Tax Tips for Individuals

Guess what? The IRS knows about your un-filed tax returns

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No one likes filing their taxes, but not filing them isn’t just a bad idea. It’s illegal. The IRS keeps detailed records, and chances are they’ve already noticed your lack of compliance. If you’re guilty of an unfiled return, it’s only a matter of time before they catch up with you and demand payment. So, do yourself and your finances a favor, and bring your return filing status up to date as soon as possible.

Here’s how to get started…

Consult with a professional. While the desire for a clean slate is commendable, now is not the time to go it alone. Before filing missing returns, you may want to consult with a qualified tax professional who can offer advice and support, from gathering the proper documents to ensuring that the necessary paperwork is completed correctly.

Gather documentation. Sort through your records and compile all the tax-related information you have on hand. If you’re missing W2 or 1099 forms from past years, your tax pro has the ability to help retrieve them. A professional can also help you construct your income and expenses when records have been lost or destroyed.

Run the numbers. A tax professional can file on your behalf, so you can learn the exact figures you may owe. According to the IRS, a surprising number of unfiled returns may actually be due for a refund. In fact, unfiled 2015 federal income tax returns left 1.4 billion in unclaimed refunds on the table.

If you’re dealing with the potential repercussions of unfiled tax returns, contact the tax resolution specialists at NJ CPA firm Magone & Company at (973) 301-2300 to schedule a no-obligation consultation, and get back on good terms with the IRS.

The latest guidance on tax payment relief

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We have received guidance regarding the special payment relief proposed by the Treasury Department on March 17. This payment relief includes:

Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of the 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C corporations, such as trusts or estates. The IRS will automatically provide this relief to taxpayers. You do not need to file any additional forms or call the IRS to qualify for this relief.

Corporations: For C corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of the 2019 tax due.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.

We remind our clients and friends that for the vast majority, your tax return is due on April 15, 2020 without extension. This relief does not extend the filing date, only the payment of the tax liability.

We also remind you this relief applies only to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax.

Here is the latest on the payment deferral and filing due dates for the states that have published information:

  • California — Filing and payments extended until June 15, 2020. Includes quarterly estimated tax payments.
  • Connecticut — Business returns extended until June 15, 2020, individuals until July 15th.
  • Michigan, Colorado, Georgia, Maryland, Massachusetts, Ohio, Oregon — State treasury departments have said they will mirror IRS guidance; however, there have been no official pronouncements issued yet.
  • South Carolina – Filing and payments extended until June 1, 2020 for individuals and corporate taxpayers. Quarterly estimates were not addressed.

Many state treasury departments are closed, but monitoring the IRS guidance. We continue to monitor various state payment deferral plans and due dates, and will communicate them if and when they are adopted.

Our team of tax professionals is here for you during this uncertain time. Please call the office at 973-301-2300 with any questions.

Reaching a tax resolution: Is an IRS “Offer in Compromise” the right move for you?

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Like clockwork, tax season is upon us. But for taxpayers who owe multi-year payments plus mounting penalties, it’s an especially expensive and stressful time of year.

Owing money to the IRS can be frightening, to say the least. For each day that goes by, more interest and penalties may accrue, wreaking havoc on your finances. Even if you think there’s no hope in paying off what’s owed, there are repayment options worth exploring that can help you get out of debt for a reduced amount.

The Offer in Compromise
If you owe back taxes to the IRS or have years of unfiled returns, you may qualify for programs that can help pay off your debt faster and with minimal headaches. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS, settling your liabilities for less than the full amount owed. While this option is widely known, it’s often considered a complicated part of the tax code.

Without an experienced tax resolution specialist to navigate the ins and outs of an OIC, the IRS may turn down your application, and the amount you’re obligated to pay could keep climbing. A tax pro also has extensive knowledge of other IRS programs and payment options, which may better suit your personal situation.

There’s no time like the present to get back on track
Few things in life are as frightening as owing money to the IRS, but the faster you move, the sooner you can work on paying off your debt. If you’re in tax trouble, reach out to our NJ tax resolution firm for guidance on how to best proceed. Contact Magone & Company today at (973) 301-2300.

4 income tax filing mistakes that could land you in tax trouble

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Thinking of preparing your own income tax return  this April? You might want to reconsider. Even the slightest oversights might mean hefty fines and penalties that could have been avoided. Watch out for these four mistakes before hitting the “submit” button.

#1 Neglecting to report all of your income.
Whether it’s your regular paycheck, a side gig, gains that you’ve made on the stock market or interest earned from deposits in the bank, you need to account for all of it in your tax return. If you don’t, the IRS may come knocking. Every time you make at least $600 in income working as an employee of any description, you get a 1099 form stating what you’ve made. Technically, you should also record smaller chunks of income for which you don’t get a 1099.

#2 Guessing what your deductions are.
Back up every attempt at a deduction with documentation like receipts or logs. If you attempt a rough estimate at what your deductions should be, you could trigger suspicion — especially if the sum you claim is high for your income level, or if it’s a convenient round figure.

