Every year, about 17 million new cars are sold by dealerships and 6-7 million homes are sold by homeowners. If you’re hoping to join those statistics by buying a home or car soon, you’ll need to verify your income first, especially if you want a good loan or mortgage rate.

One of the best ways to do this is by filling out an IRS Form 4506-T to request an official tax return transcript, which will show potential lenders that you can afford the payments.

If you’re wondering, What is a 4506-T form, anyway? and want to know how to fill it out, keep reading.

What Is a 4506-T Form?

The IRS uses Form 4506-T to request an official IRS tax transcript. You can get a transcript online or have it mailed to you. The information on the transcript has been changed so that some personal information is not shown—this is to protect people from criminals who might try to steal their information.

Here is what will be visible:

• The last four digits of your SSN or EIN.
•  The last four digits of the account phone number.
• The first four characters of the first name and the first four characters of the last name.
• The first four characters of any name on the business name line.
• The first six characters of the street address.
•  All money amounts (wages, income, interest, balance due, penalties).

Only individual taxpayers can request their own transcripts.

What is a 4506 T Form Used For?

The 4506-T form is used to prove your income. You might need it when applying for an auto loan or a mortgage for a home. Taxpayers might also use this form while seeking financial aid for college or if they’re struggling to resolve tax problems with the IRS.

How to Fill Out Tax Form 4506-T

Form 4506-T is the form you need to request a transcript of your tax return from the IRS.

To fill it out: 

• In Section 1, write your name, Social Security number, and address.
• In Section 6, write “1040” in the box and check the box at the end of line 6a.
• On Line 9, write out the last calendar day of the tax year you’re requesting.
• Check the box above the signature line and place your phone number in the proper box.
• Sign and date the form.

Tax Return Transcript

Once you have completed your form, you can submit it online on the IRS platform or through the mail. If you choose to mail your form, remember that it will take at least an additional week or two to process your request and receive your tax return transcript.

Do you need help filling out your form? Are you requesting transcripts for more than one year? Have you fallen behind with your tax obligations? If you are looking into your tax return transcripts to identify how much money you owe the IRS, it might be a good idea to start researching tax relief solutions that can help you manage your debt.

How Long Does it Take to Receive a Tax Transcript?

Remember that all of these time estimates may take longer in 2022. In the past few years, the IRS has struggled because they’ve had more work to do—they’ve had their normal tax responsibilities on top of sending out stimulus checks and advanced tax credits, too.

If you think the IRS is taking too long or need more help than you’re getting, try our tax help resources.

Do You Need Help With Your IRS Form 4506-T?

The IRS Form 4506-T will help you get a copy of your official tax transcripts. Once you have this document, you can use it to secure a loan, establish a mortgage, or prove your income to other potential lenders. Now you should know where to find this form, how to fill it out, and how long it will take to get your IRS tax return transcript from the IRS.

Do you need additional help with your tax forms? Are you unsure if you’ve even filed your taxes for the years you need transcripts for? If you’ve neglected your taxes for some time, then you might want the help of a tax expert. Contact us to get the help you need.

Most of us don’t want to pay taxes—the good news is that most of us don’t have to on Tax Day. Recent statistics show that only about 39% of Americans owed federal income taxes in 2020 during the height of the pandemic. That means the majority (61%) owed nothing.

How come? The answer is the W-4 and tax withholding. Most of us don’t pay taxes on Tax Day because we’ve already paid them throughout the year via tax withholding. 

So, how much money is withheld from your paycheck? The answer depends on your specific tax situation, but we hope to clear up some confusion by outlining the basics. Learn more about tax withholding and how it applies to you below.

How Does Tax Withholding Work?

Before you get into the details, it’s crucial to understand how withholding works.

As an employee, you are paid by your employer. Your employer doesn’t just hand over all your earnings, though. A percentage of your income is withheld and given to the IRS. Consider this an advanced payment on your income taxes—if your employer did not withhold this amount, then you’d be expected to pay it all in one big lump sum come tax time. For most Americans, it’s far easier to bear the brunt of their tax burdens by paying them with each paycheck rather than all at once.

If you’re self-employed, or your employer doesn’t withhold your taxes, then you’ll be expected to pay them on your own.

Who decides how much is withheld? That’s where the W-4 comes in. 

How Does a W-4 Work?

Prior to 2020, you’d fill out a personal allowances worksheet on your W-4 to determine the amount your employer withheld from your paycheck. Now, however, you’ll find a five-step process on your W-4 form: 

1. Fill out your personal information
2. Account for your and your spouse’s job, if filing jointly
3. Claim your dependents
4. Take the standard deduction or list your deductions manually
5. Sign and date the form

The amount ultimately withheld from your paycheck is a factor of your combined income (if filing jointly), how many dependents you have, and your deductions. 

