How Do you know if you qualify for Innocent Spouse Relief?

All the facts and circumstances below are considered in determining whether its inequitable to hold you liable. Some of the factors include:

*The taxes owed are your spouse's or ex-spouse's
*You are no linger married to that spouse
*You thought you spouse would pay the taxes on the original return
*You didn't know about the items changed in the audit
*You would suffer a financial hardship if you were required to pay the tax. You would not be able to pay for basic living expenses like food, shelter, and clothing
*You did not significantly benefit (above normal support) from the unpaid taxes
*You suffered abuse during your marriage

However keep in mind that you must file no later than two years from the sate the IRS first attempted to collect that tax from you.

You are an injured spouse if you share of the overpayment shown on your joint return was, or is expected to be, applied (offset) against your spouse's legally enforceable past-due federal taxes, state income taxes, child or spousal support payments, or a federal non-tax debt, such as a student loan. If you are an injured spouse, you may be entitled to receive a refund of your share of the overpayment.

If you think you qualify for Inniocent Relief, contact a repuatable tax debt company for assistance and relief of this burden

Offer In Comporomise and the IRS

An offer in compromise is an agreement a taxpaye and the Internal Revenue Service that settles the taxpayer's tax liabilitiee for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or throuhg a payment agreement.

In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayers ability to pay and includes the value that can be realized from the taxpayer's assets, such as real property, automobiles, bank accounts, and toher property and any dissipated assets. The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.

OIC- Doubt as to Liability
A legitimate doubt exists that the assessed tax liability is correct. Possible reaons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law (2) the examiner failed to consider the taxpayersevidence (3) the taxpayer has new evidence.

OIC- Doubt as to Collectibility
Doubt exists that the taxpayer could ever pay the full amount of the tax liability owed within the remainder of the statutory period for collection.

OIC- Effective Tax Administraton
There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstances exists that would allow thr IRS to consider an OIC. To be eligible for compromise on this basism, a taxpayer must denmonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.

Small Business's Can Claim IRA Retirement

Retirement plans are not just for big businesses. They are also available for sole proprietorships. If you are self-employed small business owner, you can set up a qualified retirement plan for yourself and your employees.If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. You can also deduct trustee fees if contributions to the plan do not cover them.The Internal Revenue Code provides significant tax incentives for employers that establish and maintain retirement plans that comply with the requirements of the Code.

Such plans include Simplified Employee Pension (SEP) plans and Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA) plans.Generally under these plans, contributions that are set aside for retirement may be currently deductible by the employer, but are not taxable to the employee until distributed from the plan.You must set up and fund a qualified retirement plan such as a SEP or SIMPLE-IRA.

No matter what type of plan for the self-employed you are considering, you must actually make contributions to a qualified and properly maintained retirement plan account. This fact sheet provides a quick look at preventing incorrect deductions for retirement plan.

Do You Qualify For Head Of Household When Filing Your Tax Returns?

To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. You can determine whether you paid more than half of the cost of keeping up a home by using the following worksheet.

Cost of Keeping Up a Home :Property taxes Morgage interest expenseRentUtility chargesUpkeep and repairsProperty insuranceFood consumed on the premisesOther household expensesIf the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Costs you include: the cost of upkeep expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home.

Costs you do not include: the cost of upkeep expenses such as clothing, education, medical treatment, vacations, life insurance, or transportation. Also, do not include the rental value of a home you own or the value of your services or those of a member of your household.There are so many nuances that the average taxpayers negates to include when preparing tax returns. Before you cost yourself money, contact a licensed tax preparer to help prepare your returns.

How To Report Expenses To The IRS

Did you know that if you are self-employed, you must report your income and expenses on Schedule C or C- EZ (Form 1040) if you are a self-proprietor, or on Schedule F (Form 1040) if you are a farmer. You do not use Form 2106 or 2106 EZ.

Say for instance, if an employee receiving the standard meal allowance under a non accountable plan may claim 50% of the standard meal allowance as a miscellaneous itemized deduction, subject to the 2% limitation. Reimbursements under accountable plans are not included in the employers taxable compensation. Therefore, such employees receive no deduction, and the 50% limitation applied to the employer's deductions.

If you are both self-emplyed and a W-2 earner, you must keep separate records for each business activity. Report your business expenses self-employment on Schedule C,C EZ- or F. You will need to report your business expenses for your work as an employee on Form 2106 or 2106-EZ.

Allowable and Unallowable IRS Expenses Towards Resolutions

This week I had a taxpayer ask me whether or not the following expenses would be considered an "allowable" expense with the Internal Revenue Service. When it comes to what is considered an allowable and unallowable expense, the IRS has strict guidelines on what they deem as a necessary living expense.



1. School Loan, for a child- This would not be considered an allowable expense , unless you had a ledger showing how was paid along with the balance; need to include the original loan statement

2. A personal loan you have made with a family member- This too is not an allowable expense because its not a loan backed by collateral. Meaning, the loan could be in someone else's name, and the taxpayer pay them monthly, but not itf the loan is not through an acredited finacial institution backed by collateral (car,home,assets).



If you have questions or need tax debt relief, contact a professional who can help today.

How Long To Keep Records and Receipts for Tax Purposes

You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep your records that support your deduction (or an time of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date.

Say For Instance:

If you use your automobile less than 50% fir business and claim actual expenses, you must keep those records for at least 6 years (the straight-line, useful life depreciation period).