Taxes 101 – Year-End Tax Savings Strategies

Though our firm specializes in helping people resolve their IRS or State back tax problems, we also love saving money. After all, one of the best ways to avoid getting into tax trouble is to have a solid tax strategy to minimize your liabilities.

The end of the year is the perfect time to review your finances, and the perfect time to make some smart tax saving moves. Making the right moves at the end of the year can reduce your tax liability and allow you to keep more of what you earn.

From harvesting your capital losses to boosting the amount you put away for retirement, there are things you can do to lower your tax burden. You may not be able to control the tax fight in Washington, but you can limit the amount you pay by assessing your own tax situation and making some prudent changes.

Boost Your 401(k) Contributions

As the year ticks down to its close, it pays to look at your most recent pay stub and see how much you have already contributed to your 401(k) plan. Contributing to a 401(k) plan is an excellent way to save on taxes, since every dollar you put in is deducted from your taxable income.

For 2018, you can contribute up to $18,500 to your 401(k) plan, plus an extra 6,000  if you are 50 or older. If you have not yet maxed out your 401(k), now is the perfect time to boost your contributions and make up for lost time. Many companies allow you to change your contribution percentage any time you wish, so boosting the amount you put in between now and the end of the year can make a huge difference. You can adjust your contribution downward in the new year if you wish, but at least consider leaving it at its new elevated level.

Gather Your Donations

Donating to charity makes you feel good, but it can also be good for your wallet. If you itemize your deductions, you can take a deduction for not only cash contributions but gifts of household goods and clothing as well.

Take a few minutes this weekend to go through your closets and storage areas. Look for usable items you no longer need, box them up and take them down to your local thrift store or other charity. Be sure to get a receipt that shows what you donated, along with the approximate value. Keep those receipts in a safe place and use them to lower your taxes when you complete your return.

Rebalance Your Portfolio

No matter what you invest in, it is important to review your portfolio at least once a year. That annual review gives you a chance to see how your investments have done, but it allow allows you to rebalance your mix of stocks, bonds and other holdings.

Start by gathering your most recent brokerage and mutual fund statements, then add up your holdings in the applicable categories, like stocks, bonds and cash. Compare the percentages to your ideal portfolio, then make any adjustments needed to bring things back into balance. This exercise can keep your investment strategy on track, but it can also help you lower your taxes.

Harvest Your Losses

When you make an investment, you expect to realize a profit, but things do not always work out that way. If one of more of your investments has been a disappointment, the end of the year is the perfect time to cut your losses and use them to lower your taxes.

If you have a loss in a stock, mutual fund or other investment, you can use that loss to offset any capital gains you have elsewhere. If the amount of your losses exceeds your gains, you can write off up to $3,000 against your taxable income. That could make a big difference in how much you pay, so go through your stock portfolio and look for any underperforming stocks you want to get rid of.

Taking some time at the end of the year can lower your tax burden substantially while helping you plan more effectively for the future. For instance, retaining that higher level of 401(k) contributions can lower your taxes now, and next year as well. Getting rid of those loser stocks and harvesting your losses can make your portfolio stronger in the new year and get you off to a great start in your investment portfolio. The time you spend making those last minute tax moves just may be the most profitable time you will spend all year.

Owe Back Taxes? 3 Real Reasons You Need A Tax Resolution Professional NOW!

Owing money to the IRS or State can be daunting, intimidating and throw your life out of whack. You might be tempted to just hide your head under a pillow, but ignoring your back taxes will only make the situation worse. Penalties and interest alone can bury you deeper so it’s important to take immediate action.

But where do you start? How do you go about tackling the behemoth that is the IRS and start getting your life back? A qualified Tax Resolution firm can help. Here are 3 real reasons to at least have a conversation with our tax firm. If you’re ready, you can contact us here Give us a call at 214-447-7544!

#1. Penalties and Interest - Don’t Let Them Pile On

The IRS has over 148 different types of penalties they can hit you with.

And the worst part is that the IRS can also charge interest on the interest (called “compounding”) and on the original penalties.

Penalties can be such a high percentage of the total amount owed to the IRS, it usually makes sense to consider requesting the IRS to reduce all penalties to ZERO.

