With the personal deadline passing I find a majority of people have questions on why their filing status matters. We have found that Married Filing Separately (MFS) is one of the most misunderstood filing statuses. There are many legal and personal reasons why you might choose to file separately. However, the IRS prefers you to file Married Filing Joint (MFJ) and shows preference to this by allowing certain credits only when MFJ. These include the Earned Income Credit, education credits (AOC and LLC), full child credit, dependent care credit, and the adoption credit (on the year adoption took place). They also allow MFS to amend to MFJ within the allowed amendment period. But if you filed MFJ and afterwards decided to amend to MFS, if it is past the April deadline it is not allowed.
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Wedding
There is nothing scarier than going to your mailbox and seeing a notice of the IRS’s intent to levy you. Owing taxes can be scary enough, but when you add in the stress of being levied or having a lien placed on your property, it can be too much. If you have received notices from the IRS or you have been talking about possible problems with your taxes, you may have come across the terms Tax Levy and Tax Lien. The two are types of collection action used by the IRS to collect on an unpaid tax debt. They have some similarities and they both have stark differences you need to be aware of.
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Tax Levy,
Tax Lien,
IRS Tax Lien
The IRS is giving businesses back a break they thought they had lost due to the Tax Cuts and Jobs Act. The agency announced that companies can still deduct 50% of meals while entertaining clients and customers. The announcement cleared up confusion about whether the tax law changes had completely eliminated the benefit of writing off taking clients out to a meal.
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Tax Cuts and Jobs Act
Time is running out for taxpayers looking to take a depreciation deduction on certain property they have used in 2017. Individuals and calendar-year corporations must generally file the election with the IRS by October 15th.
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Tax Scams,
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The Tax Cuts and Jobs Act created hundreds of changes to the U.S. tax code and will affect every taxpayer in America. The changes range from eliminating or lowering exemptions and special tax credits to increasing the standard deduction. The new tax law also re-did the tax brackets and changed the tax rates for some people and businesses. One of the changes most people don’t know about is the 20% Qualified Business Income Deduction. This is a provision meant to benefit businesses with pass through income and is effective from 2018 until 2025.
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When people think of big tax breaks on a tax return for individuals, they typically think of the credits for having children or dependents or the deduction home owners receive for mortgage interest paid over the course of the year. If you don’t have a child or dependent and still are working to buy your first home, you would not qualify for these tax breaks. But not to worry! There are other tax breaks out there that you might qualify for!
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So you filed your tax return and you later realize that you made a mistake!! If you made a mistake on your tax return after you filed it, the IRS will allow you to prepare and file an amended return to fix the errors in the originally filed return. A lot of taxpayers tend to choose the wrong filing status or notice mathematical errors on their returns. It’s important that if you do realize you made a mistake on your federal tax return, that you file an amended return as soon as possible.
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One of the biggest struggles we see with our clients is them trying to deal with a revenue officer by themselves. A revenue officer is an IRS civil enforcement employee who works cases that involve an amount of money owed by a taxpayer or a delinquent tax return. Their job is to collect tax debts on those cases the IRS has deemed significant. Usually individuals who owe more than $250,000 to the IRS will be assigned a revenue officer.
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Liens
As the US continues to undergo major tax reform changes, there is one in particular that might catch your eye. The IRS released a draft of a new post-card sized Form 1040 that will streamline tax returns and allow all American taxpayers to use the same form. The updated form will replace and consolidate the 1040 with the 1040A and 1040EZ as well, eliminating the latter two. The IRS plans to complete the streamlined Form 1040 over the summer with the help of the tax professional community. The 1040 forms are the most common tax forms and this will be the first major change to the forms in decades.
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In this month's closed case round up, we have a business owner who didn't file their tax returns for a few years and a contractor that created a large tax debt after his business slowed down!
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audit help,
Audit,
levy,
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Tax Help,
Tax Law
