Depending on how much time has past, an individual will see hundreds; even of thousands of dollars owed in back taxes that were not originally assessed when first receiving a letter from IRS. Similar to a credit card company, penalties and interest can and will be applied.
Delinquent Income Tax Return Defined -
A delinquent income tax return is defined, in the eyes of the IRS and federal government as:
Income tax return having a US mail postmark after April 15th, if an extension was not granted. If an extension was applied for and granted, a delinquent income tax return is defined as an income tax return with a US mail postmark after the due date of that extension.
Does the IRS Keep my Return Money if I am Late? -
After three years, yes. There is a statute of limitations, or certain period of time allowed, by the federal government applied to receiving income tax refund money for a given year. That is three years from the due date of the tax return, not January 1st.
Just think, you could have money owed to you that you could apply toward your IRS tax debt if you have not filed.
Tax Return Stature of Limitations Example -
For example this is 2007, if your unextended delinquent income tax return for 2003 is fixed this year, you must do so before April 15th, 2007 to receive any refund from the IRS.
After that date, the government legally does not have to pay any refund owed even if it is thousands of dollars. If you mail or the return after the third anniversary date, the IRS will keep your refund check.
Delinquent Tax Penalties & Interest -
If you owe tax from the year's income, you could possibly be subjected to several penalties on the amount due. The failure to file penalty assesses a 5% charge on the amount due each, up to a maximum amount of 25%.
The failure-to-pay penalty equals one-half of 1% of the amount owed per month, maxing out at 25% as well. You will be charged interest on an unpaid balance at the prevailing rate (varies month-to-month).
You may be subjected to a penalty for not paying sufficient estimated taxes. There are several other penalties that may also apply.
If you have not filed and have not heard from the IRS, it is only a matter of time, even if you have not heard from them in years. They will contact you and find a way to collect.
How the IRS will Settle Delinquent Taxes by Force -
If none of these previously mentioned options above are arranged, some of the enforced collections measures the IRS can use, but are not limited to:
- Wage attachments
- Bank Account Levies
- Seizures of property
- Referrals to a private collection agency
- License or permit revocations
- Corporate responsible person assessments
Do not let the IRS scare you into signing an agreement that demands high dollar tax payments that you can not afford. Let a tax professional with years experience working with the IRS help you.
By : Neil Lemons
Neil Lemons represents Allied Tax Solutions, a 30 year leader in IRS help & tax relief solutions helping individuals and companies. For more information or a free consultation visit http://www.alliedtaxsolutions.com.
Wednesday, September 30, 2009
Tuesday, September 22, 2009
How To Sell Assets Without Fear Of Capital Gains Tax
Assets we own that have appreciated in value make us tremendously happy. The taxes we pay on these gains make us tremendously unhappy. If you own appreciated assets such as real estate, business, fine art, jewelry, planes, boats, or even a race horses, you face a large tax bill if you sell these assets and do not plan properly. However, there is finally a way to sell off almost every appreciated asset ranging from real estate to collectibles without paying hefty capital gains taxes using a powerful, tax-efficient selling resource called the Private Annuity Trust.
Not only is the Private Annuity Trust an ideal way to avoid capital gains taxes, it's also one of the most secure asset protection tactics offered today. The Trust cannot be sued for the value of your personal property or real estate. Securing your valuables in a trust is a critical piece of the financial puzzle for any type of investor, and the Private Annuity Trust has the added benefit of allowing you to avoid capital gains taxes when property is sold. The Private Annuity Trust will also allow you to pass all assets left in the trust when you pass away to your beneficiaries completely free of estate taxes and probate fees.
Who's using The Private Annuity Trust?
Private Annuity Trusts have traditionally been utilized by real estate investors, but even in this circle, the Private Annuity Trust is a new concept for many. The Wall Street Journal recently ran an article about various ways to defer capital gains tax and received an enormous number of inquiries asking for further information about the details of Private Annuity Trusts. This method of deferring capital gains on real estate is gaining momentum, but many people still don't realize that Private Annuity Trusts can also defer capital gains on property such as fine arts, jewelry, and other valuables.
