You can appeal a federal tax lien if the following occured when it was filed. The law requires the IRS to notify you within 5 business days of a lien being filed. The IRS can give you this notice in person or leave it at your home or your usual place of business. The IRS can also send it by certified or registered mail to your last know address.
If you feel this was not done, you can ask an IRS manager to review your case. You can ask for a Collection Due Process hearing with the office of appeals by filing a request for a hearing with the office listed on your notice. There is a deadline to file for a request so check your notice for that date.
These are the issues you can discuss in your appeals hearing or with the IRS manager.
- You paid all your taxes before the IRS filed the lien
- The IRS assessed the tax and filed the lien while you were in bankruptcy. Bankruptcy puts you in a automatic stay of collections for that time period.
- The time to collect the tax, known as the statute of limitations, expired before the IRS filed the lien.
- You did not have time to dispute the assessed tax liability.
- You wish to discuss the collection options.
- You wish to make spousal defense.
When your Collection Due Process hearing is over, the IRS office of appeals with issue a determination. It will either support the lien filed or if the lien needs to be released or withdrawn. If you disagree with the determination, there is a 30 day period starting with the date of determination, in which you may request Judaical review in a court of proper jurisdiction.
Wednesday, January 21, 2009
Releasing a Federal Tax Lien
If you owe the IRS you may have a Federal Tax Lien filed against you. If you do, you can not sell your home unless you pay off your tax liability. You can get a copy of your lien in the county courthouse where you live, but the amount due will be out of date. You have to call the IRS and find out how much is owed currently because interest and penalties have been added to your balance.
You can sell your home if the money you make from the sale of you home is enough to full pay your tax liability. In most cases the only thing to do is to issue checks to the IRS for the taxes and the IRS will automatically release the lien in 30 days from the date the taxes are paid.
In the case that a lien discharge is needed for the title insurance company, you need to apply for a lien discharge with the IRS. Instructions for doing that are here. The really good news is that the IRS is helping to facilitate these discharges in weeks instead of months to help tax payers settle their back taxes.
If you need help with this find a knowledgeable real estate agent and a good tax resolution firm to help with the discharge. The tax firm can research all of your back taxes and help facilitate the discharge by talking with the IRS for you.
You can sell your home if the money you make from the sale of you home is enough to full pay your tax liability. In most cases the only thing to do is to issue checks to the IRS for the taxes and the IRS will automatically release the lien in 30 days from the date the taxes are paid.
In the case that a lien discharge is needed for the title insurance company, you need to apply for a lien discharge with the IRS. Instructions for doing that are here. The really good news is that the IRS is helping to facilitate these discharges in weeks instead of months to help tax payers settle their back taxes.
If you need help with this find a knowledgeable real estate agent and a good tax resolution firm to help with the discharge. The tax firm can research all of your back taxes and help facilitate the discharge by talking with the IRS for you.
Wednesday, January 14, 2009
How much do you know about your taxes?
In an article on April15.com, H & R Block did a survey of 1000 US Adults on how well they know their taxes. Many can not even answer basic tax questions. Almost 60% did not know the difference between and tax credit (which lowers your tax liability dollar for dollar) and a tax deduction (it lowers your liability by a percentage.
Location was cited as the most popular reason for picking a tax preparer, not how well a preparer was knowledgeable in tax law.
Most do not know which tax bracket they are in and 83% did not know they could go back and amend a tax return for the 3 prior years if errors were made in the return.
A tax payer should never prepare their own tax return. There is way too much involved with it. A simple calculation error or missing a credit or deduction can cost you money, time and a lot of hurt dealing with the IRS. Find a reputable tax preparer and get it done right.
Location was cited as the most popular reason for picking a tax preparer, not how well a preparer was knowledgeable in tax law.
Most do not know which tax bracket they are in and 83% did not know they could go back and amend a tax return for the 3 prior years if errors were made in the return.
A tax payer should never prepare their own tax return. There is way too much involved with it. A simple calculation error or missing a credit or deduction can cost you money, time and a lot of hurt dealing with the IRS. Find a reputable tax preparer and get it done right.
Monday, January 12, 2009
Tax Refund, Will I get mine if I owe?
As a condition of your agreement, any refund due you in a future year will be applied against the amount you owe.
Continue making your installment agreement payments as scheduled because your refund is not considered as a substitute for your regular payment due.
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.
IRS will automatically apply the refund to the taxes owed.
If you owe taxes when you file and you can not pay the full amount, you can get help here.
Continue making your installment agreement payments as scheduled because your refund is not considered as a substitute for your regular payment due.
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.
IRS will automatically apply the refund to the taxes owed.
If you owe taxes when you file and you can not pay the full amount, you can get help here.
Tax Credit for Adoption
The benefits for adopting a child have increased form 2007.
For 2008, the maximum adoption credit has increased to $11,650. Also, the maximum exclusion from income for benefits under your employer's adoption assistance program has increased to $11,650. These amounts are phased out if your modified adjusted gross income (MAGI) is between $174,730 and $214,730. You cannot claim the credit or exclusion if your MAGI is $214,730 or more.
