Owe Back Taxes?

Received An IRS Notice? 10 Simple Tips
Don’t panic, keep copies of everything, prepare for a long wait on the phone and consider hiring a pro if the bill is big.

Read more on Forbes

Does Tax Season get you down?

Here are 4 simple steps that any small business owner can take to lower your tax bill this year.

STEP #1: Understand How Serious Your Tax Problem Is

Are you aware of just how much in taxes you are paying?

Here’s how much the average family spends on various consumer categories — as a percentage of income.

You must realize that it’s not how much you spend on taxes that is important, it’s how much you spend on taxes as compared to all other major categories of spending.

Consumer Spending:

How Do You Spend Your Hard-Earned Dollars?

Taxes ———————- 32.0%

Housing ——————– 16.7%

Medical Care ————— 11.5%

Food ———————– 8.2%

Transportation ————- 7.9%

Recreation —————– 5.7%

Clothing ——————- 4.1%

Savings ——————– 1.4%

Other Miscellaneous ——– 12.5%

TOTAL ——————— 100.0%

So, if you think you are being “nailed” by the government, you are absolutely right. You spend more on taxes than any other category of consumer spending.

In fact, you spend more on taxes than on food, clothing, and housing combined.

And it’s not just federal income taxes we’re talking about here. There’s also state and local income tax, payroll tax (Social Security and Medicare), sales tax, excise tax and property tax.

Maybe you already knew “intuitively” that your tax bill is outrageously high. If not, the picture I’ve just painted should thoroughly convince you that you pay too much tax, period.

STEP #2: Get The Right Attitude About Your Taxes

What do I mean by this? Well, you simply must have a certain “mental attitude” toward this whole idea of paying taxes. I’ll get right to the point — you must have an attitude about taxes that says, “Enough is enough. I’m paying way too much tax and I don’t like it. And it’s about time I did something about it — TODAY!”

After reading those numbers above, how do you feel? Doesn’t that just make you furious? If so, great, then you are on your way to solving this problem. The old cliche is true: “You can’t solve a problem until you admit you have one.”)

If you saw those numbers above and said, “Big deal. So I pay 32% in taxes. So what? So does everybody else in this country” — well, I’m sorry, but you might as well just stop reading this article right now. You will continue to pay too much tax because you really don’t care about it.

To reduce your taxes, you must be committed to the idea of paying less taxes.

Before today is over, go get last year’s personal income tax return (Form 1040) and look at how much tax you paid.

When you have Form 1040 in front of you, do you realize where the most important number is on this form?

No, it’s not Line 71 — the refund amount.

No, it’s not Line 74 — the balance due amount.

The most important number on Form 1040 is Line 62.

It says: This is your TOTAL TAX. That is how much federal income tax you paid for all of last year. When it comes to reducing your taxes, it doesn’t matter whether you got a refund or whether you had a balance due.

What matters most is: What was your total tax liability for the year. That’s the “magic number” that should just make your blood boil and your heart beat so fast that you can hardly stand it.

Now that I’ve got you all “riled up” about paying so much tax, let’s move on to Step #3.

STEP #3: Realize That Reducing Taxes Is The Easiest Path Possible To Creating Wealth

Consider this simple fact: Reducing your taxes by just $4,000 per year is the easiest way possible to becoming a millionaire.

Let me elaborate.

Let’s say you implement some new tax-saving strategies that reduce your taxes by $4,000 each year. Now, if you take that $4,000 per year in tax savings and invest it over the next 30 years, assuming you earn 11.5% on your investment, you end up with $1,048,745.98 at the end of the 30 years.

And here’s the best part about this scenario: Where did you get the $4,000/year to invest? Well, you got it from money that would have gone to Uncle Sam. It’s money that you used to spend on taxes, part of the 32% of your income that goes to taxes each year.

In effect, it’s free money. It’s money that was always there — you just didn’t realize it.

Is this a good deal or what? By simply reducing your taxes, the government will finance your million-dollar retirement.

And let’s say your tax situation is such that you save $2,000/year instead of $4,000/year. Same assumptions: you invest the $2,000 each year at 11.5% for 30 years. End result: $524,372.99. Not too shabby, eh?

So all you have to do is come up with the tax-saving strategies that will put $2,000 or $4,000 in your pocket each and every year. Which brings us to Step #4.