How the Private Annuity Trust Defers Capital Gains Taxes Legally
Let's assume that Jim, a 45 year old man, owns a collection of fine art that will net him $5,000,000 once sold. If Jim were to sell his art collection tomorrow without a Private Annuity Trust, he could be responsible for paying a large amount of capital gains tax on his profit, potentially creating a $1,000,000 tax bill! Had he transferred ownership of the property into a Private Annuity Trust before selling, he could have paid $0 in capital gains taxes this year.
A Private Annuity Trust is designed to pay the owner of the trust a special annual payment, or annuity, over the course of his or her lifetime. Capital gains taxes on the earnings from the property sold are still due on the sale of the asset, but taxes aren't due until the money is taken out. The seller of the asset is able to "stretch or spread" his or her taxation over his or her entire lifetime without any interest or penalties from the IRS. This gives investors tremendous financial power, and flexibility - if they don't need the income from the Trust right now, they can defer payments, and not begin paying taxes until they decide to take the income.
The amount of the annuity payment is determined by a number of factors determined by the IRS. A very simple estimation of the program states that if Jim's life expectancy is another 40 years, he will receive annual payments of 1/40 of the value in the trust plus interest as calculated by the IRS. This means he will only be responsible for 1/40 of the capital gains tax from the sale of the property each year, which means that he will have more of his profits invested, and working for him, creating financial security for the future.
A Smart Way to Protect Your Assets and Grow your Wealth
The Private Annuity Trust isn't just beneficial when you sell your property, but also offers long term protection of your assets from lawsuits, liens, or any other threat to your investments. You can use the money gained from selling to reinvest and continue to grow your wealth. In the previous example, Jim can use the trust to buy new art-or any type of investment property, watch it appreciate, and then sell the property and defer the capital gains taxes again, by placing it in his Private Annuity Trust.
If you're a collector of fine art, jewelry, planes, boats, race horses, or anything of value, you owe it to yourself to look into the benefits of the Private Annuity Trust. There is no minimum or maximum value for property that can be transferred into a Private Annuity Trust. The Trust structure, as a planning tool, is a resource that can help you pass wealth to generations of your family, without worry about losing large chunks to taxes at each transfer. For many investors, it may be a key to safe, smart, investing.
About the Author
Author is a writer for QFN who specialize Private Annuity Trusts. For more information you can visit http://www.QAPlan.com.
Not only is the Private Annuity Trust an ideal way to avoid capital gains taxes, it's also one of the most secure asset protection tactics offered today. The Trust cannot be sued for the value of your personal property or real estate. Securing your valuables in a trust is a critical piece of the financial puzzle for any type of investor, and the Private Annuity Trust has the added benefit of allowing you to avoid capital gains taxes when property is sold. The Private Annuity Trust will also allow you to pass all assets left in the trust when you pass away to your beneficiaries completely free of estate taxes and probate fees.
Who's using The Private Annuity Trust?
Private Annuity Trusts have traditionally been utilized by real estate investors, but even in this circle, the Private Annuity Trust is a new concept for many. The Wall Street Journal recently ran an article about various ways to defer capital gains tax and received an enormous number of inquiries asking for further information about the details of Private Annuity Trusts. This method of deferring capital gains on real estate is gaining momentum, but many people still don't realize that Private Annuity Trusts can also defer capital gains on property such as fine arts, jewelry, and other valuables.
How the Private Annuity Trust Defers Capital Gains Taxes Legally
Let's assume that Jim, a 45 year old man, owns a collection of fine art that will net him $5,000,000 once sold. If Jim were to sell his art collection tomorrow without a Private Annuity Trust, he could be responsible for paying a large amount of capital gains tax on his profit, potentially creating a $1,000,000 tax bill! Had he transferred ownership of the property into a Private Annuity Trust before selling, he could have paid $0 in capital gains taxes this year.
A Private Annuity Trust is designed to pay the owner of the trust a special annual payment, or annuity, over the course of his or her lifetime. Capital gains taxes on the earnings from the property sold are still due on the sale of the asset, but taxes aren't due until the money is taken out. The seller of the asset is able to "stretch or spread" his or her taxation over his or her entire lifetime without any interest or penalties from the IRS. This gives investors tremendous financial power, and flexibility - if they don't need the income from the Trust right now, they can defer payments, and not begin paying taxes until they decide to take the income.