For 2009, the maximum adoption credit has increased to $12,150. Also, the maximum exclusion from income for benefits under your employer's adoption assistance program has increased to $12,150. These amounts are phased out if your modified AGI is between $182,180 and $222,180. You cannot claim the credit or exclusion if your modified AGI is $222,180 or more.
This is good news for those who adopted children last year and plan to do so this year.
For more help on tax preperation and tax resolution find a good tax firm.
For 2008, the maximum adoption credit has increased to $11,650. Also, the maximum exclusion from income for benefits under your employer's adoption assistance program has increased to $11,650. These amounts are phased out if your modified adjusted gross income (MAGI) is between $174,730 and $214,730. You cannot claim the credit or exclusion if your MAGI is $214,730 or more.
For 2009, the maximum adoption credit has increased to $12,150. Also, the maximum exclusion from income for benefits under your employer's adoption assistance program has increased to $12,150. These amounts are phased out if your modified AGI is between $182,180 and $222,180. You cannot claim the credit or exclusion if your modified AGI is $222,180 or more.
This is good news for those who adopted children last year and plan to do so this year.
For more help on tax preperation and tax resolution find a good tax firm.
Don't Miss Out On Your Tax Credit
The IRS reminds us of tax dedutons we may be overlooking. Here is a list of a few that are taking by a lot of tax payers.
Tax credits can help pay the cost of raising a family, going to college, saving for retirement or getting daycare for dependents. But each year, many taxpayers overlook these credits, even though they often qualify for one or more.
While tax deductions and tax credits can both save money, they are fundamentally different. A deduction lowers the income on which the tax is figured, while a credit lowers the tax itself.
The popular credits listed below can help either lower a taxpayer’s bill or increase a refund.
First-Time Homebuyer Credit
Those who bought a main home recently or are considering buying one may qualify for the first-time homebuyer credit. Normally, a taxpayer qualifies if she didn’t own a main home during the prior three years. This unique credit of up to $7,500 works much like a 15-year interest-free loan. It is available for a limited time only –– on homes bought from April 9, 2008, to June 30, 2009. It can be claimed on new Form 5405 and is repaid each year as an additional tax. Income limits and other special rules apply.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) helps people who work but do not earn a lot. Working families with incomes below $41,646 and childless workers with incomes under $15,880 often qualify. Generally, you must have earned income as an employee, independent contractor, farmer or business owner to qualify. Taxpayers under the minimum retirement age who receive disability payments from an employer plan may also be eligible. The EITC Assistant, available in mid-January, can help you see if you qualify.
Child Tax Credit
A taxpayer who has a dependent child under age 17 probably qualifies for the child tax credit. This credit, which can be as much as $1,000 per eligible child, is in addition to the regular $3,500 exemption claimed for each dependent. A change in the way the credit is figured means that more low- and moderate-income families will qualify for the full credit on their 2008 returns.
Credit for Child and Dependent Care Expenses
An individual who pays for someone to care for a child so he or she can work or look for work probably qualifies for the child and dependent care credit. Normally, the child must be the taxpayer’s dependent and under age 13. Though often referred to as the child care credit, this credit is also available to those who pay someone to care for a spouse or dependent, regardless of age, who is unable to care for him- or herself. In most cases, the care provider’s Social Security
Education Credits
The Hope credit and the lifetime learning credit help parents and students pay for post-secondary education. Normally, a taxpayer can claim both his or her own tuition and required enrollment fees, as well as those for a dependent’s college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. A taxpayer can also choose the lifetime learning credit, even if she is only taking one course. In some cases, however, she may do better by claiming the tuition and fees deduction, instead.
Saver’s Credit
The saver’s credit is designed to help low- and moderate-income workers save for retirement. A taxpayer probably qualifies if his income is below certain limits and he contributes to an IRA or workplace retirement plan, such as a 401(k). Income limits for 2007 are:
$26,500 for singles and married taxpayers filing separately
$39,750 for heads of household and
$53,000 for joint filers
Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply. There is still time to put money into an IRA and get the saver’s credit on a 2008 return. 2008 IRA contributions can be made until April 15, 2009.
Other Credits Available
Recovery Rebate Credit, claimed on Form 1040 Line 70, Form 1040A Line 42 and Form 1040EZ Line 9. FS-2009-3 has further details
District of Columbia first-time homebuyer credit, claimed on Form 8859
Foreign tax credit, claimed on Form 1040 Line 47
Credit for the elderly or the disabled, claimed on Form 1040 Schedule R
Adoption credit, claimed on Form 8839
Residential energy efficient property credit, claimed on Form 5695
Alternative motor vehicle (including hybrids) credit, claimed on Form 8910
Credit for prior year minimum tax, claimed on Form 8801
Credits Save Taxpayers Money
These credits can increase a refund or reduce a tax bill. Usually, credits can only lower a tax liability to zero. But some credits, such as the EITC, the child tax credit, the Recovery Rebate Credit and the first-time homebuyer credit, are refundable –– in other words, they can make the difference between a balance due and a refund.
Although some credits are available to people at all income levels, others have income restrictions. These include the EITC, the Recovery Rebate Credit, the saver’s credit, the first-time homebuyer credit, the education credits and the child tax credit.