STEP #4: Get Hold Of The Tax-Saving Strategies That Will Make You A Millionaire

You know, it doesn’t really take much information to save a bundle in taxes. It is true: just a little bit of tax knowledge goes a very long way.

Useful tax information is freely available. On the Internet, at your local library, and through your local tax professional.

The question is: Are you willing to spend some time this year learning about effective tax strategies that can save you literally thousands of dollars?

Here’s a simple goal to set for yourself: Over the next 10 weeks, set aside just an hour a week to read up on tax-reduction strategies. That’s all, just 10 hours.

Chances are you’ll find 2 or 3 strategies that reduce your tax bill by $1,000 this year.

So you spend 10 hours and, in effect, pay yourself an extra $1,000 for your time. Not a bad hourly rate, eh?

Many times, that’s all it takes to pay less tax.

Simple ways to avoid tax-time trouble
Two things are true about taxes: We’d rather see a refund — or at least not owe a lot of money. And we don’t want any trouble. So with the April 15 filing deadline near, pay attention to the 1040 land mines to be sure you get everything to which you’re entitled and avoid a complicated tax mess.

Read more on Detroit Free Press

I had taken extensions until the 10-15 deadline. Tax info was given to office 2 weeks prior to that deadline. He delayed. I assumed all was well because usually he is conscientious and takes care of things in timely way–but did inquire once or twice about the amt I owed. He is willing to refund his fee. What is his financial, legal, moral obligation, in that order. How can I most adroitly handle the issue without undo antagonism.

The savings of tax is the dream that everyone wants to achieve. Almost each country in the world has the income tax system. Many taxation professionals are there who are providing tax related services to the millions of tax payers. The savings of tax is the topic of discussion since a long time. This article will explore the tricks to save the tax. In this article, you will find simple tricks that can be useful to you in the process of the tax payment. The tax saving is in your hand. If you wish, you can easily save tax. Yes, you can save your valuable money to be paid to the government in a form of tax. There are mainly there methods of tax savings: Reducing Income, increasing tax deduction, and being qualified for the tax credits. If you can all of the three, you can easily save the tax money

Reducing income
The tax is applied on the income and deducted amount of tax is dependent on the amount of the income. If your income is more, you have to pay more tax to the government. The low income can result in low tax deduction. There are several ways to save tax. If you runs a small business, you can wait till the new year if you are about to stock more items. If you are an employee in a company, the government itself gives less income tax offers to you. The offers depend upon the type of your job.

Increasing tax deductions:
If you pay taxes in advance, the deduction of the amount of taxes can be increased. The payment of taxes in advance can save a good amount of tax. The real estate taxes and other fix taxes can be easily paid in advance. The increase in the tax deduction can be a great way of saving of tax. There are many people who pay taxes in advance and enjoy the tax credits from the government.

Getting the tax credits:
The tax credits are given to the regular and timely tax payers. Various governments have various schemes on the credits given to the tax payers. You can get tax benefits according to the laws of your government. The advance payment of the fix taxes such as house tax can be a useful trick to earn tax credits from the government.
 
The process of tax payment is probably the most complicated process on the earth. If you have right guidelines, you can easily save tax and make more money. The tax savings tips given here may not be applied to everyone. The tips are useful for you to reduce your taxes. There are many people who don’t know about the real ways to reduce the income tax. This article may have helped them a lot.

Tax payment has confused all people. There are a lot of people who don’t want to hear the word “tax” again. The payment of tax is just lot of worries for them. You may be one of them. If you are thinking to legally pay less tax to the government, there are many ways for you which can help you. If you follow them, you can save almost half of your taxes which you pay to the government. The three ways are described here which will help you in order to save tax. The ways are recommended by many tax professional tax preparers and tax managers. So read on for the extremely working tricks for saving your tax. Show less income: Tax is deducted based on your income. If your income is low, you have to pay less tax. If you show more income, you need to pay more tax. What you can do here is to showing less income and more loss. Low income will result in a less deduction of tax from your budget. Reducing your income will be effective on reducing the amount of tax to be paid. The amount of tax that you pay is dependent on the amount of your income. The reduce in income can be a large tax benefit for the small business owners. Stock more items after the end of this year and you’ll be free of tax of that stock. Advance tax payment There is an opportunity for you to save tax in advance. To get this opportunity, you have to pay your tax advance to the government. If you pay taxes in advance, the deduction of the amount of taxes can be increased. The payment of taxes in advance can save a good amount of tax. Some of the taxes that can be paid in advance are the real estate taxes and other fix investment taxes. The government has several tax saving schemes for the advance tax payers. You can get benefit in tax payment if you pay tax in advance. There are many individuals who pay taxes to the government in advance and get reduced tax payments. Get tax credits from the government Government values the advance and regular tax payers. It also offers various schemes that can be helpful for the tax payers to reduce their amount of tax. The schemes can also be useful if you are planning to pay your tax in advance. Hire a professional for your tax preparation: Well if you can’t complete your tax payment process, its better for you to hire a professional who prepare your tax documents better. Of cource, it will cost you but you can use the experience of the tax preparer for your tax payments. You can see a great reduce in the amount of tax to be paid when you receive a tax preparation service. A tax preparer will be a bridge between you and the government. He will solve all of your tax problems.