The amount of the annuity payment is determined by a number of factors determined by the IRS. A very simple estimation of the program states that if Jim's life expectancy is another 40 years, he will receive annual payments of 1/40 of the value in the trust plus interest as calculated by the IRS. This means he will only be responsible for 1/40 of the capital gains tax from the sale of the property each year, which means that he will have more of his profits invested, and working for him, creating financial security for the future.
A Smart Way to Protect Your Assets and Grow your Wealth
The Private Annuity Trust isn't just beneficial when you sell your property, but also offers long term protection of your assets from lawsuits, liens, or any other threat to your investments. You can use the money gained from selling to reinvest and continue to grow your wealth. In the previous example, Jim can use the trust to buy new art-or any type of investment property, watch it appreciate, and then sell the property and defer the capital gains taxes again, by placing it in his Private Annuity Trust.
If you're a collector of fine art, jewelry, planes, boats, race horses, or anything of value, you owe it to yourself to look into the benefits of the Private Annuity Trust. There is no minimum or maximum value for property that can be transferred into a Private Annuity Trust. The Trust structure, as a planning tool, is a resource that can help you pass wealth to generations of your family, without worry about losing large chunks to taxes at each transfer. For many investors, it may be a key to safe, smart, investing.
About the Author
Author is a writer for QFN who specialize Private Annuity Trusts. For more information you can visit http://www.QAPlan.com.
Friday, September 11, 2009
Child Tax Deduction Law Is For Your Own Benefit
Save money, save money and save some more money. This is what we have been hearing ever since we were kids. And why not when the law is allowing you to?
Hiring kids between the ages of 7 to 17 not only makes them smarter but you too. You could be laughing all the way to the bank.
As a rule, every child has a standard deduction of $4,570; thus it follows that children are exempted from paying the first $4,570 in income. Now, if you have a kid working for you and you fall in the 30% bracket, you can coolly save $1450 in taxes after spending the whole $4570 on your kid. Nice stuff right?
You needn't have to pay the social security taxes on 'wages' paid to kids as they come out of sole proprietary and not from business corporations.
In tax saving exercise, you are not free from paper work. Form 941 is to be submitted four times in a year. This is basically a form used to withhold finances generated by an employee; however, for a child there will be no withholding. Further, at the end of the year, you will have to issue a W-2.
Kids are legally allowed to be hired as employees by their parents when they are 7 years old, provided that the work assigned to them is not mentally and physically challenging, and is within their means to achieve it. The number of hours and the type of assignments completed by the child should be recorded on an Excel Sheet. As long as the pay and the work given to the child are reasonable, you can avail of the tax deduction.
Moreover, the wages that you are paying goes into your hands and not theirs. This means that you are the true owner of
Ultimately, make sure that your kids don't spend more than 50% of their expenses, if they do, then you lose the itemized deductions.
You know that you don't want to make your kid work a bit too much. Let the work be reasonable. Let him enjoy and you can enjoy yourself too.
About the Author
Find more about Tax Deductions at http://taxdeduct.net
Hiring kids between the ages of 7 to 17 not only makes them smarter but you too. You could be laughing all the way to the bank.
As a rule, every child has a standard deduction of $4,570; thus it follows that children are exempted from paying the first $4,570 in income. Now, if you have a kid working for you and you fall in the 30% bracket, you can coolly save $1450 in taxes after spending the whole $4570 on your kid. Nice stuff right?
You needn't have to pay the social security taxes on 'wages' paid to kids as they come out of sole proprietary and not from business corporations.
In tax saving exercise, you are not free from paper work. Form 941 is to be submitted four times in a year. This is basically a form used to withhold finances generated by an employee; however, for a child there will be no withholding. Further, at the end of the year, you will have to issue a W-2.
Kids are legally allowed to be hired as employees by their parents when they are 7 years old, provided that the work assigned to them is not mentally and physically challenging, and is within their means to achieve it. The number of hours and the type of assignments completed by the child should be recorded on an Excel Sheet. As long as the pay and the work given to the child are reasonable, you can avail of the tax deduction.