IRS penalties can often be reduced to ZERO if you have REASONABLE CAUSE.  What makes up REASONABLE CAUSE you ask?  Well, in our experience in negotiations with the IRS, anything may qualify as long as it’s reasonable.

We’ve had the IRS abate penalties for medical reasons, bad accountants, and ignorance of the tax laws, ex-spouses, helping to provide care for a loved one, military call-ups, fires, floods, alcoholism, drug abuse, death and even for relying on IRS advice.


#2. You don’t have to talk to the IRS.

As a matter of fact, going or talking to the IRS yourself could be the worst thing you can do. The taxpayer Bill of Rights allows you to be represented by a qualified practitioner who can answer questions for you and provide documentation and a resolution to the IRS. Many taxpayers attempt to handle things on their own or hire the person who prepared the tax return to handle it for them.  This does not usually work out because most tax return preparers do not handle IRS tax problems on a daily basis.  The IRS can easily intimidate them, which usually results in an unfavorable outcome.

#3 You have options to get out of tax trouble and stay out of tax trouble

The IRS has multiple options for troubled taxpayers, including cutting deals that can drastically reduce your total amount owed, often referred to as the Office in Compromise Program. To see if that’s an option for you, contact us so that our tax resolution firm can fully assess your individual financial situation and make a recommendation for resolution.

Remember, doing nothing not only doesn’t fix the problem but the longer you do nothing the problem only gets worse.

We’ll contact the IRS on your behalf, get you compliant by helping you file all your past tax returns if needed, then work on an individualized tax debt resolution plan which we present to the IRS that will permanently solve your tax problem and keep you out of trouble. Give us a call at 214-447-7544!





Income Tax Refund Loans and Back Taxes!

If you file your taxes electronically and allow the government to deposit your refund directly into your checking account, the Internal Revenue Service promises to refund your money within 21 days. Before 2012, you could get the money sooner through a refund anticipation loan offered by most tax preparers. Major lenders don't offer RALs anymore, and any loan you take out to get your refund money early is based on your credit history and income, not your income tax refund. Past due state taxes will only affect the decision on your loan to the extent that the back taxes appear as a collections item on your credit report.

Back Taxes

If you owe back taxes, any refund you're due from this year's tax return automatically goes toward paying your back taxes. If you owe state back taxes, the state can put a lien on your federal refund. If you owe federal back taxes, the IRS can put a lien on your state refund. The government also can place a lien on your tax refund if you're past due on student loans or if you're behind on child support payments.

Refund Anticipation Loans

Prior to 2012, you could get a refund anticipation loan through your tax preparer and receive the funds in about a day. When the tax preparer received your refund, it paid off the loan and distributed any remaining balance to you. However, the government determined that RAL practices violated federal lending regulations and state laws, and the IRS changed its policy.

Getting Your Money Earlier

Some companies market short-term "payday loans" to consumers as a replacement for RALs. Consumers might not realize that the loans don't consider the size of your refund or whether you owe back taxes. Lenders follow standard lending practices and consider your credit history and your annual income. To get approved for a loan, some lenders require that you have your paycheck direct deposited into your account. The company makes the loan due on a day you get paid, and it electronically debits your account for the balance of the loan before the bank even opens its doors for business.

Refund Anticipation Check

Some tax preparers charge a fee for a program called a refund anticipation check. A tax preparer charges a tax preparation fee to prepare and file your taxes. When you're due a refund, the preparer loans you the money for the tax preparation fee until you receive your refund. You don't have to pay anything out-of-pocket until the government sends your refund. A refund anticipation check doesn't provide you with money any sooner than when the government provides it to you. It simply defers your tax preparation fee until you receive your refund.

What if you owe back taxes and need to pay them?

 If you happen to owe back taxes, the IRS can garnish your paycheck, levy your bank accounts, put a lien on your home and seize other assets. It’s important to not let the debt pile on but it’s equally important that you don’t dig yourself into a deeper hole by taking on high interest loans to pay off your back taxes.

We always recommend getting in touch with a specialized tax resolution professional to help avoid the harsh penalties and interest that accrued on your back taxes. It’s far easier to navigate towards tax resolution, if you have a professional working with you. If you’d like to schedule a no-cost confidential tax relief consultation, contact us here. Call our office to discuss your situation at 214-447-7544.


