Tax Talk - The 20/20 tax resolution blog

According to the Associated Press and recent information that has surfaced from the Internal Revenue Service, a large amount of federal employees owe back taxes.  More than 279,000 federal employees and retirees owed $3.4 billion in back income taxes as of 2010.

The data showed that 467 employees of the House of Representatives, owed more than $8.5 million. In the Senate, 217 employees, owed $2.13 million.

In addition, the White House Staff  was not immune to the issue. Approximately 36 people in  the executive office of nearly 1,800 workers, owe  about $833,970 in back taxes.

The release of the information comes on the heels of the State of the Union address which sought for changes in the tax code, especially anyone making more than $1 million a year.

However, delinquency rates are falling among federal employees from previous years. The total amount owed is down slightly from September 2009, when more than 282,000 federal workers owed $3.3 billion in taxes. For more detailed information visit the  Associated Press and the full article.

Please note that we have a section on our website devoted to more of these tax-related stories and successful20/20 tax resolution stories.  Click here to see the 20/20 Tax Resolution successful resolutions near you.

If you have any questions about  tax matters, please feel free to contact us.

Are the health risks of soda enough to justify a new tax that would supposedly reduce the amount of soda consumption and save lives? Advocates of the tax say studies correlate excessive soda drinking with high mortality rates. However, those opposed to the tax say the tax “limits freedom of choice” of Americans.

To be fair, scientists and public health experts are trying to get the the truth of the argument and the actual data on whether or not soda has such a large impact on health standards. Regardless of your opinion on the issue, it is important to know the facts. The implementation of the tax germinated from a recent study conducted by researches at UC San Fransisco and the Columbia School of Public Health. To accomplish the study the researchers made some basic assumptions about the eating and drinking behavior of Americans and then, using a time-tested computer model of American nutrition and health, simulated the potential future impact of a national, penny-per-ounce excise tax on sodas.

The study predicted that the tax might save 2,600 lives, avoid 9,500 heart attacks, and 240,000 new cases of diabetes every year. A penny-per-ounce soda tax on sugar-sweetened beverages would likely raise the shelf price of soda by about 20 percent. The Bibbins-Domingo’s new study estimates that such an increase “would reduce consumption … by 15 percent among adults age 25 to 64.” To read in greater detail about the study and how to get your opinion on the issue out there, visit The Huffington Post.

If you have any questions about  tax matters, please feel free to contact us.

It has been another successful week for 20/20 Tax Resolution.  An Enrolled Agent at 20/20 Tax Resolution successfully negotiated a TFRP Abatement and Refund with the IRS for a client in Bradford, PA. A TFRP stands for Trust Fund Recovery Penalty and occurs when the IRS assesses someone personally for a portion of the business tax liability. The IRS does this to ensure it can collect from willful and responsible individuals if the business closes.  If found willful and responsible, then the individual is responsible for 100% of the penalty.

20/20 Tax Resolution discovered that the client was unfairly assessed by the IRS, resulting from a business liability where she was only the bookkeeper for the business but held no fiscal authority over the business. To make matters worse, the IRS issued levies taking a large amount of money from the client. 20/20 was able to prove that the client was neither willful nor responsible and successfully secured an abatement and refund with interest. 20/20 Tax Resolution saved this client over $50,000.

Please note that we have a section on our website devoted to more of these success stories so that you can find other examples in your state.  Click here to see the 20/20 Tax Resolution successful resolutions near you.

If you have any questions about  tax matters, please feel free to contact us.

The deadline  for filing 2011 taxes is just around the corner. Here at 20/20 Tax Resolution, we want to make sure you are prepared for that process. Recently, there have been some updates to tax rules  to look out for and the following summary outlines some of the key issues to note when you go to file.

1. First,  the due date for filing this year is April 17. This is because the April 15th due date falls on a Sunday, and April 16th is a National holiday so automatically the date gets bumped back by two days.

2.The final due date for estimated tax payments for the  next quarterly installment for prepayment of 2011 income taxes is Tuesday, Jan. 17.

