-face, the professional integrity required of a firm conducting a bona fide business should be considered.
2. Reachable contact person. Is there an actual person who will be ultimately responsible to take care of you and your financial world?
3. Valid licensure. Does their home state licensing board affirm that the tax professional you would like to use has an active license in good standing?
4. FINRA background check. If the tax professional is also Series-7 licensed, do they and their broker dealer and have a clean history with FINRA?
5. Active insurance license. If the tax professional is also insurance licensed, does their resident state’s Insurance Commissioner affirm that they have an active license in good standing?
6. Clean history. If the tax professional is also a registered investment adviser, does their state or the SEC affirm that they have a clean history?
7. Age of business. when did you start doing US expat income tax returns? if too new they maybe just learning on you. If they are nearing retirement, they may not have the interest to stay current with the changing regulations.
8. Size of practice. Are they a sole-practitioner? Or is there a great professional team to work with you? If you are dealing with just one practitioner, what do you do if something happens to them? If the IRS is coming can they help you?
9. Experience of professional. How big is too big? Will you have access to the senior professionals in the firm, or are you working with firms so big you are just getting the inexperienced junior preparers? Those who work at large, international corporations often have the opportunity to use large, international accounting firms, and pay thousands of dollars just to be ignored by inexperienced junior preparers. Larger is not always the better choice.
10. public impression of the CPA firm. Does the firms clients reward the firm with long-term relationships? Do you know what are their clients are saying about them?
11. other services. Does the firm offer other services to help you so you can get the “one-stop financial shopping” you need? If so, what are they offering? How do they help you understand which services you really need?
12. Name recognition. Are they nationally-known in their industry? And do they teach other tax professionals? Do state CPA societies use them for seminars? The best way to really know something is to teach it to other professionals.
13. Online presence. our US expats their main focus and do they support them with a separate website?
14. Ongoing support. Can they continue to help you after you return to the US?
15. creative help. What if you start a business? Can they continue to help you?
16. Expat tax forms. Do they know the proper use and filing of these forms:
–Form 2555 (for foreign income exclusion)
–Form 1116 (for foreign tax credit)
–Form 1040NR (for non-residence aliens)
–Form TD. 90-22.1 (for foreign bank accounts)
And more importantly, can they explain them to you in simple enough terms to help you really understand the tax challenges of being an Expat?
17. Fees charged. Are they charging too little for you to receive the quality, professional service your situation requires?
18. Quote for service. Are they charging too much (sometimes thousands of dollars) or do they hesitate to give you an upfront quote?
19.Personal interaction. Will a live person speak to you before they take your money?
20. Tax organization. Will they provide you with a specialized tax organizer to help you gather all the information you are going to need?
21. Access to important information. Will they provide you with a secure, online document vault to access your return and source information from anywhere in the world?
22. Financial tools. Do they have online financial tools that allow you to conduct your own research on various aspects of your financial world?
23. IRS updates. Do they send out a monthly newsletter to keep you updated on tax law changes?
24. Information sharing. Will your personal, private information be shared with outsiders or shipped out of the country for processing?
25. Comprehensive coverage. Do they offer to go beyond just getting the numbers right, to working with you to get the answers right for your entire financial world?
Take the time to thoroughly interview the tax professionals you are considering to help you manage your expat taxes and expat finances. This simple step could save you from creating sticky situations in the filing and management of your expatriate taxes.
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Nick Hodges, President of NCH Wealth Advisors, provides US expatriates with the best tools, strategies and planning techniques to help expats manage their tax and financial goals and dreams on a day-to-day basis regardless of their location. To claim your free gift, ExPat Life Portfolio Kit, visit his site at http://www.ExpatCFO.com |
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IRS Records Further Growth In E-Filing,
November 11, 2009 by taxman
Filed under IRS News Items
Individual taxpayers in the United States e-filed a record 95 million federal income tax returns during 2009, up almost 6% from last year’s total of nearly 90 million, the Internal Revenue Service (IRS) has announced.
According to the IRS, about two out of three taxpayers e-filed this year, and out of the 141 million returns filed so far this year, over 67% were e-filed, compared to 59% last year.
There has been a year-on-year rise in the number of taxpayers choosing to e-file their tax returns. While the total number of tax returns has increased 10% during the past decade, the number filed electronically has increased by 168%.
In 2000, just over one-quarter (27.5%) of individual tax returns were filed electronically.