If you underpay, you might end up owing the IRS when you’d typically get that money refunded. If you end up owing way more than you can pay off, then you’ll be researching tax relief solutions to help get you out of debt!

To avoid that situation, consider using a W-4 withholding calculator to determine how much you’ll owe if you opt not to have your taxes withheld by your employer. This type of calculator is available directly on the IRS website. You’ll want to input all your information to receive the best possible estimate.

How Many Allowances Should I Claim?

Since 2020, filing a W-4 has become much easier. You won’t have to decide how many allowances to claim because there aren’t allowances on the form anymore. Instead, if you want to impact your withholding, then you’ll need to fill out the multiple jobs or spouse works sections. You’ll also want to fill out Step 3, which goes over your dependents. If you have extra withholding you want or if you have other income, you’ll fill out Step 4.

Do You Have More Tax Questions?

Are you still unclear about your tax situation? If so, then it’s advised that you speak with a tax expert about your situation. Getting professional help with your taxes could be the difference between getting penalized by the IRS and getting a chunk of money back through a refund!

Leave your tax worries behind by getting expert guidance from a team with over 30 years of experience working with the IRS. Contact us now to learn more about how we can help you!

Are you a notoriously late tax filer? Have you fallen behind on your taxes for more than a few years? If so, then you’re in good company. Experts suggest that about 7 million American taxpayers fail to file their income tax returns every year.

If it’s been a while since you filed, then you might be wondering what IRS forms you need to file. So, what is a 1040-EZ form? Do you need to file one?

On top of knowing what forms to fill out, you also need to understand how tax laws have changed in recent years. Learn everything you need to know about the 1040-EZ form, whether you need to file one, and how to go about doing your taxes this year below.

What Is a 1040-EZ Form?

So, what exactly is a 1040-EZ tax form? The best form 1040-EZ definition describes the document as a simple and short version of a 1040. The form is streamlined, which makes both tax preparation and filling out a 1040-EZ online form quick and seamless.

A 1040-EZ form is used to complete your annual taxes. On it, you’ll provide all your personal identification information and describe your tax situation.

Who Can File a 1040-EZ Form?

This tax form is the easiest to fill out, but you won’t want to use it if you have a complicated tax situation. This tax form is reserved for individuals who have very basic tax situations and only need to provide minimal information to the IRS. These taxpayers also fall into the following categories:

• They’re single or married filing jointly
• They’re under 65 years old
• They don’t have dependents
• No visual impairments
• Not going through bankruptcy
• Their income comes from wages, salaries, unemployment, or tips
• Their taxable income is less than $1,500
• They don’t owe money as a result of hiring a household employee

In general, first-time taxpayers fill out federal tax forms 1040-EZ since they often don’t claim deductions or many credits at all. That makes a 1040-EZ a good option for younger individuals, students, or people who only work part-time jobs.

This type of tax form isn’t good for you if you have important credits and deductions that you need to file. The 1040-EZ form is dubbed easy for a reason: it doesn’t contain the appropriate sections for you to file those deductions and credits, which are important to reduce your overall tax burden. If you have real estate assets, foreign income, tax shelters, or receive retirement contributions, then it’s not a good idea to use this simplified form.

How Do I File a 1040-EZ?

Do you believe you fall into the categories outlined above? If so, then we know what you’re thinking—how do I file a 1040-EZ? If you’re hoping to use this form, then follow the following 1040-EZ instructions:

• Confirm that you meet the eligibility requirements listed above
• Wait to receive your W-2 from your employer
• Get a blank 1040EZ form for the year you’re filing for
• Input your personal information
• Send the form to the IRS or file the form electronically

Keep in mind that the IRS no longer uses 1040-EZ forms now that it’s 2022. If you’re filling out a 1040-EZ, then you’re likely doing so for a year that you failed to file. If you have more questions about how to file the appropriate forms, then consider consulting with tax attorneys who can help.

Form 1040 or Form 1040-SR?

If 1040-EZ forms are no longer applicable in 2022, what forms do you fill out instead? Rather than using a simplified 1040-EZ, you’ll need to fill out either a regular 1040 or a 1040-SR. Let’s break down the differences below.

A 1040-SR form is appropriate for taxpayers who receive Social Security benefits or are older than 65. This form has a color scheme with greater contrast, which could help seniors file their paperwork with ease. The form also has a larger font. This form allows space to document distributions from retirement plans, income you receive from annuities, your Social Security benefits, other deferred-payment arrangements and more. While you don’t have to be retired to use this form, it’s a great option for taxpayers who have retired.

