As we sit today, we do not have an estate tax in 2010.  The problem this presents is that, through an interplay of the estate tax rules and the Alternative Minimum Tax rules, if Congress does not act to reinstate the estate tax for 2010 there will be a significant increase in the number of individuals paying the AMT, not only in 2010 but in all future years as well.

The AMT issue

The AMT side of this issue stems from the impact that capital gains have on an individual taxpayer’s AMT.  While long-term capital gains are taxed at the same tax rates for both the Regular Tax as well as the AMT, an increase in an individual’s taxable income, whether from ordinary income or from capital gains, in many cases means a decrease in the individual’s AMT exemption amount.

Here is how this works: once a certain level of Alternative Minimum Taxable Income (AMTI) is reached, every dollar of additional income will reduce the taxpayer’s exemption by 25 cents.  The threshold level for a married couple filing jointly is $150,000; it is lower for singles and marrieds filing separately.  These thresholds, as well as the mechanics of the AMT exemption phaseout, are explained in the lower part of the IRS Form 6251. (more…)

In order to be considered tax-deductible your donation must meet a few restrictions:

1. You actually have to donate the cash or property; a pledge or promise to pay does not count as a deduction until it is actually paid.

2. You must itemize your return in order to claim the deduction. Taxpayers taking the standard deduction cannot deduct charitable contributions.

3. You have to meet the IRS’ record keeping requirements, and will need to keep all receipts, canceled checks, acknowledgement letters, and appraisals for donated property.

Cash Donations

All monetary contributions made either by check, money order, credit card, or electronic funds transfer, etc. to qualified nonprofit groups can be deducted on your tax return. Just be sure that you have adequate records for all contributions. (more…)

No matter the conditions or causes of an IRS Tax Levy, every individual is granted the following rights. Firstly, the IRS cannot assess a lien on the owner’s residence if amount of funding the IRS requires from the levy totals less than $5000. Secondly, the law grants that the IRS must follow Due Process in the collection of a tax liability. Therefore, The IRS must send the Final Notice of Intent to Levy and Notice of Your Rights to a Hearing 30 days or more prior to issuance of the levy. Additionally, if the Statute of Limitations on a tax debt expires, then the IRS must stop collecting from the owner of the property.

In the event that a taxpayer has appealed the levy unsuccessfully via a Collection Due Process hearing, an additional 30 days is given, during which time the taxpayer may continue his/her appeal with the US Tax or Federal Court.
The IRS must release an IRS wage levy once an agreement is made with the taxpayer that their back tax liability is not collectible. (more…)

The IRS audits more than 50,000 businesses and 1,250,000 individual taxpayers each year, mainly via correspondence exams. Although no one can guarantee you will never be audited, you can lower your chances of being selected for an audit by following a few straightforward strategies.

Tip 1: Check Your Arithmetic

Double check your calculations for all the numbers on your tax return to ensure they are correct. IRS computers review the income and deductions on returns for accuracy and if yours has several miscalculations your return could be flagged for an audit.

Tip 2: Don’t Overstate Your Deductions

Make sure you have supporting documents to prove every deduction on your return. Your deductions are evaluated relative to other taxpayers in your income bracket by IRS computers. This is done to spot taxpayers claiming relatively high deductions, such as $25,000 in charitable contributions by a taxpayer with an adjusted gross income of $75,000. (more…)

Are you bowed down by the weight of tax owed to the IRS? If you think you can handle the situation by yourself and find the right Tax solutions it is time to think once more! IRS or State Tax Issues cannot simply be wished away. Here is professional help at hand – to help you cast off your tax burden and begin a care free life all over again.

With USA Tax Help you are never too far gone for recovery. This service team has experienced CPAs who thoroughly understand how the system works but as an individual you may not understand all the procedures and laws that run this system. They have experience in working with numerous clients from all walks of life including attorneys, doctors, financial planners and more. The team is equipped to guide and help you in obtaining substantial reduction in the tax amount you owe. They also come up with a tailored and convenient list of options to fit your unique situation, which aids you to catch up with your payments. (more…)

When the IRS and taxpayer fail to come to an agreement or if a taxpayer does not pay back taxes, often times the IRS will utilize a powerful collection mechanism called a levy. In many cases, this means IRS wage garnishment or an IRS wage levy. No matter what you call it, remember this: it is a very serious situation that you do not want to be in because the IRS will contact your employer and deduct taxes you owe from your wages or a paycheck.