When I first started thinking about beginning an online business, I didn’t think about the legalities. I knew I wanted to make some extra money. Lots of money! Sound familiar? So, I began doing some research. One day I ran across the headline of an article that I will never forget. It read, “Your Business; Get Legal Or Get Cheated”! As if that were not scary enough, there was more to come. As I began to skim the page, I was horrified to see the words, “Tax ID number.” Tax ID number? I don’t know anything about that! At that moment, I thought the dream of owning my own business was just that, a dream. I began to read more of the article and it actually sounded pretty simple. I was surprised to find how simple it really was. There are two things you must have in order to make your business legal.

The first thing you need to do is file your business name with your state. This is referred to as a Doing Business As (DBA) or Fictitious Name depending on your state of residence. It is as simple as going down to your local County Office building to register your business name. You will be charged a fee. I payed $19 in my county which is in North Carolina. You will need to find out the cost of the fees in your county. You can also file a corporation with your state. All states have a website that gives information about this. Most of the time you can even file online. A corporation will give you more protection for your business but is more expensive.

The second thing you need to do is obtain a Tax ID number. Most states require you to have one. In my state it is called a Sales Tax and Use Certificate. In other states it could be called a Seller’s Permit. What is the purpose of this number? It allows you to collect sales tax on items you sale within your own state. You will use this to file and pay taxes on the items that you sell. You can obtain a Tax ID number by visiting your local State Tax office. You should be able to complete the process and have your number within minutes for a minimal fee. Since the process was still a little scary for me, I went to see my accountant and he filed the papers for a fee of $25. I thought it was worth every penny not fill out the forms myself. If you buy products from a wholesaler, you will need to give them a copy of your Sales and Use Tax Certificate or Seller’s Permit. This proves to the IRS that they are not required to charge you tax on products that they sell to you for wholesale prices.

So, there you have it! Those are the two things you will need to make your business legal. Not too scary and painful, I hope. Easier and cheaper than you thought, right? There are a couple of other things to consider when starting your business, especially if you are serious about making money online.

Opening a business bank account is optional, but I highly recommend that you do. For a while, I didn’t have one. You will need the documents with your business name. Most banks offer business accounts and only require a deposit of $50 to $100. I opened a free business checking account. It included 175 transactions per month without being charged extra and no minimum balance was required to keep the account open. If you need more transactions there are other options available. Shop around for the best deals. One thing to take into consideration is convenience. For instance, if you spend a lot of time in other towns or states, make sure you open an account with a bank in those locations if possible.

If you are going to do business online you are going to need a merchant account to accept credit card payments from your customers. You will not be able to earn much money without one. People who shop online use credit and debit cards to get what they want as quickly as possible. A merchant account will collect payments from your customers and deposit them into your business bank account. When applying, you will need to supply all of the information I have discussed in this article. There are, of course, fees for using a merchant account. There will be a one time fee to set up an account. This amount can vary from a couple of hundred to a few thousand dollars depending on your needs and who you choose to set up your account. You will also be charged an average of 2.2% of the amount charged to your customer’s credit card plus around 30 cents for each transaction. This is what my bank would charge if I opened a merchant account with them. You will need to shop around to find the best rates and plan for you. I do not have a merchant account but am still able to accept payments online. I currently use Paypal to accept transactions. Go to their website to read about what they have to offer. It has it’s advantages and disadvantages, but I digress. That is another topic.

I hope you enjoyed reading this article and found it to be helpful in your business endeavors. I wish you the best of luck on your journey to success!