Moreover, the wages that you are paying goes into your hands and not theirs. This means that you are the true owner of
Ultimately, make sure that your kids don't spend more than 50% of their expenses, if they do, then you lose the itemized deductions.
You know that you don't want to make your kid work a bit too much. Let the work be reasonable. Let him enjoy and you can enjoy yourself too.
About the Author
Find more about Tax Deductions at http://taxdeduct.net
Friday, September 4, 2009
Work For Yourself And Slash Your Tax Bill
One reason that many people like the thought of working from home and freelancing is that you need to pay lower taxes. As a freelancer you pay taxes four times a year instead of monthly and many extra expenses can be taken as tax deductions. If you are involved in freelance employment these additional tax deductions can greatly benefit you.
One of the tax deductions which freelancers working at home are able to make is for a portion of their rent. If you work from home on freelance contract then the room where you work is considered like business property and is therefore eligible for tax deductions. Unfortunately this only counts if you are making a profit from your freelance business and you are not using your tax deduction from your home office to create a loss in your taxes.
If you are involved in freelance employment you should also have a look at the items you use - your stationery, magazines, books, computer accessories and find out what tax deductions you are able to get on these items.
There are also those items that you use for business that last longer than a year - such as your computer. You have two options for decreasing your tax with these items. You can take it as an expense in the first year (or the year it is bought) or you can spread the cost out over a couple of years taking into account depreciation. By taking it all off in the first year you will get a larger break in that year but you will not be able to use it as a deduction in the following years, or you could opt for a smaller deduction in each of the following years.
As someone involved in freelance employment you are also able to claim some expenses on professional memberships and seminars that are necessary for your work. For example if you are a freelance writer and belong to a writer's organization then you may be able to claim these fees from tax, or if you attend a seminar to do with your work then you can claim it from tax.
As a freelancer it is highly recommended that you find a professional tax consultant experienced in handling taxes for those involved in freelance employment and who has your best interests at heart to help you find all the tax benefits you can get from your freelance employment. Some one who is an expert in this field will be able to point out to you all the areas that you may not even know about as well as being able to offer you tax advice on some of the areas we have mentioned above. Take advantage of your tax breaks as a freelance worker and find someone who is an expert in tax law for freelance employment.
By : Rob Palmer
Rob Palmer is the Editor of Freelance Work Exchange, the leading jobs site for contract professionals worldwide. Join Freelance Work Exchange for just $2.95 and get access to thousands of freelance jobs and work-at-home jobs. http://www.freelanceworkexchange.com
One of the tax deductions which freelancers working at home are able to make is for a portion of their rent. If you work from home on freelance contract then the room where you work is considered like business property and is therefore eligible for tax deductions. Unfortunately this only counts if you are making a profit from your freelance business and you are not using your tax deduction from your home office to create a loss in your taxes.
If you are involved in freelance employment you should also have a look at the items you use - your stationery, magazines, books, computer accessories and find out what tax deductions you are able to get on these items.
There are also those items that you use for business that last longer than a year - such as your computer. You have two options for decreasing your tax with these items. You can take it as an expense in the first year (or the year it is bought) or you can spread the cost out over a couple of years taking into account depreciation. By taking it all off in the first year you will get a larger break in that year but you will not be able to use it as a deduction in the following years, or you could opt for a smaller deduction in each of the following years.
As someone involved in freelance employment you are also able to claim some expenses on professional memberships and seminars that are necessary for your work. For example if you are a freelance writer and belong to a writer's organization then you may be able to claim these fees from tax, or if you attend a seminar to do with your work then you can claim it from tax.
As a freelancer it is highly recommended that you find a professional tax consultant experienced in handling taxes for those involved in freelance employment and who has your best interests at heart to help you find all the tax benefits you can get from your freelance employment. Some one who is an expert in this field will be able to point out to you all the areas that you may not even know about as well as being able to offer you tax advice on some of the areas we have mentioned above. Take advantage of your tax breaks as a freelance worker and find someone who is an expert in tax law for freelance employment.
By : Rob Palmer
Rob Palmer is the Editor of Freelance Work Exchange, the leading jobs site for contract professionals worldwide. Join Freelance Work Exchange for just $2.95 and get access to thousands of freelance jobs and work-at-home jobs. http://www.freelanceworkexchange.com
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