If you owe taxes and are avoiding the IRS there is a good chance that you will face wage garnishment in the very near future. Of course, before this happens the IRS will send out Letter 1058 – Final Notice of Intent to Levy. Within 30 days it is up to you to do something about your situation. For most, this means requesting a Collection Due Process Hearing. You can be assured if you don’t do anything the wage garnishment process is going to begin.

The IRS has the right to seize any property that you own. Some people do not believe this, and that is why they are so lazy in moving forward in finding a solution. If the IRS decides to levy your wages an order to do so is sent directly to your employer – there is no way around this. You may think that speaking with your employer will help, but this has no bearing on what happens. Simply put, the IRS is in charge. (more…)

Remember, when almost every US tax payer on the planet filed a tax return, in order to get the free stimulus payment?

Well, the IRS now know for sure, that you exist, and now they released a statistic report stating that, as of June 26, 2009, they are missing around 10.7 million tax returns, based on last year’s tax returns filed.

True, out of the 10.7 million, many of the taxpayers are not required to file a tax return, however, many of them are – and the IRS is now looking for those returns.

As of June 26, 2009, the IRS has received about 135.4 million individual tax returns.

Common sense tells us, with the cost of the bailouts, the IRS will be looking for those millions of tax returns that have not been filed and should be filed.

Many taxpayers ask, how would the IRS know who should file, and does not have to file?

Think about it for a moment.

You repaired the roof on an apartment complex for $6000, or you provided child care for a young couple, for a total of $4000 during the last year. You may not have thought about it, but you provided a tax ID, alone with your name, address and additional contact information, before you were allowed to provide the services.

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Starting your own business is fun and exciting; very seldom do we stop and think about the law. During the year we keep all of our receipts (most of us), we have records showing how much money made during the year and if we’re lucky how much space was used in our home for the business and mileage. After all this is what’s required of us to write these expenses off on our taxes right!

Wrong, now you have to deal with the Hobby or Business rules. See below for some questions to consider when deciding if it’s a business or hobby.

· Do you plan to make a profit?

· Is your participation for fun?

· Do you depend on income from this activity?

· Do you have the knowledge and skills to make a profit from this business?

· Have you made a profit in a similar business in the past?

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If you have an overseas bank account and your objective was and is to hide money from the IRS than things have certainly changed for you especially if you bank with UBS. Until recently, you could rely on bank secrecy laws to protect you from disclosure. Now the federal government has successfully taken UBS which is the Union Bank of Switzerland to court in an effort to force the foreign bank to give up the names of American citizens maintaining overseas bank accounts, technically known as non-disclosed accounts to the American government.

The number of Americans maintaining overseas bank account(s) are in the tens of thousands. In a landmark negotiation UBS has agreed to give up the names of several hundred of these account holders who the bank believes are guilty of criminal behavior to the IRS. So if you are a holder of an overseas bank account here’s your bet. We know the number of customers having such accounts are in the 50,000 range. If the bank is giving up 250 accounts to start with, is your name in that 250, or are you in the remaining 50,000? That’s the bet.

The IRS has created a disclosure program that allows you to reveal your identity to the government until September 23rd. If you do voluntarily come forward, it seems unlikely that the government will pursue the matter criminally which means jail time. There will also be a certain amount of clemency given and certain fines will be avoided. If you wait until after the deadline, or if the government finds you first, we can promise you that you will face a nightmare scenario. The government does know how to make one’s life miserable between liens, arrests, confiscations and a whole variety of practices thought up over the last 70 years.

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So bankruptcy is staring you in the face, or maybe you’re facing foreclosure. I’ve been there and done that. I’ve also assisted thousands who have also been there and done that. One of the most important lessons we all learned was to be a pack rat. By that, I mean we learned the value of keeping and reading every letter and piece of correspondence to and from attorneys, creditors, the county, bankruptcy court, IRS, and any other entity involved in the bankruptcy and/or foreclosure. Here’s why:

1. To protect yourself before the bankruptcy and foreclosure are final. More often than not consumers take the approach in bankruptcy and foreclosure that they are working with highly trained professionals and avoid being actively involved and checking to make sure the paperwork is being properly done. Yes, bankruptcy attorneys and trustees and foreclosure attorneys are highly trained professionals, but they are still human and can make mistakes. Reaffirmation agreements can be missed. A second mortgage can be overlooked by the attorney. It happens.

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