A standard 1040 form is what you’ll want to use if you’re reporting a significant amount of income, plan to use deductions, or want to claim tax credits. This standard form gets used by the IRS to determine how much of your income is subject to tax. It also alerts the IRS to any refunds they may owe to you. Here are the schedules you’ll want to fill out:

• Schedule 1: Additional income and deductions
• Schedule 2: Owe additional taxes (self-employment, household employment, etc.).
• Schedule 3: Claiming certain credits

Answering Your Tax Questions

While you may understand which forms to fill out now, the process is still pretty complicated. You may have more questions. If that’s the case, then there are tax help resources you can use to continue learning more. You could also consult with a tax professional to ensure you fill out all your returns correctly.

Getting Tax Help For a Brighter Future

Have you found yourself asking questions like, What is a 1040-EZ? What tax forms do I need to fill out this year? If so, then we hope this article has helped inform you about the proper tax forms you need to fill out going forward.

Of course, tax laws do change from time to time, so you may need to check back on our website each year to remain compliant. If you have questions or concerns about past, present, or future taxes, then it’s far better to consult with a tax expert about your situation.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today to get started on your brighter future.

Over 11 million Americans currently owe a collective $125 billion in taxes to the IRS. That’s not good news, considering that the IRS has the legal authority to levy consequences against those individuals.

One of those consequences is an IRS wage garnishment, which means the IRS can seize a portion of your paycheck before it even reaches your hands. If you’re subject to wage garnishment, then you’ll receive IRS form 668-W before the garnishment starts—but you still have time to seek out tax debt help. Below, learn more about this important IRS form and what steps you should take after getting one.

What Is IRS Form 668-W?

Receiving an IRS form 668-W is intimidating, but it’s one of the most common tax problems we see. It’s a notice of an IRS wage garnishment. It’s often sent to your employer to alert them about the garnishment plans.

Once the garnishment goes into play, an employee’s wages, commissions, bonuses, and salary are up for garnishments. Retirement income and other benefits aren’t safe, either; these can still get garnished, too. It’s important to also understand that these garnishments are continuous—your employer is expected to comply until the IRS releases the levy.

How Employers Should Deal With a Wage Levy

If you’re an employer and you receive a 668-W, then there are some specific steps you must take. You have at least a full pay period between receiving a 668-W and complying with the garnishment order, though. The IRS advises employers to encourage the employee that owes the tax liability to contact the IRS. In some cases, that employee can deal with the garnishment and get it removed. If those attempts are unsuccessful, though, then you’ll need to start complying with the order.

To do so, you need to give your employee parts 2, 3, 4, and 5 of the form and have them sign a statement. Then, you’ll need to calculate what that employee’s net pay minus exemptions will be. You’ll need to send over all this information to the IRS.

From there, you’ll need to start complying with the levy and sending over the required amount.

How Employees Should Handle Form 668-W

If you’re currently an employee who was informed about a 668-W (or you received one), then a wage garnishment is imminent. If you haven’t done so already, attempt to contact either the IRS or a tax debt expert who can help with IRS debt. If you can work out an arrangement with the IRS, then the agency will consider releasing the levy and garnishment.

If you don’t act, then your employer will ask you to fill out a few forms. You need to complete those forms within three days. If you don’t, then calculations will get made for you, which could end up causing you to get garnished more than you should.

Once you’ve filled out the papers and returned them to your employer, you’ll start to notice a smaller paycheck each week or month. You won’t have to take further action, as that money will go straight to the IRS.

Are you worried that the IRS levy will cause significant financial hardship for your family? If so, then it’s possible to contact the IRS and file for an extreme hardship.

Self-Employment and Tax Levy Garnishment

Are you currently self-employed? If so, then your tax levy garnishment situation will be much more complex. A 668-W form isn’t ideal. Why? As a self-employed individual, you are not considered an “employee.” In other words, your independent contractor status means you don’t actually have an employer who can garnish your wages.

It’s more appropriate to get a form 668-A form, which is a levy of third parties. Often, this type of levy goes to your bank. That way, your bank can levy your income stream. This type of form is often called a “1099 levy.” If you received a 668-W form but you’re self-employed, then it may be a good idea to consult with a tax professional or IRS agent who can set you up with a 668-A instead.

Can the IRS Garnish Wages Without Notice?

Do you currently owe a serious tax debt? If so, then it’s normal to worry that your wages or bank account could be garnished unexpectedly. So, can the IRS garnish wages without notice? The good news is that the short answer is “no.”

IRS wage garnishment cannot happen without ample notice. First, you should receive a notice by direct mail. You will have the right and opportunity to speak with the IRS directly in an attempt to arrange a payment schedule. You’ll also need to fill out forms when your employer gets the levy notice.

