Tax Talk - The 20/20 tax resolution blog

We’re always excited to share with you when  2020 Tax Resolution’s tax experts are relied upon in the news for tax advice.  This time Enrolled Agent, David Miles, was interviewed in a Fox Business article, “When to Hire Tax Help”.  The author writes about the decision whether or not to hire a tax professional when dealing with your tax matters.

In the article Miles explains,  “The more things you have going on in your life, the more complicated your taxes are.”  There are understandably a handful of variables that go into figuring out the complex tax code.  We’re glad that our experts at 20/20 can step in and help educate taxpayers and be a dependable source for tax expertise in the news.

Read the “When to Hire Tax Help” article and get some great tax information from 20/20 Tax Resolution to help you along your way.

The race to file taxes if upon us and the finish line of April 17th is just around to corner. Before you start your engines and go to file, make sure you are aware of all of the rules of filing for 2011 taxes. To help, the IRS released 6 important facts about dependents and exemptions that everyone should be aware of. In this week’s 20/20 Tax Resolution Tax Talk blog post we would like to go over these tips so that all “engines are check” for the upcoming tax filing rush.

1. Exemptions May Reduce Taxable Income: The IRS outlines two types of exemptions you may be eligible for. These are: personal exemptions and exemptions for dependents. For an exemption you may deduct $ 3,700 on your tax return.

2. Spousal Status: Your spouse is never considered your dependent. If you are filing a joint return you may claim one exemption for yourself and one for your spouse. However, if you are filing separate returns you may only claim the exemption for your spouse if they have no gross income, are not filing a joint return and we not the dependent of another taxpayer.

3. Dependents: In general, you can take an exemption for each of your dependents. An example of a dependent may be a qualifying child or a qualifying relative. To take the exemption you must list the Social Security number of any dependent whom you are trying to claim an exemption.

4.  Are You Being Claimed as a Dependent? You May Still Need to File Separate: Whether you must file a return on your own regardless of your dependent status depends on several factors. These include: the amount of your unearned, earned or gross income, your marital status and lastly, any special taxes that you may owe.

5. Dependents may not claim an exemption when: someone else – for  example, your parent -claims you as a dependent. In addition, you may not claim your personal exemption on your own tax return

6. People that Cannot be Claimed as a Dependent: As a general rule of thumb, you cannot claim a married person as a dependent if they file a joint return with their spouse. To claim a dependent that person must either be a U.S. citizen, or a U.S. national/resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

Stay tuned for more tips to come in the weeks prior to the filing deadline. Although the end goal of the coming months is the finish line of the April 17th deadline, you don’t have to get there the fastest just the most accurately before the deadline is up! Please visit the IRS website for more information.

Please note that we have a section on our website devoted to more informative tax-related issues and tax success 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.

This week’s success story is made possible thanks to Bethany Kuenne, E.A. and her team who successfully negotiated an Installment Agreement with the IRS. The client from Wasilla, AK owed upwards of $142,000 from several periods of back taxes. Because of the amount owed, 20/20 Tax Resolution and Bethany Kuenne had to draw a hard line with the IRS. The IRS revenue  officer assigned to the case argued that the client could pay a whopping $22,000 per month towards the liability. Both 20/20 and the client knew this was not feasible based on the financial situation. 20/20 remedied the situation by negotiating monthly terms with the Revenue Officer and Group Manager. The terms ended up being considerably lower than the $22,000.

Ultimately, the case escalated to the Office of Appeals. 20/20 worked with the Appeals Officer to formalize an Installment Agreement for $2,550 per month. This monthly payment is far more reasonable than the first negotiation, and thanks to 20/20 Tax Resolution and Team Kuenne this client is able to pay down their owed taxes.

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.

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.