3. Beginning in 2011, brokerage firms are required to report to the IRS not only proceeds from sales of stocks and mutual funds, but also the cost basis of the investments that are sold. This process requires a new form called the 8949. Click to see a Draft From 8949.

4. Business mileage rates for 2011 were changed , make sure you are current on those. Click Standard Business Mileage Rates for more details on this issue.

5. The temporary payroll tax cut has been extended to Feb. 29; employees will enjoy a continued savings of wages withheld for Social Security .

6.The self-employment health insurance deduction no longer offsets the self-employment tax.

These are just a handful of the issues that have been changed from the last filling period to the upcoming April 2012 filling period. To understand these issues in greater detail visit What you Need to Know for Your 2011 Filling and What’s New for 2012 and feel free to contact us.

It is the beginning of the year and people all over are looking to follow through on their promised New Year’s resolutions . While many are heading to the gym or cutting back on the sweets, here at 20/20, our hopes for the New Year are pretty simple: to help those seeking resolution on their taxes to find it.

This week’s successful resolution story involves a client of 20/20 Tax Resolution’s from Florida who owed over $300,00 in personal income back taxes accumulated over the course of eight years. Senior Tax Consultant and Enrolled Agent,  Amanda MacKinnon, E.A, got right to work and successfully negotiated an Installment Agreement with the IRS. It was a tricky case to negotiate, seeing how the client averaged $16,000 per month in “non-allowable” expenses which basically means the IRS thought the client could pay over $15,000 a month to the IRS.  Through Amanda’s negotiations the client is now only paying $1,000 per month.

In addition to formalizing the Installment Agreement that will potentially save the client the upwards of $190,000 over the life of the collection statue, 20/20 Tax Resolution worked with ADP  to outsource the client’s business payroll function. This introduction to ADP services helped bring the client into compliance and will ensure that this hard-earned resolution with the IRS remains intact.

Whatever your New Years resolution is, working out on that treadmill, or attempting a healthier diet, here at 20/20 Tax Resolution we hope you fulfill it. If your resolution happens to be resolving your tax issues, we  hope you find the right help to do so!

Please note that we have a section on our website devoted to more of these success stories so that you can find other examples in your state.  Click here to see the 20/20 Tax Resolution successful resolutions near you.

If you have any questions about  tax matters, please feel free to contact us.

It is the season for gift giving at 20/20 Tax Resolution you to be informed about the tax issues that go along with being generous. A recent article in Forbes magazine by Erik Carter, debunks the myths around holiday gifts and the tax issues that in sue. The article walks readers through five myths about giving gifts, and perhaps lends more insight on how to give gifts in a smart way for both you and those who you are giving to.

Myth # 1: You have to pay tax on gifts you receive.

False. In actuality the giver of the gift may owe the tax. Carter explains that the whole point of the gift tax is to prevent people from using lifetime gifts to avoid paying the estate tax. However, employer gifts,property gifts, and foreign gifts come with different stipulations. Make sure upon receiving the gifts you are well informed of your obligations as a taxpayer.

Myth #2: You have to pay a tax on gifts you make that are over $10k per year.

Carter states, that the annual gift tax exclusion has gone up to $13k per year. Also you may give unlimited contributions to a spouse or qualified charity in addition to a medical or educational institution. Keep in mind the $13K is per person. Be sure not to go over the limit, click for more information on the gift tax.

Myth# 3: You can avoid the gift tax by loaning money at no interest and than forgiving the loan.

Real loans must be treated as such which means putting the terms in writing, including the repayment schedule, and charging a fair interest rates. If you forgive the loan, it will be considered a gift at that point.

To read the remaining debunked gift-giving tax myths and more detail about each myth scenario click 5 Common Tax Myths About Gifts and link to Carter’s article. 20/20 wishes you a merry season of informed gift-giving!

The New Year is just around the corner and 20/20 tax resolution wants to make sure you go out with a bang by taking all the necessary steps to ensure your taxes are as low as they can be, even if these steps are last minute! Read on for end of year tips that will surely have you celebrating as you wrap up your year.