Tax Debt Help

Wage garnishment is not an ideal situation for anyone. You won’t have control of your full paycheck, and you’re putting undue stress on your employer, too. If you’re facing this type of situation, then it’s in your best interests to research tax relief solutions like installment plans. If you need help learning more about your options, then speak with a tax professional who can help.

Understanding Your IRS Form 668-W

Have you recently received IRS form 668-W? If so, then your wages, salary, or income are about to get garnished. The good news is that you are allotted a period of time between getting notified and the time when the garnishment will begin.

During this time, it’s advised that you seek out tax debt help from an expert. In many cases, you can work out a payment plan with the IRS.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today to get started!

Almost half (47%) of Americans are bothered by the complexity of our nation’s tax system. While it remains challenging, things have improved since IRS tax returns went digital. Electronic filing helps taxpayers feel more confident about understanding confusing forms, and it can help reduce errors, too.

But despite all those changes, tax return mistakes can still happen. When they do, you’ll need to file an amended return.

Are you currently attempting to learn more about your amended tax return status? Have you been wondering, Where’s my amended return? Don’t panic! We’re here to put your mind at ease. You can learn everything you need to know about an amended tax return below.

What To Do If You Find an Error On Your Taxes

Even if you file your taxes online, you might still make a mistake. If you realize you made a mistake, don’t panic or call the IRS right away. First, figure out what went wrong.

Maybe you made a mistake with the math. If so, fixing the error might not be necessary at all—most math mistakes are automatically corrected when your return is processed.

Perhaps you made an error with your filing status, like forgetting to include certain income streams or deductions. If that’s the case, these errors call for filing an amended return.

How To File an Amended Tax Return

One common tax problem is not knowing how to fill out the forms correctly. If you made a mistake on your tax return, you can fix it by filing a 1040-X form.

This form is broken down into three sections:

In Section A, you will input the amount from your original return. In Section B, you will put the total difference between the inaccurate and amended returns. Lastly, in Section C, you will add the accurate figures.

If your error resulted in you owing more money to the IRS, it is advised that you pay as soon as possible.

Do you need additional help with your tax forms or have questions about filing your taxes? If so, contact us for help.

Amended Tax Return Refund Timeline

Once you finish filing your amended return, it can take up to three weeks for the return to even reach the IRS, depending on whether you file via mail or electronically. Once they have it, you may be looking at up to 16 weeks to process the return.

While you wait, why not learn how to check 1040-X status?

How Do I Check My IRS Amended Refund Status?

To find my amended return status, you’ll need your Social Security number (or tax ID), date of birth, and ZIP code. Once you have that information, go to the IRS’s “Where’s My Amended Return” page.

There, you’ll find a status like:

• Return received
• Return adjusted
• Return completed

Once the IRS receives your amended return, that’s when your 16 weeks starts. Once an adjustment has been made, your return is in progress. Once the return is completed, that means your return is on its way.

The IRS updates this system at least once a day, usually at night. So, feel free to check your status on a daily basis to see how far along in the process your return is so far.

How To File an Amended Return Online

Filing an amended return online is a relatively simple process. The first step is to log into your account on the IRS website. Once you are logged in, you will need to locate the section for amended returns.

When you have found the appropriate section, you will need to enter the necessary information, including your Social Security number and the reason for filing an amended return. You will then be able to submit your amended return electronically.

In most cases, the IRS will process your amended return within 16 weeks. However, if you have any questions or concerns, you can always contact the IRS directly for assistance.

I Have Not Received my Amended Tax Refund: Next Steps

If you are wondering where your amended refund is, check the 1040-X status to see if it is on the way. It is normal to feel anxious about getting the money you deserve, but keep in mind that the IRS is very busy during tax time—it may take at least 16 weeks before you get your refund.

Does it really take 16 weeks for an amended return to process? Yes, it often does. It can happen faster, but you should expect to wait at least that long.

Will My Amended 1040-X Status Trigger an IRS Audit?

The answer is complicated. The IRS won’t initiate an audit based on the fact that you amended it, but it can make an audit more likely. If you end up getting audited, be prepared to provide proof of your amended estimates.

If you’re concerned that an audit could cause problems for you or you have more questions about filling out your taxes, then consider looking around at our tax help resources.

Do You Need More Tax Help?

If you’ve been waiting patiently to learn more about your IRS 1040-X status, then you’re not alone. It’s important to understand that the IRS will likely look at your returns much more closely, and your chances of getting audited increase, too. For all these reasons, your return will likely take longer to process.

If you have more questions about your taxes, then we invite you to leave your tax worries behind with expert guidance from a team that has over 30 years of experience working with the IRS. Contact us today to learn more about how our team of tax experts can help you get through even the most complex tax situations.