What are the Chances that your Income Tax Return will be Audited?

For the vast majority of taxpayers, there is not much need to worry that you will be audited. In 2016, only 0.6% of individual income tax returns were audited according to the IRS 2017 Data Book. Why? For starters, the IRS budget has been cut resulting in more than 2,200 fewer agents available to audit returns. However, the “real” audit rate is closer to 7.o% as the IRS does not include the over 9.2 million notices that are questioning items on your client’s tax returns such as forgetting to include  a 1099-Misc form.  The IRS is relying more and more on technology  to uncover underreporting and underpayment of taxes. Also, certain taxpayer groups are more susceptible to catching the attention of auditors.

If you’re in the middle of an audit or owe back taxes, contact us to schedule a free consultation. Call our office at 214-447-7544. 

Returns that report more than $10 million in income or report no income

Sixteen percent of individuals who reported over $10 million in income were audited in 2014. Surprisingly, those returns that reported no income were audited at a higher rate than the average person. In 2014, 5.3% of tax returns with no income reported were audited. If your income is $25,000 - $200,000, you're highly unlikely to be singled out for an audit.

Estate Tax Returns of more than $5 million

In 2014 the IRS did an audit on 8.5% of estate tax returns which was well above the .9% of individual returns. Even larger estate tax returns, 21% of those between $5 million to $10 million were audited, while 27% of those over $10 million received an audit.

Individual filing of international returns raises a red flag

The IRS is focusing more attention on international returns. Statements made by experts in the field, strongly emphasized the practice of offshore tax evasion as being fundamentally unfair. Wealthy people evading the law by stashing their money overseas and not paying their share of tax is forcing the bulk of lower income citizens to foot the bill to fund the government. In 2014 only 4.8% of the international returns were audited.

Errors in information entered

Simple careless mistakes in filling out income tax forms are made which send up red flags to the tax auditors. Filers neglect to get all report forms and statements together and forget to report dependents and exemptions correctly. The automated systems recognize these discrepancies, but can't tell if they are actual mistakes or intentional. Neglecting to report all your income and other figures could result in an audit especially at higher incomes. Those who contribute to more charities and other organizations open up the possibility for fraud.

Reports of itemized deductions that is unrealistic

If an individual or small business claims itemized deductions that are clearly out of line, they could be signaled out for an audit. Filers need to know what a legitimate deduction entails.

Carefully reading directions for completing forms and checking for accuracy and honesty will reduce the chances of an audit. Hiring a tax professional, specifically someone with tax resolution experience like our firm, can help you stay out of tax trouble.

If you need an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Call our office at 214-447-7544. 


A Taxing Situation: Timely Tax Tips for Cryptocurrency Investors!

Until recently, cryptocurrency investors have mostly flown under the radar as far as taxes are concerned. Now those days are coming to an end, and many holders of virtual currency are scrambling to understand what they owe and how their investments may impact their finances.

The IRS has already requested the identities of those who hold substantial amounts of cryptocurrency, and it is only a matter of time until the tax agency broadens its scope. Just as with overseas bank accounts, the days of free riding in the cryptocurrency market are quickly coming to an end.

When the veil of secrecy got pierced for holders of Swiss bank accounts, wealthy individuals all over the world were shocked -- and suddenly a lot poorer. And while cryptocurrency fans have primarily relied on the supposed anonymity of their investments to protect themselves, recent events have shown that Bitcoin, Ethereum and the like are not entirely as anonymous as advertised. So before the tax man comes calling, it is time to get out ahead of the situation.

Here are some timely tax tips for cryptocurrency investors but before we get into it, if need an expert tax advisor or are already in tax trouble, reach out to our firm and we’ll schedule a confidential consultation. Call us at 833-921-9977.

Do Not Assume Your Account is Too Small

 If you only have a few hundred dollars in the cryptocurrency market, you may assume that your account is too small to get the attention of the IRS, but that is not necessarily the case. As the tax agency gets better at sorting out the records of cryptocurrency exchanges, they will likely expand their reach beyond the most significant players in the marketplace.

As the reach of the tax agency broadens, more and more cryptocurrency investors will become ensnared in their net. Keep in mind that much of this information gathering is automated and that the IRS may begin to generate statements on that basis.

