Cleaning out for the New Year: Which Tax Records Do you keep?

Cleaning Up: A fresh new year is upon us. This is a great time to go through all of your Tax Records and weed out everything that’s unneeded. To be honest, the IRS does not require you to keep your records in any particular order, but you should keep any document that could have an impact on your tax returns.

Confusion: Many people ask, "How long should I keep my tax records?" It's not fun to have loads of paperwork weighing you down, but keeping your paperwork is important. If the IRS decides to take any kind of action against you, how will you defend yourself without ample documentation?

The Keepers: This is the IRS’s official list of definite “Keeps.”

• Bills
• Credit card and other receipts
• Invoices
• Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return

Start off Right: If you keep your records straight through the year you’ll save time and effort when tax time rolls around. If you hire a professional to complete your return, having your records in order will help them quickly and accurately get the best results possible. Don’t wait until next year to set things right, get organized now!

Now You Have the Smoking Gun...Use it!

Tax Debt and New Years Resolutions

The New Year is under way...we're already half way there, folks! How are you doing with all of your resolutions? Out of all the common resolutions people make, taking care of your IRS Tax Debt should be priority number one! I'll tell you from experience, the IRS can have devastating effects on your life if you ignore them. This year, the IRS has resolved to crack down on taxpayers that owe.

Lets Review...There's a lot of ludicrous ideas out there about Tax Debt. So you need to know the cold hard facts. Don't let unreliable people tell you that settling tax debt is "Easy" or that there's "tons" of ways to pay off the IRS. Because it's not true. Working with the IRS is hard. Filling out IRS paperwork is daunting. And there are only 5 real options for handling your IRS Debt.

1. Wait for Statues to Expire: Bad idea! The statue of limitations on your debt will not expire for 10 years. And sometimes, the statues are extended (like if you file for an "Offer in Compromise.") And while your waiting for the time limit to expire the IRS can collect on your debt by force with Tax Liens, Levies, and seizures. Don't give them the opportunity to do this. It will not pay to ignore your debt.

2. Pay in Full: If there is any way you can actually pay in full, do it! Do not submit an "Offer in Compromise" if your have money in the bank to pay for your IRS Debt. Your IRS Hitman has access to your bank account. If they see you have the money to pay, they will tell you to pay in full.

3.Settle It: The IRS gives you the chance to submit an "Offer in Compromise." You're are basically settling your debt for a lower amount. Very few people are actually accepted for this program. And barely anyone has their offer accepted for "Pennies on the Dollar." But if you are in a truly desperate situation, you might want to see if an "Offer in Compromise" is an option for you.

4. Suspend Collections: If you are in a situation displaying true Financial Hardship, prove it. The IRS might stop the collections process for a limited amount of time so you can get your finances back in order. They will determine the amount of time based on your situation, and check up on you periodically to see if your situation has changed yet.

5. Pay Monthly: You can pay the IRS monthly. You have to enter into an "Installment Agreement" with the IRS to do this. The IRS will take a close look at all your finances and assets. If you're approved to pay monthly, they choose the amount you pay each month. Then you are locked into a binding contract, stating that you must pay a certain amount monthly. And defaulting can have harsh results.

Still Hope: Sorry if I'm making things seem hopeless. Yes, paying off your IRS Debt is hard. The IRS's system of ruthless Hitmen doesn't help the matter. But there are ways to get your debt taken care of. None of the options I have described are easy to do. But you have to do them if you don't want to remain in debt to the IRS forever.

Now You Have The Smoking Gun...Use it!

IRS Tax Filing: Your Questions Answered!

An IRS-Hitman Special: Tax time is around the corner. This is that special time of the year when my inbox get flooded with questions from worried taxpayers all across the Nation. It's time to give the people what they want, answers to their IRS Tax Filing questions!

What are the legal qualifications for filing jointly?
There's only one. The couple has to be legally married as of December 31 of that year.

Are any special return notations required when your are filing jointly, but your spouse is deceased?
Yes, there's a particular area of the paperwork you need to take note of. In the signature area write in "Filing as Surviving Spouse." The final return needs to have the word "Deceased," the decedent's name, and the date of death written across the top of the return.