A taxpayer who qualifies can claim any credit, regardless of whether he or she itemizes deductions. Any credit can be claimed on Form 1040, sometimes referred to as “the long form.” Alternatively, many credits can also be claimed on the 1040A “short form.” The EITC and Recovery Rebate Credit can even be claimed on Form 1040EZ. The instruction booklet for each of these forms contains information about these and other tax credits.
Tax credits can help pay the cost of raising a family, going to college, saving for retirement or getting daycare for dependents. But each year, many taxpayers overlook these credits, even though they often qualify for one or more.
While tax deductions and tax credits can both save money, they are fundamentally different. A deduction lowers the income on which the tax is figured, while a credit lowers the tax itself.
The popular credits listed below can help either lower a taxpayer’s bill or increase a refund.
First-Time Homebuyer Credit
Those who bought a main home recently or are considering buying one may qualify for the first-time homebuyer credit. Normally, a taxpayer qualifies if she didn’t own a main home during the prior three years. This unique credit of up to $7,500 works much like a 15-year interest-free loan. It is available for a limited time only –– on homes bought from April 9, 2008, to June 30, 2009. It can be claimed on new Form 5405 and is repaid each year as an additional tax. Income limits and other special rules apply.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) helps people who work but do not earn a lot. Working families with incomes below $41,646 and childless workers with incomes under $15,880 often qualify. Generally, you must have earned income as an employee, independent contractor, farmer or business owner to qualify. Taxpayers under the minimum retirement age who receive disability payments from an employer plan may also be eligible. The EITC Assistant, available in mid-January, can help you see if you qualify.
Child Tax Credit
A taxpayer who has a dependent child under age 17 probably qualifies for the child tax credit. This credit, which can be as much as $1,000 per eligible child, is in addition to the regular $3,500 exemption claimed for each dependent. A change in the way the credit is figured means that more low- and moderate-income families will qualify for the full credit on their 2008 returns.
Credit for Child and Dependent Care Expenses
An individual who pays for someone to care for a child so he or she can work or look for work probably qualifies for the child and dependent care credit. Normally, the child must be the taxpayer’s dependent and under age 13. Though often referred to as the child care credit, this credit is also available to those who pay someone to care for a spouse or dependent, regardless of age, who is unable to care for him- or herself. In most cases, the care provider’s Social Security
Education Credits
The Hope credit and the lifetime learning credit help parents and students pay for post-secondary education. Normally, a taxpayer can claim both his or her own tuition and required enrollment fees, as well as those for a dependent’s college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. A taxpayer can also choose the lifetime learning credit, even if she is only taking one course. In some cases, however, she may do better by claiming the tuition and fees deduction, instead.
Saver’s Credit
The saver’s credit is designed to help low- and moderate-income workers save for retirement. A taxpayer probably qualifies if his income is below certain limits and he contributes to an IRA or workplace retirement plan, such as a 401(k). Income limits for 2007 are:
$26,500 for singles and married taxpayers filing separately
$39,750 for heads of household and
$53,000 for joint filers
Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply. There is still time to put money into an IRA and get the saver’s credit on a 2008 return. 2008 IRA contributions can be made until April 15, 2009.
Other Credits Available
Recovery Rebate Credit, claimed on Form 1040 Line 70, Form 1040A Line 42 and Form 1040EZ Line 9. FS-2009-3 has further details
District of Columbia first-time homebuyer credit, claimed on Form 8859
Foreign tax credit, claimed on Form 1040 Line 47
Credit for the elderly or the disabled, claimed on Form 1040 Schedule R
Adoption credit, claimed on Form 8839
Residential energy efficient property credit, claimed on Form 5695
Alternative motor vehicle (including hybrids) credit, claimed on Form 8910
Credit for prior year minimum tax, claimed on Form 8801
Credits Save Taxpayers Money
These credits can increase a refund or reduce a tax bill. Usually, credits can only lower a tax liability to zero. But some credits, such as the EITC, the child tax credit, the Recovery Rebate Credit and the first-time homebuyer credit, are refundable –– in other words, they can make the difference between a balance due and a refund.
Although some credits are available to people at all income levels, others have income restrictions. These include the EITC, the Recovery Rebate Credit, the saver’s credit, the first-time homebuyer credit, the education credits and the child tax credit.
A taxpayer who qualifies can claim any credit, regardless of whether he or she itemizes deductions. Any credit can be claimed on Form 1040, sometimes referred to as “the long form.” Alternatively, many credits can also be claimed on the 1040A “short form.” The EITC and Recovery Rebate Credit can even be claimed on Form 1040EZ. The instruction booklet for each of these forms contains information about these and other tax credits.
Keep Good IRS Tax Records
Keeping Good Tax Records
In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.
Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.
Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.
Publication 583, Starting a Business and Keeping Records,
and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.
These publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676). Actually, there is a wealth of free tax information on the IRS Web site. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.
In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.
Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.
Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.
Publication 583, Starting a Business and Keeping Records,
and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.
These publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676). Actually, there is a wealth of free tax information on the IRS Web site. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.
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