Know that All Cryptocurrencies Will Be Impacted Eventually

While Bitcoin is the first, and by far the most significant cryptocurrency tax target, eventually the IRS will start poking around in other forms of virtual payment. Even if you have eschewed Bitcoin in favor of other cryptocurrencies, you should not expect a free ride from the IRS.

In fact, certain altcoins may garner considerably more IRS scrutiny, especially forms of payment associated with drug purchases and other transactions on the dark web. Even if you are not doing anything wrong, your holdings in those altcoins could get the attention of the IRS and eventually generate a big tax bill.

Keep Careful Records

The tax man is coming eventually, and the best thing you can do is prepare now. Waiting until the IRS comes calling could mean big penalties and additional interest, so the best strategy is to calculate your holdings and determine what you might owe.

Keeping extensive and accurate records will be essential going forward, but you might want to go back and look at your past purchases and sales. Every transaction, including purchases using cryptocurrency as payment, could potentially be a taxable event, so good recordkeeping is vital.

The IRS is interested primarily in the money you make on cryptocurrency, not necessarily on how many virtual coins you own. Calculating the cost basis, i.e., what you paid for the coins in the first place, can help you avoid paying too much in taxes while keeping you on the right side of the IRS.

Watch Out for Scams

The fact that cryptocurrency is in the IRS crosshairs has taxpayers worried. Unfortunately, the new tax scrutiny has also given rise to many scams, and it is essential for investors to prepare for the possibility.

These tax scams are likely to follow a familiar scenario, albeit with a cryptocurrency twist. The scam artist may call holders of cryptocurrency, claiming to be from the IRS and demanding immediate payment for taxes owed.

While the tax agency has taken a new interest in cryptocurrency investments, they do not initiate collection activities over the phone or via email. If you do owe money on your cryptocurrency holdings, you will receive a letter from the IRS, and possibly a bill as well. If you receive a threatening phone call or suspicious email, ignore it - or report it to the authorities and the IRS.

The cryptocurrency market is growing up, and the IRS has finally taken notice. After many years of flying under the radar, cryptocurrency investors are finally getting the attention of the IRS. Whether you were an early adopter or recently joined the virtual payment revolution, you need to prepare for the tax implications of this 21st-century investment. The sooner you get started, the less taxing the situation will become.

If need an expert tax advisor or are already in tax trouble, reach out to our firm and we’ll schedule a confidential consultation. 833-921-9977.







If You Don't Have Money to Pay Your Taxes, You Have Legitimate Options!

If you don't have money to pay what you owe the IRS, you have a few options to work with. Whatever you do, don’t ignore the letters from the IRS and don’t let your back tax problem go unattended. The IRS has a great deal of power when it comes to recovering money they think is theirs.

When you owe the IRS money,  they can garnish your wages, levy your bank accounts, put a lien on your home and seize other assets.

Here's what you can do if you find yourself not being able to pay your taxes. Note, we always recommend getting in touch with a specialized tax resolution professional to help avoid the harsh penalties and interest that accrued on your back taxes. It’s far easier to navigate towards tax resolution, if you have a professional working with you. If you’d like to schedule a no-cost confidential tax relief consultation, contact us here. 833-921-9977.

First, make sure that you file your returns

Even if you have no hope of being able to pay your taxes, you should at least file your income tax returns. Whatever the penalties are for not paying your taxes, the penalties for not filing are much larger. The IRS will remove penalties for not filing and not paying but you have to have a good reason. We can request to have your penalties removed or reduced. It's also important to remember that when you file for an extension, it only gives you more time to file. Your payment date remains unchanged.

Revisit your W-4 withholdings

If your employer withholds money from your salary to pay your taxes with, you shouldn't have to worry about paying anything extra from that income source. If you do owe more, it's a sign that you withholding exemptions are incorrectly reported on your W-4 form. To make sure that you don't get into tax trouble repeatedly, you should make sure your W-4 form is correct and get advice from a tax professional about the kind of withholdings necessary exemptions.

Make a partial payment

If you can't afford to pay all that you owe, you should pay whatever you can. While you will still be hit with interest and penalty charges, they will be smaller than they would be if you paid nothing. These charges are proportional to what you owe the IRS.