Taxpayers who e-file from a home computer continue to be an increasingly significant segment of those who e-file. More than 32 million returns were e-filed from home computers, up almost 20% from last year’s record of 27 million and representing more than one-third (34%) of all e-filers.
Almost 73 million refunds were electronically deposited into taxpayer accounts. These direct deposit refunds accounted for 66% of all refunds, up from 62% of refunds last year.
Overall, the IRS issued 110 million refunds, averaging USD2,753 per refund; direct deposit refunds averaged USD2,997 per refund.
More than 3 million taxpayers filed their tax returns for free through the IRS free file program.
This year for the first time, taxpayers could also file directly to the IRS by completing a Form 1040 on the IRS website; 273,000 taxpayers used this new way to file.
However, the IRS’s filing statistics show that so far, the total number of individual income tax returns filed is 8% down on last year, and, despite the increasing use of e-file facilities, visits to the IRS website are almost 18% lower this year compared to 2008.
Another notable statistic is that there has been a 20% increase in self-prepared electronic tax returns filed with the IRS compared to last year.
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Two Daughters of Rialto Tax Return Preparer Sentenced to Six Years in Federal Prison – US Attorney
October 7, 2009 by taxman
Filed under IRS News Items
LawFuel.com – Legal Announcement Service -
Father Previously Sentenced to 9 Years in Prison in $30+ Million Scheme
Riverside, California – Two daughters of a Rialto man who previously was sent to prison for crimes related to his fraudulent operation of an income tax preparation business have both been sentenced to 72 months in federal prison for their roles in a scheme to defraud the Internal Revenue Service out of more than $30 million.
Karen Denise Berry of San Bernardino and Carla Denine Berry of Rialto were sentenced Monday afternoon, each receiving a sentence of six years in federal prison. In addition to the prison terms, United States District Judge Stephen G. Larson ordered Karen Berry and Carla Berry to pay $14 million in restitution to the IRS.
Karen Berry and Carla Berry pleaded guilty in March 2008 to various charges, including conspiracy to defraud the IRS, aiding and assisting in the preparation of false tax returns, and subscribing to a false tax return.
Their father, Matthew Carl Berry, who ran a tax return preparation eventually called N.C.K. Services, Inc., was sentenced in June to nine years in federal prison. Judge Larson ordered Matthew Berry to pay more than $15 million in restitution to the IRS after finding that the scheme caused losses of $31 million. Matthew Berry was convicted at trial of conspiring to defraud the IRS and filing false personal income tax returns for the years 2001, 2002 and 2004.
Matthew Berry operated the tax business out of his residence in Rialto from as early as 1995 through 2003. Beginning in early 2000, his daughters began preparing false income tax returns at the business. In 2002, two others convicted in the case began preparing false income tax returns at the business as well. In 2004, the business relocated to a commercial building in Rialto, where Matthew Berry and his daughters formed N.C.K. Services, Inc.
The defendants in this case prepared false income tax returns that included fabricated and inflated Schedule A deductions for things such as mortgage interest, un-reimbursed employee expenses, real estate taxes and charitable contributions.
“IRS-Criminal Investigation will continue to aggressively investigate tax return preparers who knowingly prepare false tax returns,” said Leslie P. DeMarco, Special Agent in Charge, IRS-Criminal Investigation, Los Angeles Field Office. “These dishonest preparers undermine the integrity of our tax system and must be held accountable. The collective 21-year prison sentence for the Berry family serves as a reminder to all tax return preparers who intentionally prepare fraudulent tax returns — their disregard for our tax system can lead them to prison,”
Co-conspirators Ivan Taylor Johnson of San Bernardino and Valerie Madel Dixon of Rialto previously pleaded guilty to conspiracy to defraud the IRS and aiding and assisting in the preparation of false income tax returns. Judge Larson sentenced Johnson in October 2008 to 35 months in federal prison and ordered him to pay $19,034,901 in restitution to the IRS. Dixon was sentenced in November 2008 to five years of probation, which includes 10 months of home detention, and was also ordered to pay $19,034,901 in restitution to the IRS.
The investigation in this case was conducted by IRS-Criminal Investigation. The case was jointly prosecuted by the United States Attorney’s Office and the Tax Division of the United States Department of Justice.
CONTACT: Assistant United States Attorney Antoine F. Raphael
(951) 276-6246
Assistant United States Attorney Charles E. Pell
(951) 276-6104
Better Business Award GOLD Star to New Century Tax Consultants, our team of Expert Attorneys, CPA's, and Tax Practitioners.
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