Additional options for lowering 2014 taxes

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This is another reminder to begin preparations for filing 2014 tax returns. Whether one made some tax moves before the previous year ended or not, there could still be some time to lower the taxes one owes for 2014. Here are a few suggestions on the options available to taxpayers:

The self-employed can take a deduction for their contributions to their retirement plan. It’s a particularly valuable deduction because it is claimed as an adjustment to income on form 1040, line 28. However, this deduction is only available if the taxpayer had already established the SE 401(k) plan and the account before the year-end.

Otherwise, taxpayers can instead make a contribution to an IRA. This option is available until April 15 and if one qualifies for it, it can be claimed as an adjustment to income and can be used to increase other tax credits.

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Additionally, individuals who have enrolled in a high-deductible health insurance plan can make tax-deductible contributions to a health savings account. Like contributions to an IRA, this option is available until April 15 and can be claimed as an adjustment to income. Those who take this option will also need to include a completed Form 8889.

There are other common deductions that many people overlook when filing for tax returns. These include job search costs, mortgage costs, and lifetime learning credit, among others.

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Wall and Associates is one of the leading professional tax representation and negotiation firms in the country. For more resources about filing taxes correctly, visit this Google+ page.

REPOST: Tax returns to change with Affordable Care Act

Filing tax returns can be a tough and tedious task, and with the Affordable Care Act added in the picture, there could be even more confusion. Read the article below to know more about these changes.

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Filing tax returns will be different this year due to the onset of the Affordable Care Act, officials from the U.S. Department of Health and Human Services announced Thursday.

Tax filers who had health insurance in 2014 through work or an unsubsidized policy will check a box on their tax returns indicating they had coverage, said Treasury Secretary Jacob Lew.

But those who did not have health insurance or received a subsidy will be required to go further, Lew said in a news release from DHHS. “A fraction of taxpayers will take different steps, like claiming an exemption if they could not afford insurance or ensuring they received the correct amount of financial assistance,” he said. “A smaller fraction of taxpayers will pay a fee if they made a choice to not obtain coverage they could afford.”

Those with Marketplace coverage will receive a 1095-A form that will be used “to reconcile their upfront financial assistance,” the news release said. Over the next few weeks, government agencies will release various “consumer-friendly tools and resources” for tax payers who have health coverage through the Marketplaces, those seeking an exemption and those looking for information about the fee for those who could afford to purchase health coverage but chose not to, the news release said.

Some resources can already be found at www.IRS.gov/ACA, or www.healthcare.gov/taxes/.

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In addition, the government also will contact Marketplace enrollees directly through email, phone and text messages, the news release said.

“We will focus on providing targeted messaging to consumers who benefitted from an advanced premium tax credit last year to help them offset the cost of their Marketplace premiums,” the news release said.

The department also will work with community organizations and non-profits to provide assistance and resources and will form partnerships with top tax preparers to provide consumers with information.

Wall and Associates Inc helps businesses and individuals find solutions for settling outstanding taxes. For more information about filing tax returns, visit this blog.

Making tax debt payments more manageable

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What does a person upon the discovery of actually owing more income tax than he or she can immediately pay? Similarly, what options are available to a person who has accumulated a significant amount in back taxes?

Suddenly finding out issues in tax payments can take the wind out of anyone, especially if it adds to one’s financial burdens. It can be challenging enough to make ends meet during difficult times. Having problems with the IRS can lead to further financial complications that are best avoided.

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Fortunately, the IRS understands that income tax and back taxes can be a severe burden on taxpayers, which is why it instituted a program to allow for payments in monthly installments rather than a punitive lump sum.

To apply for an installment agreement, the taxpayer must submit the IRS Form 9465. If the total debt is less than $25,000 in taxes, penalties, and interest, the taxpayer can then complete an online payment agreement instead. Otherwise, he or she must submit a Form 433-F along with the Form 9465. The IRS will usually respond to the application within 30 days.

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Once granted, the taxpayer will get the time needed to pay the tax liabilities. As long as the terms of the agreement are honored and the taxpayer makes the payments on time, then any collection efforts by the IRS or other collection agencies will stop. However, it is also important to remember that the IRS will still apply interest and penalties to the unpaid balance until it is fully paid.

Wall and Associates Inc. helps taxpayers find solutions to many IRS tax problems. To find more information on tax payments issues, visit this website.

Managing tax disagreements with the IRS

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There are times when disagreements between the IRS and taxpayers arise. It is for these cases that the IRS Office of Appeals was created. With the appeals system in place, it is possible to resolve many issues without relying on a court of law.

The appeals system applies to taxpayers who: have received a letter from the IRS explaining their right to appeal the IRS’s decision, do not agree with the IRS’s decision, or are not signing the agreement form that was sent to them.

In appealing tax matters, only the current laws apply. The process and provisions may be confusing, which is why taxpayers with tax agreements are advised to seek the services of a qualified tax consultant for advice and representation in order to get the compromise that they want.

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If a taxpayer’s case qualifies for an appeal, the IRS Appeals Office will review the issues of the case with a fresh perspective and schedule a conference with the taxpayer. The conferences may be conducted through correspondence, via telephone, or in person. Many disagreements are often settled in conferences, making expensive and time-consuming court trials unnecessary. The Appeals Office will consider any valid reason for disagreement, save for moral, religious, political, constitutional, conscientious objection, or similar grounds.