Before the pandemic, almost half of Americans (48%) viewed the IRS negatively. Once the pandemic hit, though, most Americans were provided with financial relief and the IRS helped them get it, so perceptions about the IRS improved sharply. As a result, a letter from the IRS was no longer seen as something to fear—it might be an indication that a check was on the way!

Not all IRS letters to taxpayers are positive, though. Some could indicate that you owe a hefty sum of money to the IRS, and some could even mean that you’re about to suffer penalties or consequences for avoiding your returns or tax debt. 

The first step in preventing a bad situation from unfolding is to understand your letter from the IRS. You can learn everything you need to know about the different types of IRS letters and how to deal with them right here.

Identifying a Letter from the IRS

If you regularly receive mail, phone calls, or emails, then you already know how prevalent scams are. In fact, there’s a huge chance that you’ve been already targeted at one point or another. 

Fraudsters are always looking for new ways to trick people into handing over their hard-earned cash, and one of the most common types of scams involves tricking Americans into thinking they owe a tax debt to the IRS. For that reason, it makes sense to be suspicious if you receive a letter from the IRS in the mail.

The first thing you should do if you get a letter that appears to be from the IRS is to verify its legitimacy. This can be difficult to do because a fake IRS letter will likely look and appear real. Here are some tell-tale signs that could indicate the letter isn’t legitimate:

• There are misspelled words or clear grammatical issues.
• The letter asks you to provide bank account details to the IRS.
• The letter demands one form of payment.
• The letter is asking for payment in the form of gift cards or something else that doesn’t add up.
• The letter is threatening you and saying you need to act immediately.
• The letter contains contact information that’s different from the official IRS contact information.
• The letter contains mistakes like an incorrect last name.
• The letter doesn’t give you clear instructions on how to proceed.
• The letter claims that you’ve won gift money or some type of contest.

Real IRS letters will always have a notice number or a letter-number on the top or bottom right-hand corner. If there is not a number on one of those areas, then the letter is likely a fake. 

If you’re unsure whether a letter is legitimate or not, then it’s advised that you immediately reach out to the IRS at 800-829-1040. If you don’t feel comfortable doing that, then you could also bring the letter to tax attorneys who can help you determine if it’s real.

Different Types of IRS Letters and How to Deal With Them

Once you’ve accepted that the IRS mail is legitimate, you need to identify what type of letter it is and determine how to proceed. Remember, a real IRS letter will always include clear, actionable steps that you need to take. If a response isn’t required, then the letter should clearly state that no reply or action is needed. 

Below, we’ll go over the different types of IRS letters and how to deal with them.

CP521: You Have an Installment Payment Due

One of the most common IRS letters you might receive is a CP521 letter. This letter indicates that you have an installment payment due. Think of this letter as a gentle reminder to send in your monthly payment by the due date.

In response to this letter, you should pay the amount due by the date indicated on the letter. You can mail in your payment with the provided envelope. If you don’t pay, then you could end up defaulting on your agreement.

CP180 or CP181: Your Return Can’t Be Processed; Missing a Form

Another common reason the IRS may send you a letter is because there was an issue with your most recent tax return. A CP180 or CP181 letter means you’re missing either a schedule or form.

In response to this letter, be sure to read and understand what form or schedule you need to provide to the IRS. Then, download the required form and fill it out. If you have further questions or concerns about the issue, then consider reaching out to either an attorney or the IRS directly.

CP504: You Owe a Debt to the IRS; Final Notice

One of the most common tax problems is getting a tax bill that you can’t pay. If you owe a debt to the IRS, you’d better believe that they’ll remind you to make a payment. The first notice will come in the form of letter CP501. The second request is CP503. If you still haven’t paid in full, then the IRS will send out a CP504 letter.

This is a final notice to settle your tax debt. If you don’t act, then the IRS will move on to more serious consequences, including levying your assets. If you receive this notice, then you need to reach out to either a tax attorney or the IRS as soon as possible, as inaction could result in significant consequences.

CP44: Notification of Delay

Tax FAQ pages are filled with people wondering where their tax refund is. Is this you? If the IRS is experiencing delays when processing your returns, then they’ll send you a CP44 letter. This letter means the IRS is still in the process of determining your tax status. You’ll need to wait for more correspondence letters to determine what to do next.

Economic Impact Payment Notices

Recently, the IRS has taken control over distributing stimulus checks to millions of Americans. After you received your funds, you should have received an IRS letter detailing how much you received. This letter does not require further action, but it’s recommended that you save it. When you go to file taxes, you’ll need to verify how much you received. You can reference this letter to ensure you fill out those questions accurately.

If you did not receive the stimulus funds that the letter indicates you did, then you need to reach out to the IRS about the problem. Not only do you need to clear up the misinformation, but you could end up receiving your rightful stimulus money, too!