#3 Automatically rejecting the idea of itemizing.
Most tax filers choose to take the standard deduction, rather than itemize. But, this doesn’t mean that you shouldn’t itemize — it really depends on your specific circumstances. If you have many legitimate deductions to make because you pay a great deal of mortgage interest, for example, itemizing may work in your favor.

#4 Procrastinating filing your return.
Preparing your taxes is a complex process. If you’re self-employed, or if you need to itemize, it man only get worse. Don’t rush through the process, as mistakes can be costly. Take the time to file your taxes well ahead of the deadline. If you need extra time, you can always file for an extension and avoid the late filing penalty, which can add up to a whopping 25% of the original tax amount.

Whatever you do, don’t skip filing altogether! At Magone & Company, we’re here to help. Give us a call at (973) 301-2300 for assistance in resolving any tax issues that come your way.

What is “Currently Not Collectible” status from the IRS?

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Big corporations are known for getting all sorts of breaks, but when average people fall behind, they rarely receive help. When you owe back taxes but can’t afford to pay them, you may qualify for a special tax status known as currently not collectible (CNC). In a nutshell, if the IRS agrees you can’t pay both your taxes and your reasonable living expenses, it may place your account in CNC status.

You can request CNC status by submitting the proper form and proof of your income and expenses, as well as documentation of your assets and loans. Be sure to gather copies of all your bills, your most recent pay stubs, and statements detailing other sources of income such as alimony, pensions or investments. If the IRS determines that your necessary expenses exceed your income, you will be notified of your status. And if you’re approved for CNC status, the IRS must not only cease its collection efforts, but can no longer garnish your wages or seize your property.

Not a permanent solution
Keep in mind, CNC status only applies to back taxes. You will still have to file tax returns, and are not exempt from paying current and future taxes. You will also continue to accumulate penalties and interest on your unpaid taxes. After a year or two, the IRS may review your status, and if you’re able to begin paying your back taxes, then you must do so.

Statute of limitations
The IRS can attempt to collect outstanding taxes for only 10 years from the date the taxes were assessed against you, which is usually the date you filed. If at the end of this 10-year period the IRS hasn’t collected, the taxes are no longer owed.

Advice you can trust
In difficult times, many individuals and businesses have trouble meeting their commitments. Reaching out to our firm for a confidential consultation may give you some peace of mind. Call the tax professionals at Magone & Company at (973) 301-2300 for a specific evaluation of your situation.

3 reasons you shouldn’t talk to the IRS yourself if you owe back taxes

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If you owe money to the IRS, it might sound like common sense to try to tackle your tax problem on your own. However, one of the worst things you could do is talk to the IRS directly without proper representation.

As an expert tax resolution firm, we encourage all readers facing a tax problem to contact us for a free consultation.

The IRS is not on your side and their primary goal is to collect the taxes they believe you owe. In this article, we give you 3 reasons why talking to the IRS directly could get you into deeper trouble.

1. You have rights.
Contrary to popular belief, you DO have rights as a taxpayer that you probably don’t even know exist. One is the right to representation. If an IRS revenue officer or revenue agent calls or “visits” you, did you know you are under no obligation to answer any of their (very intrusive and condescending) questions? Politely respond by asking for their contact information, explaining that you’re in the process of hiring a professional to represent you and that this person will contact them directly. A CPA or Enrolled Agent that deals with IRS problems for a living knows the “ins” and “outs” and how to deal with the IRS so that your rights are protected. A tax resolution specialist also knows how to get you the lowest possible settlement allowed by law. Generally, our clients never meet or speak with the IRS once we’re on the scene.

2. Answering questions can dig you into a deeper hole.
If you are being audited or about to be, the IRS will ask you about 50 very intrusive questions in your initial interview. How you answer these questions will dictate the fate of your case.  Having a tax resolution specialist conduct these meetings WITHOUT you is the best course of action we can recommend. Half of the referrals to the IRS’s criminal investigation division come from that “nice” auditor sitting across the table at the audit.

3. They won’t tell you about all your settlement programs and options. The just want their money.
If you owe between $10,000-$25,000+, the IRS has many NEW flexible programs under their Fresh Start Initiative available to taxpayers. These include Offer in Compromise, Partial Pay Installment Agreements, Payment Plans, Penalty Reduction, and Currently Not Collectible Status to name a few. Each carries with it its own unique process, procedures and qualifications.  Having an experienced tax pro in your corner ensures you are taking advantage of the best options available to you.

One last thing….

Ask yourself this question: Would you go to court without a lawyer?

If you answered “yes” hopefully you know the law inside and out concerning your case, but if representing yourself doesn’t seem like a great idea it’s best to hire somebody who is well versed in the subject matter. Well, it’s the same thing with the IRS. Having someone who knows how to negotiate the IRS’s maze of rules, regulations and the 74,000 pages of the Tax Code and deal with the IRS may be the best money you’ve ever spent.

If you want the help of an expert tax resolution professional who navigates the IRS maze for a living, reach out to our firm at (973) 301-2300. We’re happy to schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.