What deductions can I safely take?
In the end, it's your decision. But ask yourself the following questions: Do you like taking risks that could land you into prison? Do you like taking risks that would make you pay hundreds or even thousands of dollars in fines? If you wouldn't rob a bank, don't rob the IRS. Those consequences I listed are the realities of getting too bold with your Tax Filing. It's best to get a professionals' opinion on this matter.

I haven't filed my taxes for a couple of years and the IRS says I owe them money. Do I have to file my missing years before the IRS will work with me on my debt?
Yes, you do have to file any Tax Returns from past years before the IRS will work with you. The plus side is that you only have to file missing returns for the last 7 years. And if you file your returns you may see your Tax Debt reduced.

Still Lost? Still have a tax question you need answered desperately? Don't worry, I'll be back next week to answer more of your questions. Until then, I hope everyone has a safe weekend!

IRS Wage Garnishment: Kiss Your Paycheck Goodbye

Where it Begins: If you’ve got an IRS tax debt, chances are good that the IRS is doing everything they can to get that money. Maybe you gotten a few letters, but none of them seemed to serious. But about two weeks ago you got a “Final Notice” that said they intended to garnish your wages. You didn’t think it was that big of a deal, at least until payday, when you discovered what exactly wage garnishment means to your check.

Where Is Your Money? How could this have happened? You used to make $2000 dollars a paycheck and now it’s $400 dollars. You can’t even pay the bills! Well, that’s because the IRS can legally garnish up to 80% of your paycheck in order to pay for your debt. It may seem unfair, but the IRS feels that nothing is more important than IRS debt. They feel if you can afford to ignore the debt, they’ll just take your money straight from the source.

Talking to the Boss: You’re obviously infuriated over this. How can they just take your money? You need it to pay bills. So you go to take it up with your boss, and he tells you that his hands are tied. Unfortunately, he’s right. Your boss has no say in the matter. The IRS just comes to him and says “We’re going to be taking this amount from this employee’s paycheck.” All the boss can do is comply. In fact, if he tries to interfere, he can be fined or brought up on charges.

Who Can Help? Depending on the specifics of the situation, you can get the garnishment removed. But that involves taking the necessary steps to solving the problem. The IRS took it this far, they’re certainly not going to walk away without their money. Speak with an experienced tax professional to find out what it takes to remove the garnishment, arrange to pay the debt, and get back to living.

Now you have the Smoking Gun…Use It!

Manage Your IRS Debt Even after You’ve Lost Your Job

It’s a jungle out there… Times are hard, and many people, possibly you; have lost their jobs. What’s worse is that you’ve taken out of your 401k to cover your bills until you can get back on your feet. Now that money is gone, your job situation hasn’t improved and you got a letter from the IRS stating that you have a tax debt.

When it rains…How did this tax debt happen, and what can you do about it? The cause is simple; the correct amount of taxes weren’t taken out when you withdrew the money from your 401k. When you withdraw money from a 401k or any other investment you should expect to have to pay the IRS around 30% of that money. But that money’s gone, it went to paying for basic bills. So how are you going to pay your IRS debt without any income or liquid assets?

Don’t be lured by false hope…There is a couple of promising solutions available based on your situation right now. But before you go and try to negotiate with the IRS to get your debt reduced or erased ask yourself one question: where will I be in a year?

The two solutions I’m talking about are the Offer in Compromise and Currently Non Collectible. Both of these are solutions for people who have been hit hard by financial trouble, and both of them can take the IRS up to a year to make a decision on.

Answers to questions…So why is the question: where you will be in a year important? Because both IRS programs have very strict financial guidelines that you must meet in order to be accepted. And if during the year you’re waiting for a decision you get a job and your financial situation improves, you would no longer be eligible.

So where does that leave you? Let’s go over your grim situation…you’re unemployed, or you’re working at a job that pays far less than you made before. You have to make decisions about what bills you can pay and which ones you can put off. On top of that you have an IRS tax debt.

Real, not perfect solutions…Your only real option is to setup a monthly payment plan with the IRS. Because of your situation you payments should be low. Even though you won’t even be paying enough to cover the interest, you are paying the IRS something. That way the IRS won’t take any collection actions against you.

Once your situation improves you will have to renegotiate your payment plan with the IRS, but the most important thing for you right now is to keep the IRS from kicking in your door and seizing all of your assets.

Now you have the smoking gun…Use it!