When appealing an audit or tax decision, however, the services of a qualified tax consultant may mean the difference between a failed appeal and a successful one.

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Wall and Associates Inc. is a leading tax negotiation and representation firm. For more resources about the IRS appeals process, visit this Google+ page.

A primer on unfiled tax returns

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An unfiled tax return is the set of documents that detail the unstated tax from an individual or business. In most cases, unfiled tax returns can span a number of years and can often culminate in the Internal Revenue Service (IRS) taking legal action against the specific individual or company. Often, most taxpayers state that they did not file their tax returns because: a) they did not know how to start and b) they missed one year and are now afraid to file another one in fear of the repercussions. This creates a vicious cycle and it is the taxpayer, not the IRS, who suffers the most.

The IRS has a program called the Substitute for Return that files the tax for companies or individuals that fail to file a tax return. This program files a default tax return which (almost always) leaves the taxpayer owing money to the federal government. This is because the IRS does not take into account the intricacies of taxpaying, such as deductions and exemptions, and files the tax return as is. In these cases, the taxpayer may find himself owing money and requiring to pay his unstated tax.

 

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Not filing a tax return is considered a crime, but this can also result into a deep financial problem in the future. A business will be on public record as an establishment with poor credit, while an individual may not be fully entitled to some government-sponsored benefits and may not be able to apply for a loan in the future. Additionally, the IRS may decide to compound the interest to the tax debt of non-filers. At maximum, this can reach an astonishing 47.5 percent. When this happens, the taxpayer needs to find representation in order to properly dispute any case the IRS may file. To avoid this, it is wise to have a tax negotiation firm handle all the financial aspects of the business.

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Wall and Associates Inc. is a leading tax negotiation and representation firm. Learn more about tax filing by visiting this Google Plus page.

Unpaid obligations: A primer on tax liens

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A federal tax lien is a government document that can claim an individual’s property after he or she fails to pay a tax debt. This lien, or legal claim, gives the government access to the taxpayer’s entire estate, including real estate, personal property, and certain financial assets. The Internal Service Revenue (IRS) first assesses the taxpayer’s liability through a thorough audit of his or her financial books. Once the assessment has been made, the IRS usually gives a Notice and Demand for Payment, which lists down how much is owed to the government. If the taxpayer refuses or neglects to fully pay the debt in time, the IRS files a public document, known as the Notice of the Federal Tax Lien, which alerts the public that the government now controls the individual’s assets. If a property is sold while a lien is in effect, majority of the proceeds will go to the IRS before the taxpayer.

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Since tax liens are public records, these are included in an individual’s credit report and can affect the outcome of any bank loan or request. The good news is that avoiding these legal claims are generally a matter of foresight. The most recommended method would be, of course, to pay one’s taxes in full. However, if the taxpayer is undergoing financial challenges that would prevent him from paying his taxes in full, the taxpayer can set up an installment agreement with the IRS. These can either be a guaranteed or a streamlined installment agreement. The former requires an outstanding balance of $10,000 or less, while the latter would require a balance of $25,000 or less. If the balance exceeds $25,000, it is recommended that the taxpayer pays the balance to set a streamlined installment agreement.

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Tax problems such as these can be avoided with the services of a trusted tax representation firm. It is about thinking long-term and understanding the cost-effectiveness of such a service. After all, a federal tax lien adversely impacts the credit of taxpayers, resulting in a bad credit score and less opportunities for new credit or refinancing.

Wall and Associates is committed to helping its clients nationwide settle their tax issues and attain the best possible outcomes. Learn more about its services here.

The capital gains tax in America

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A capital gains tax is a tax applied to profit gained from the sale of a property or an investment. The more common capital gains are from the sale of stocks, bonds, precious metal, and the like. In the United States, the government places a relatively high marginal tax rate to capital gains as a means to foster a stronger local economy and increase worker wages.

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Currently, the tax rate on long-term capital gains income is 23.8 percent, exclusive of state-level rates, which range from zero to 13.3 percent. This means that companies and individuals can face a capital gains tax as high as 28.7 percent. This rate exceeds the global average of the 18.2 percent tax faced by taxpayers. This is based on research from the Organisation for Economic Cooperation and Development (OECD) that promotes greater transparency in tax matters by studying the banking and tax industries from 34 industrialized countries.

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This places a high burden on taxpayers, and many legislators believe that this may have a negative long-term effect on the competitiveness of the country. Because this tax deducts for a single purchase, certain prejudices and biases regarding savings may occur. This may create a snowball effect of corporations not having enough capital on hand to hire new employees which in turn slows down economic growth.

Many analysts and investors are still debating whether it would be fair to tax capital gains and most stock dividends at lower rates than earned income. The opinions vary, with no single tax analyst agreeing with one another. It is clear, however, that this is a relatively controversial issue and should be discussed with a tax representative before making any type of decision.


 Wall and Associates Inc. has helped hundreds of clients understand their taxes better by providing them with the right information and proper guidance. As one of the nation’s leading tax representation firms, it recognizes the value of being an educated taxpayer. For more information regarding the company’s services, visit its official website.