Settle Your Back Taxes

One way that you can settle outstanding tax debts is by negotiating an Installment Agreement with the U.S. government which involves paying your back taxes over an agreed upon period of time.

If monthly payments still cannot be paid because of financial difficulty and you do not qualify for any other type of tax relief, you may arrange for your account to be placed in “currently not collectible” state. This will keep the IRS from taking any further collection action for the time being and you will not be required to make any payments.

If an IRS Installment Agreement is an option, then what is it? As mentioned, an Installment Agreement allows you to setup a payment schedule. As long as you are staying current with your monthly payments, the government will not enforce any collective actions against you. On the downside, you will still be racking up interest and penalties as you go along until the balance is paid in full. And depending on the amount of the debt, a tax lien may be put in place.

In order to qualify for an IRS Installment Agreement the following must all be true:

• You must have filed all of your taxes. Even though you owe them money you still must have your tax filings up to date.
• You must show full disclosure of all assets including bank accounts and cash on hand.
• You must NOT have enough cash on hand or in any accounts to pay your debt.
• You must have exhausted all borrowing options, including a second mortgage, etc.
• You must NOT have enough equity in any retirement accounts to satisfy your debt.

Need Help With Your Taxes?

Many taxpayers until today are still in the confused state when it comes to filing individual tax payments. There are help available freely to us taxpayers, provided free for all taxpayers by the IRS themselves.

Since taxpayers pay up to a total of $7.5 Billion of tax per year, a taxpayer can seek for help to file for their tax payment as long as they meet the IRS’s criteria for tax payment help. There are sites such as the Tax Counseling for the Elderly Program (TCE) where taxpayers can benefit from the free tax return preparation and tax help for the elderly. Individual volunteers of TCE are usually retirees tied to non-profit organizations and being supported by the IRS.

If you are one of the low to moderate income individual with an annual income of less than $42,000 a year, you can look forward to the IRS Volunteer Income Tax Assistance Program (VITA) to help you to prepare for tax returns. There are many certified volunteers that are being placed in community centers, libraries and shopping malls to aid taxpayers to file for taxes.

Free help does not end here, and military families can also seek for free help on preparing tax return papers be it you are an Airman, Marines, soldiers, or even your immediate family members. One can look for the Armed Forces Tax Council (AFTC) for help if you are the one serving the country for the good cause.

There is another approach for those who do not meet the criteria as mentioned above. The Community Outreach Tax Education Program provides tax seminars to educate taxpayers on how to file for tax returns. One can also learn how to reduce the amount of taxes by learning about the tax benefits that you deserve, helping you to pay less and save more!

Tax Avoidance and Tax Evasion – There Is A Difference!

When you found out that you have a huge amount of tax to pay the government, you must be clear to yourself of what options you can take to reduce the taxes – and not in the illegal way!

Tax avoidance and tax evasion – these are two different things and one should never get them mixed up. Tax avoidance, also known as tax mitigation is the method of reducing tax amount by taking advantage on tax benefits such as claiming beneficial items such as health products, personal improvement products, and also investments to our personal good.

If we look at another term mentioned earlier, tax evasion is actually escaping taxes. Declaring goods wrongly on purpose is considered illegal. It makes no difference than smuggling an item into the country which they would not need to pay any duty. Illegal methods such as these can easily cost you more trouble even though it is just a small amount of goods or money involved.

One can sell a property in the United States and follow up with the purchase of another property. Although it has a gain in it but it can be classified as a “Like Kind Exchange” and one can avoid being taxed. Meanwhile, one who sells his or her property and made a huge profit out of it, yet the seller chose to under report the gain of the sales, which is totally illegal, can be counted as tax evasion.

Remember, both terms have similar meaning, but understanding it further, one will find that it is a totally different set of meanings.

The IRS – What Is It?

Many of those who have not paid taxes will find the word IRS new to them. In fact, the Internal Revenue Service, proper name of IRS, is a part of the Department of Treasury. Its main function is to collect taxes from businesses and also workers in the United States. Complying with the Federal Tax Law, the IRS collects taxes annually but they do vary from different cases such as quarterly a year for freelancers.

It all started from the office of Commissioner of Internal Revenue. Originally called the Bureau of Internal Revenue, taxes are being collected to pay for the expenses accrued during the Civil War. It was until the year 1953, when the Commissioner of the Bureau of Internal Revenue still remains but they have changed the name of the bureau to Internal Revenue Services.

When IRS resources cannot meet the workload, they hired a number of private debt collection companies to collect income tax debts. Income tax debts only apply to those who fail to make payment for their annual income tax by 15th of April every year. In this case of not being able to fully repay the overdue amount, these private debt collectors will take action on behalf of the IRS to liaise with the debtor.

The IRS approach to private debt collectors are not well informed to the public as many of us still do not know that there are private companies involved in debt collection, with the fact that they can get hold of our sensitive information which is a breach against our privacy.

Taxes: The Basics

Worry not about taxes, they are just part and parcel of anyone’s life. A simple guide like this will assure you with more knowledge on taxes than what you might already know.

First things first, you have to find out whether you’re in a taxable range or not. If you have a salary sufficient to be taxed, you cannot escape from it. It will increase according to your pay raise too. Put your worried looks aside, as you still can reduce the total tax payment by many options such as tax deductions and exemptions. One can get their taxes reduced by book purchases or medical bills.

Know your taxes and what type of taxes you‘re paying. Profit from investments and monthly wages are the common taxable incomes, but things such as scholarships, sponsorships or inheritances are not taxable.

Always be clear with when you are paying your taxes. Most of us pay taxes monthly by deducting a portion of money from the paycheck. Rest assured that if you have paid less than what you need to, you will be incurred with a “Balance Due”. On the contrary, a “Tax Refund” will be made to you if you have paid more than what you’re needed to pay in the first place.

You should also know that as a US citizen, your taxes are to be paid voluntary. It does not mean that you can opt to not pay your taxes but you can choose to go with a financial plan or some other arrangements so that you can benefit from the many tax reduction options – choices are always there to make tax payments as flexible as possible.

Now that you’ve known more about taxes, so you should not worry about being left out in the world of taxes again!

Minors Are Taxed As Well

Regardless that you are a child or an adult, once you have an income that is sufficient to be taxed, you cannot escape from paying it. Those who have a profit above a certain level no matter they are under or above the age of 18, must be responsible to file for a tax return, as proven by the latest publication of IRS 929.

If you have a child whom is making a profit out of the investment that you made for him or her, the it might be necessary for your child to get hold of the sufficient knowledge and information on how to pay taxes. Or of course, you can help your child with the tax return too. If you are someone of the minor category yourself, then you must also know how to file a tax return too. If you do not know how, do not worry, you can always get help from your parents or any adult that knows how to file a return.

As long as the minor is old enough to have a valid signature, he or she can already do the tax return. A disadvantage of this will be that if the IRS is to question anything, the parents will find it difficult to answer on behalf of the child, unless it was signed on behalf by the parents themselves. Another workaround to this problem is that the parents can sign as a third party designee, which allows them to answer to the IRS without the need of attorneys.

I hope that this short article will be able to help with some questions that you might have regarding taxes on minors. Or least get you started.