Many people simply forget to pay their taxes for a long time or may not find it possible to pay at a given time for various reasons. They wake up to find that they owe a fairly big amount to Internal Revenue Service (IRS) i.e. they are in a tax debt. Opting not to pay the amount is a bigger risk as you stand to lose even more than you owe. Some people think that filing for bankruptcy will pull them through but they are gravely mistaken. The laws are too strict to excuse any tax debt. Rather than running away from IRS one could do better and approach IRS who can offer solutions to the tax debt.

When one intends to settle the tax debt he should have a look at the tax returns to see if any tax waivers have been missed. This would help reduce the tax liability to some extent. There are many schemes available to settle the tax debt. You could approach the local IRS office to start the procedure or consider consulting a tax attorney. Before you decide to go alone and work out on the tax debt settlement, it is advisable to do an in-depth study of the various options available. Taking the help of tax attorneys is a better option. They would be better equipped with the minute details of any tax waiver that may be used and the appropriate settlement method to be used to pay the least.

IRS Tax Debt Settlement is fast becoming the popular form of debt relief. It is well known that by following certain IRS guidelines one can actually pay less than what is owed. An average settlement is of 12 cents on a dollar, though some may have to pay lesser or higher than the average. IRS allows this tax debt relief on the premise that the taxpayer would in future stay in compliance and pay the taxes on time.

This comes out of the consideration that however much the IRS tries they would not be able to collect the entire amount. This type of relief program is called as Offer in Compromise, which can be availed for personal, as well as business tax debt. Depending on the final amount that is reached you may pay the amount as an initial payment and remaining through regular tax payments. You can get the amount reduced which you currently owe and the remaining is paid in the long-term plan.

There are times when you may have lost some records. In such situations the IRS Tax specialists can assist you in making a fairly accurate calculation of back tax returns. There also exists an IRS Installment plan that allows the taxpayer to pay the tax amount over a period of time. The taxpayer has to pay the correct amount at the set date so that no further legal tool remains in the hand of IRS. The only drawback of this scheme is that the future installments also include additional interest and penalty amount, taking the tax liability much higher.

If you or your tax attorney is able to present a fairly neat and clear case of why you have not been able to pay tax, the option of Penalty Abatement can be used. It means that you may not have to pay at least some part of the penalty. The final option is to get placed in the IRS’s Currently Not Collectible status, which stops the IRS from collecting any further. Under this, even if after 10 years the IRS is unable to recover then the debt cannot be recovered after that.

IRS makes sure that they get back whatever tax the person is liable to pay. However, they make all possible efforts through various plans to ensure that people pay.

One of the biggest fears Americans face is the fear of being audited by the Internal Revenue Service.  It’s so bad that fear of an IRS audit ranks up there near fear of a cancer diagnosis.  This, of course, is just the way the Internal Revenue Service wants it to be.  The more afraid you are of being audited, the less likely it is that you will cheat on your income taxes, or even file for all of the deductions that you are legitimately allowed.

Knowing a few things about an IRS audit might decrease your fears, or increase them, depending on who you are.  The first thing to realize is that the Internal Revenue Service knows that even they cannot get blood from a stone.  So they won’t soon be auditing people who make $25,000 a year.  So, if that’s you, breathe easy.  This realization creates the Internal Revenue Service Audit Principle.

The principle is very succinct.  Look where the money is.  The Internal Revenue Service is going to audit the people who earn the most money.  In fact, statistics indicate that if you earn under $100,000 annually, your chances of being audited are just one percent.  These audits are mostly done in the form of mail notices that you need to change some figures as opposed to full-blown IRS audits.

The figure changes when you make more than $100,000.  It actually doubles to two percent, and they are done sending post cards in the mail.  These are real IRS audits, we are talking, here.  A taxpayer earning one million dollars has their chance of being audited jump to six percent, and we keep rolling from there.

The exceptions to this rule are cash receipt businesses.  If you own a business that deals with a lot of cash, like a corner grocery or a car wash, your chances of getting audited can jump well beyond 10%.  You see, the Internal Revenue Service starts out assuming that we are all tax cheats and moves on from there.  Now, you might not get audited right away, if you own one of these businesses, but the IRS could be monitoring you very closely.  For instance, if you own a laundry, it isn’t unusual for the Internal Revenue Service to monitor your water usage in order to determine revenue.

You are not entirely off the hook if you earn less than $100,000 annually and don’t run a cash receipt business, you could be a one percent victim of the IRS Audit Principle.