CP523: Intent to Terminate Your Installment Agreement and Seize Assets

A CP523 letter is a serious ordeal. This letter means that you’ve failed to keep up with your installment agreement with the IRS. It also means that the IRS is preparing to take drastic action to collect from you. Without any response from you, the IRS will move forward with plans to seize your assets.

After receiving this, it’s crucial to take action. Make a payment on your account if it’s possible. You should also reach out to an attorney ASAP, even if you are able to make a payment. Depending on your situation, you may be able to stop collection efforts. You might also be eligible to file an appeal. Even better, you might still be in a good enough standing to negotiate a new installment agreement or reinstate your old one.

How To Report a Fake IRS Letter

So, what should you do if you got an “IRS” letter in the mail only to find out that it was a scam? First, do not attempt to communicate with the scammer or give them any further details about your address, name, or accounts. Next, consider reporting the scam to the Treasury Inspector General for Tax Administration. You can contact the IRS directly at phishing@irs.gov.

You Don’t Have to Face a Letter from the IRS Alone

Have you recently received a letter from the IRS? If so, don’t panic! Follow this guide to ensure that you remain compliant with the law:

• Identify the letter and verify its legitimacy.
• Determine what type of letter it is and whether action is required on your part.
• Learn what to do to ensure you remain compliant and in good standing with the IRS.

These steps seem easy on paper, but IRS mail can be difficult to cope with. Getting correspondence from the government can feel intimidating, confusing, and ambiguous. The good news is that you don’t have to face the situation on your own!

Here at Tax Group Center, our tax consultants, tax attorneys, CPAs, and enrolled agents can all help you deal with the IRS. Whether you owe the IRS a significant chunk of money or you just don’t understand a letter they’ve sent to you, we can help. Contact us today with any of your tax questions, concerns, or needs. We’re happy to help, and we look forward to hearing from you!

Recently, worldwide headlines reported on the arrest of John McAfee, an American tech expert, who was hiding out in Spain after committing severe tax evasion in the U.S. According to the Department of Justice, McAfee could’ve faced a maximum of five years in prison if found guilty of tax evasion.

But wait, can you go to jail for not filing taxes? Is the U.S. government really willing to extradite citizens who didn’t pay their taxes on time? In a nutshell, the bad news is that you can get arrested if you don’t pay your taxes. The good news is that it’s unlikely to happen to you unless you are intentionally evading the IRS and you owe a lot of money.

Do you need more information about what happens when you don’t pay taxes? Don’t panic! Learn everything you need to know about tax crimes and tax fraud below.

What Happens When You Don’t Pay Taxes?

So, what happens when you don’t pay taxes, and can you go to jail for not filing taxes? The first step in not paying your taxes usually involves not filing your taxes. What you need to know is just because you don’t file your federal taxes or state taxes doesn’t mean that the IRS doesn’t know what you owe. On the contrary—they know exactly how much income you earned and how much you really owe.

If you don’t file, the IRS may not take action right away, but in time, you’ll get a bill in the mail from the IRS that outlines how much you owe. Keep in mind that you’ll likely get hit with a penalty, too. Depending on how much you owe, you could have accumulated a massive penalty in the form of fees and interest.

Aside from this financial penalty, the IRS won’t immediately attempt to file charges against you. If you don’t take action after the IRS notification, though, that may change.

Tax-Related Crimes: Civil Cases or Criminal?

At this point, the IRS knows you didn’t pay your taxes. They also know that you know about your situation because they informed you via letter. They may start to believe that you are both knowingly and purposely refusing to file and pay your taxes.

You can face criminal charges for this type of tax crime. Willful and intentional tax avoidance is called tax fraud.

If you make a mistake but didn’t do it on purpose, then the IRS expects you to act. They expect you to contact them and work on resolving the issue. In these situations, the IRS won’t charge you with a crime, but they may still hit you with civil penalties in the form of monetary penalties: 

• Negligent reporting could cost you up to 20% of the taxes you underestimated. 
• If you failed to file your taxes in a timely manner, then you could owe up to 5% for each month you didn’t file. 
• In total, you could end up paying up to 25% of the overall amount you owe. 
• Failure to report specific information could cost up to $520 per return.

These civil penalties may not seem like much, but they add up quickly. If you already know you can’t pay your tax bill, then ignoring it will only make matters worse. 

Tax Fraud and Jail Time

A deliberate attempt to avoid paying your taxes by lying or falsifying information is considered a crime. You could be considered guilty of tax fraud if you lied on your tax form intentionally, falsified records, or misrepresented certain expenses. Income tax fraud is serious. If you’re found guilty, then you could be subject to three to five years of jail time. 