1. Make Charitable Contributions – Make sure to itemize deductions to qualifying charities no later than Dec. 31 to be eligible for the year 2011. To do this you must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. If the donation  is charged to a credit card by Dec. 31 it is considered valid for 2011, even if the bill isn’t paid until 2012.

2. Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. These improvements may be insulation, new windows and water heaters. For details see Special Edition Tax Tip 2011-08, Home Energy Credits website.

3. Consider a Portfolio Adjustment – Check your investments for gains and losses and consider sales by Dec. 31. Deduction of capital losses up to the amount of capital gains are permitted, plus $3,000 from other income. In addition, if your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.

4. Contribute the Maximum to Retirement Accounts – Elective deferrals you make to employer-sponsored 401(k) or retirement programs for 2011 must be made by Dec. 31.  You have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over. Click IRA Saver’s Credit for more information.

5. Make a Qualified Charitable Distribution – If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income.

6.  Small Business Health Care Tax Credit – If you are a small employer who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35 percent of the premiums paid. An employer with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify.

There you have it, the top six tips that will make your New Year sparkle, pop and explode! 202/20 Tax Resolution hopes these tips help you as you get your finances in order just in time to file in April.

If going out with a bang is something you ponder regularly. Consider this: being buried in space. Well, technically you can’t be buried in space, but you can have your cremated remains carried by a commercial rocket ship out of this atmosphere and scattered among the stars for a hefty chunk of pocket change. What’s even better about this deal is that you may also get a tax break for doing so!

The legislation for the tax breaks is being proposed in Virgina to boost the Mid-Atlantic Regional Spaceport at Wallops Island, and to also boost the economy. The deductions proposed could be up $8,000 and effective from 2013 to 2020.

J. Jack Kennedy, a board member of the Virginia Commercial Spaceflight Authority, told WTVR news in Richmond, Virginia. “This is about business and job opportunities.”

However, people are not really being “buried” in space they are merely taking a “trip” out of this atmosphere. The flight can last minutes to years depending on the service requested by the customer, and of course their checkbook.

Texas-based Celestis is the company offering services and it says it has launched 10 “memorial spaceflights” since 1997. The costs range from $1,000 for a quick trip into suborbital space to $10,000 to have one’s ashes sent to the moon. Click here to read the full story.

Click here  to read more of 2020 Tax Resolution tax-related  stories.

20/20 Tax Resolution experts have been working ceaselessly to resolve client tax issues in time for the holidays. This week’s success story involves a client that came to us with an estimated liability of $17,000 in back taxes. However, after filing delinquent quarters the client actually owed much more than the original estimation.

The client was struggling to meet payroll for the business and the IRS,  just in time for the holidays, smacked the client with a levy making it impossible to meet necessary expenses. A real grinch-like way to usher in the holiday season. 20/20 Expert Martina Smith E.A.,  immediately got to work to negotiate a full Levy Release.  They are now working to spread the holiday cheer by working towards a permanent solution for the liability and helping this client in a time of need. To view the Release of Levy click here.

Please note that we have a section on our website devoted to more of these success stories so that you can find other examples in your state.  Click here to see the 20/20 Tax Resolution successful resolutions near you.

If you have any questions about  tax matters, please feel free to contact us.

A recent article written by Michael Cooper from the New York Times, suggests that Fortune 500 companies are not pulling their weight when it comes to paying state corporate taxes. Some large companies have even reported paying no state corporate tax at all. This comes as a huge surprise considering most states are in financial crisis and seeking to raise and collect tax to balance budgets.

A recent study done by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington that advocates a more progressive tax code, claims, “68 of the 265 Fortune 500 companies profiled paid no state corporate income tax in at least one of the last three years and 20 of them averaged a tax rate of zero or less during the 2008-2010 period.”

In these unstable economic times, state tax and the amount of state tax corporations are paying is a hot button issue for lawmakers, businesses and citizens alike. Click here to read the full story.