Try to work with the IRS

If you can't pay, there are resolution options available to you if you qualify for them. They include a payment plan or an offer in compromise to name a few. You need to first step up and admit to your inability to pay, though.

When the IRS grants you a payment plan, you get to pay your back taxes in installments each month. Applying for a payment plan is easy if you owe less than $10,000 - you simply need to fill out the form online. It can be more difficult to get the IRS to accept a monthly payment plan if you owe $10,000 to $50,000. If you owe more than $50,000, you need to complete IRS form 433-A.  Generally once you hit the $50,000 threshold it’s advisable that you hire the services of a competent experienced tax professional.  If your repayment plan is approved, they can give you  up to 72 months to finish paying. You need to pay interest and processing fees for the plan, though.

If your financial hardship is serious enough to preclude the possibility of repayment in the future, the IRS has a program called the Offer in Compromise. You need to prove to the IRS that you will never be able to pay the full amount back even over time.

Contact us if you’d like assistance in resolving your tax problem. Schedule a free confidential consultation here.  833-921-9977

Be sure to not fall for false promises

Scammy so called tax professionals and other con artists know how desperate things can get for people who are unable to afford their taxes. They sometimes advertise on television and radio, promising to negotiate with the IRS to bring your taxes down in return for a large fee without first seeing what IRS programs you are eligible for. You should be very careful before engaging these types of companies. Going to a local, experienced tax resolution professional may be in your best interest.

If you need an expert tax resolution provider who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. 833-921-9977


Increase Self Employed!

The House says it is worried about the growing numbers of self-employed people because it creates opportunities for them to avoid taxes.

If you’re self employed, it’s important to have solid accounting so you don’t get in tax trouble.

Unpaid Tax Debt Affecting Your Ability To Obtain Or Renew A Passport?

As many as 362,000 Americans with unpaid tax debts will not be able to apply for or renew passports until their debts are settled. The new law requires the Internal Revenue Service and the State Department to deny or revoke passports for people who have an overdue tax debt of $51,000 or more. If you have any back-tax issues, contact us for a confidential consultation.

Taxable Income, But No Cash?

A variety of events can give you taxable income even though you’ve seen no cash.

Here’s how it works when you have taxable income but no cash.




Achieve Tax Resolution with an Offer in Compromise!

An offer in compromise is the IRS’ tax resolution debt settlement program. It’s a program for taxpayers who owe the Internal Revenue Service more money than they can afford to pay.

It’s the IRS’s version of a “fresh start” when it comes to tax debt. If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt. However, it isn't always easy to gain approval due to its strict criteria. Your odds for acceptance increase significantly when you have experience negotiating with the IRS.

The IRS considers your income, assets, expenses, ability to pay, and whether paying the full amount would cause financial hardship.

Information You Need to Submit an Application for an Offer in Compromise

It's important to remember that the IRS wants its money and will only accept an offer in compromise if it thinks it wouldn't receive any money otherwise. You must be current with all filing and payment requirements to apply. Additionally, you cannot be in the process of filing bankruptcy.

You can find more information about the IRS Offer in Compromise on the IRS website here.  If you want help with your back tax problem, contact us today for a consultation at 833-921-9977.

After supplying the IRS with your name, address, social security number, and the amount of tax debt you would like it to consider for this program, you need to supply details about your income, assets, and expenses. In addition to wages, your personal income can include:

  • Business profit
  • Self-employment income
  • Rental income
  • Child support or alimony
  • Interest on investments

Your assets can include things such as:

  • Stocks and bonds
  • Resale value of your personal vehicles
  • Market value of your home
  • Balance of your retirement savings accounts
  • Balance of bank accounts, including checking, savings, and investments

For the expense section, you should only include items you pay regularly. These may include:

  • Rent or mortgage
  • Child support or alimony
  • State and federal taxes
  • Daycare costs
  • Costs to maintain a vehicle
  • Auto, health, and life insurance

Compiling this information and completing the application correctly can be challenging even for tax practitioners who don’t have expertise in dealing with the IRS. Your CPA or tax advisor most likely doesn’t have experience with resolving back tax issues. That’s why we recommend working with a specialized tax resolution professional like us to better understand this option and increase your chances of approval. Give us a call today at 833-921-9977 to discuss your needs.