But jail time isn’t the only thing you’ll have to contend with if you’re found guilty of tax fraud. You might also get hit with serious financial fines on top of the extra fines and penalties you’re already facing from the IRS.

Illegal Tax Shelters

Using an illegal tax shelter is evidence that you’re willfully and intentionally avoiding paying your taxes. A tax shelter is a type of investment that the taxpayer uses to reduce their overall income tax liability without actually changing the overall value of the taxpayer’s income or assets. Some tax shelters are legal, but many of them are nefarious. Putting money into an overseas bank account, for instance, doesn’t serve any legitimate purpose. Putting money into an employer-sponsored 401(k) program, on the other hand, would be considered a legal tax shelter.

Abusive and illegal tax shelters are investment strategies that reduce taxes unfairly. Sometimes large investors use specific counties, states, or regions that have a lower corporate or personal income tax rate. This is called a “tax haven.”

The IRS sees illegal tax shelters as abusive and fraudulent behavior. You could face a penalty that’s up to 75% of the taxes you underpaid if you’re found using an illegal tax shelter to reduce your tax liability.

How to Avoid Tax Consequences

The above scenarios are all pretty frightening, especially if you don’t earn a huge amount of money to begin with. If you’re currently facing a large tax bill, remember this: It’s not a crime if you can’t pay your taxes on time. So long as you are not willfully or intentionally lying or avoiding your taxes, the IRS can’t file a criminal case against you.

Rather than avoiding the situation, you should respond to the IRS and consider the tax relief solutions available to you. Obviously, the best solution is to pay your tax bill in full, but that’s not always possible. If you can’t pay your debt right away, then you can likely enter into an agreement with the IRS.

Installment agreements allow you to pay off your tax bill over time, and other options like penalty abatement can help you reduce any fees you’re facing due to late payment. If you’ve been struggling to pay off your back taxes for a while or you owe a very high amount, then you should research whether the IRS Fresh Start Program can help.

If you enter into any of these agreements, then the IRS is unlikely to continue attempting to collect from you. Instead, they’ll wait for you to adhere to your side of the agreement and start making payments. If you default on your payment plan, however, the IRS may re-initiate those tax consequences.

So, Can You Go To Jail for Not Filing Taxes?

So, can you go to jail for not filing taxes in the U.S.? To make the answer as simple as possible, you can get arrested for not filing your taxes. Your actions must be willful and intentional, though, which means you won’t simply get arrested off the street. You’ll have ample opportunity to settle your debt or at least get into contact with the IRS to prevent an arrest.

In most cases, you can reconcile your tax debt and avoid the consequences of tax crimes. There are legitimate tax planning and tax avoidance measures, but flat-out refusal to pay what you owe is considered a criminal act.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today!

In the wake of the coronavirus pandemic, about 11.23 million Americans failed to pay their taxes on time. Collectively, that means a whopping $125 billion didn’t get paid to the federal government and therefore can’t be used to fund important programs or help citizens in need.

If you owe a significant chunk of money in back taxes, you may have received a Notice of Intent to Offset. You know consequences are imminent, but what you may not know is exactly how the Treasury Offset Program works or what you should do after you get a Notice of Intent to Offset. Learn everything you need to know to protect your rights and financial future below.

What Is a Notice of Intent to Offset?

In a nutshell, a Notice of Intent to Offset is an informational letter that tells you what’s about to happen. It means that you owe the IRS back taxes or you owe a significant chunk of money to a different government agency.

It also means that the IRS is planning on seizing your tax refund.

Read the letter carefully to determine whether your entire tax refund or federal payments are at risk. Often, the government will only seize a portion of your refund or payments, but the amount they want to take will depend on several factors. You also need to go through the letter and verify that the following details are 100% accurate:

• Your name
• The amount of your federal payment or tax bill
• The agency that’s initiating the offset
• The agency’s contact information

Depending on the situation, the agency may take all your tax refund. In other cases, you’ll still receive a portion. Be sure to check the information in the letter and make sure that it is correct.

How Does the Treasury Offset Program Work?

The Notice of Intent to Offset is most often sent through the Bureau of the Fiscal Service. This government agency operates the Treasury Offset Program, and it also processes all payments from any federal agency. In other words, your tax refund must go through the Bureau of the Fiscal Service before it gets to you.

This government agency also gets information about delinquent debts you owe to creditor agencies. Your debts get attached to your tax identification number and name. If you owe the Department of Education for unpaid federal student loans, for example, the BFS knows about it!

Before issuing your tax refund or federal payment, the BFS will run your tax number to check for debts. If the debt is eligible for the offset program, then you’ll get sent that dreaded Notice of Intent to Offset.

Types of Treasury Offset Program Debts

Are you wondering what types of debts get sent over to the BFS and which ones are eligible for the Treasury Offset Program? Here are the types of liabilities that could potentially end up resulting in an offset:

• Unpaid child support
• Delinquent spousal support
• Past due student loans
• Delinquent state income taxes
• Back federal taxes
• Certain unemployment liabilities

The above types of debts get sent to the Treasury Offset Program once they’ve been delinquent for over 90 days.

Not every federal payment is eligible to get offset, though. Here are the types of federal payments though could get reduced through the Treasury Offset Program:

• Military pay
• State income tax refund
• Federal retirement payments
• Federal travel reimbursements
• Contractor or vendor payments from the government
• Some federal benefits (other than Supplemental Security Income)

The amount of income that can get offset is limited by law. If your Notice of Intent to Offset letter mentions your Social Security benefits, then know that they can only withhold 15%. If the letter mentions your tax refund, then understand that the full amount could be offset.

The Consequences of an IRS Tax Offset

An IRS tax offset or other type of offset means that consequences are forthcoming. If you do not take action, then the money mentioned in the notice will likely get seized. You will not receive the funds you expected, but the overall amount of debt you owe will decrease. If the offset doesn’t cover the full amount of your debt liability, then you’re not out of the woods yet. Future federal payments or tax refunds could be offset, too.

What to Do If You Get a Notice of Intent to Offset

It’s essential to take action if you receive a Notice of Intent to Offset. First, confirm that everything in the notice is accurate. As we explained above, you need to verify that all your information is correct, and you should ensure the debt amount is current and accurate. This step is very important, because the Federal Offset Program may not realize that you’ve already paid off a debt liability.

Next, you need to decide whether to fight the offset or allow the money to be seized. If you don’t want to challenge the offset, then you don’t have to do anything. Your money will be taken and it will go towards your unpaid debt.

If you know that the debt amount is correct but want to prevent the offset, then you have several options depending on whether you owe money to the IRS or the Department of Education.  

First, you need to identify who you owe your debt to. If you owe money to the IRS, then you’ll need to contact the IRS about your debt. We’ll go over that in more detail below. 

If you owe student loan debt to the Department of Education, then you have a few options for preventing the offset. A student loan consolidation tax offset means that you can bundle all your student loans into a single loan. After consolidating your debt, it will no longer be considered in default, which will mean that you’re no longer eligible for an offset. Another option is to rehabilitate the loan by reaching an agreement with your lender. You could always pay the defaulted loan in full, too, but that’s usually not an option for most borrowers.

If you want to challenge the offset, then you do have options. We’ll get into more detail about them below.

Tax Refund Offset 2021: What Are Your Options?

After receiving a tax refund offset notice, your time is limited. The IRS will only give you about 60 days to pay off the full balance of back taxes. Clearly, that’s not possible for most individuals who are receiving an offset in the first place.

That’s where tax debt negotiation strategies come in. If you and the IRS come to an agreement about your delinquent taxes and you start making payments, then there is a chance that the government will decide not to offset your federal payment.

Take note, though: there is no guarantee that the IRS will choose not to offset your federal payments even if you attempt to reconcile your debt. The only way you can be sure that no offset will occur is if you pay off the full balance of what you owe before the 60-day deadline. In most circumstances, the IRS will still offset your tax refunds even if you’re making monthly payments on your back taxes by using an IRS installment agreement.

If you owe state taxes, then look into your options for state tax debt relief, too. Sometimes, you can work with the IRS to reduce the overall amount of tax debt you owe. You can also act and start making payments to show the agency that you are willing and able to pay off that debt over time.

Steps to Take If You Want to Dispute IRS Offset Claims

Do you want to challenge or dispute the notice? If so, then you need to contact the agency listed on the notice ASAP. You only have a certain amount of time after receiving the notice to act, so get started quickly. If the agency agrees that you’ve paid your debt, then tell them to stop the offset by informing the proper agency immediately. Otherwise, that agency may be tasked with refunding you any amount that gets unfairly offset.

How to Deal With a Notice of Intent to Offset

Have you recently been served with a Notice of Intent to Offset? Are you wondering how to deal with the notice without suffering the consequences of losing out on federal income you expected to receive? Whether you decide to dispute IRS offset claims or participate in a tax refund offset alternative like making payments on your debt, there are ways to successfully deal with a Notice of Intent to Offset.

Here at Tax Group Center, our experts can help you determine your best financial option. Our experts include professionals like tax attorneys, CPAs, enrolled agents, and certified tax consultants. Our top priority is providing realistic and achievable solutions to individuals and businesses struggling with the IRS.

Get accredited and sound professional advice on your Notice of Intent to Offset, tax relief, or other IRS issues by contacting us today.