If you’re filing taxes late this year, you may be wondering if there’s still time to get your paperwork in while remaining under the radar. You may also be wondering what the regulations are regarding getting current if you’re several years behind on taxes. The truth is that taxpayers have a surprising number of options for filing taxes late if they’re willing to comply with the IRS. 

Is it ever too late to file taxes? Take a look at what you need to know.

What Happens If You File Taxes Late?

Will you be stuck with a penalty for late taxes if you file your taxes after this year’s tax deadline? All taxes filed past the tax deadline without an extension in place are considered late. There’s no standard answer for what happens when you file taxes late because the outcome will depend on how long you’ve gone without filing taxes, how much you owe in late taxes, and your ability to pay what you owe to the IRS. 

The simplest answer is that the IRS will call on you to file your taxes. If you fail to do this, you face a penalty for filing taxes late; fees, interest, and liens are not far behind. If you really let the situation get out of control, you could be facing charges for tax evasion. Luckily, the IRS is pretty reasonable about helping you to get caught up without much stress as long as you’re willing to take the actions needed.

First, it’s essential to know that the IRS won’t just forget about unfiled and unpaid taxes. While you may think that the IRS hasn’t noticed because you made it through the end of tax season without getting any notices, there’s a good chance that a letter is on its way. The IRS doesn’t just rely on the information you report on your tax returns to determine how much you owe; it uses a sophisticated system that cross-references payroll records and tax returns to calculate how much every taxpayer made during any given year. While you may have skipped filing a return, the IRS still knows if you’ve earned income based on this information.

If you don’t file taxes, the IRS will probably file on your behalf after you’ve ignored notices. There’s no benefit to allowing this to happen because the IRS will file on your behalf without giving you all the tax credits and rebates you may be entitled to receive. That means you’ll likely end up owing more than you should. You’ll also begin accruing failure-to-file penalties the moment your taxes are late. This totals five percent of what you owe the IRS for each month your return is late, and up to a maximum of 25 percent of your total bill for the first 60 days past the deadline. If you file your return 60 days late, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

Are you concerned that you can’t file your taxes because you have no way to pay what you owe? The five percent penalty for filing taxes late is actually much more expensive than the late payment penalty of .05 percent. It pays to file even if you cannot cover your full bill. Only by filing your taxes can you access the many tax relief options provided to you by the IRS. Once you’re approved for relief, the penalties stop adding up as long as you stay in compliance with the terms of your relief agreement.

While the IRS has a reputation for being persistent, taxpayers who get up to date with late taxes can take advantage of a wide variety of relief options like an Installment Agreement (IA), Offer In Compromise (OIC), or Currently Not Collectible status (CNC). All of these options will freeze your payments, reduce your total bill, or provide you with years to pay it off in smaller chunks. Almost every taxpayer will qualify for at least one relief option, but the IRS won’t consider your application for relief unless you’ve filed all past due returns.

How Late Can You File Taxes?

It’s never too late to file taxes. Again, the only mistake is never filing taxes. The IRS doesn’t stop adding on fees and penalties just because you’re ignoring letters. If it determines that you owe money, it will activate liens and wage garnishments that seize paychecks, assets, and bank accounts until your bill is satisfied. While there is generally a 10-year statute of limitations on tax collection, the IRS can reclaim what you owe through liens and wage garnishments even if you’re trying to “wait out” the problem. By avoiding taxes, you’re racking up fees and interest that will actually prolong your liens and garnishments because you’re owing much more than your original tax bill.

Generally, filing your taxes within 60 days of the due date is the best option for being late because you’re capped at paying a maximum of 25 percent of your total tax bill. Beyond that, the IRS can tack on fines that equal 100 percent of your bill. However, filing today is the best option.

If you’d like to file your taxes late without incurring failure-to-file penalties, you can apply for an extension before the tax deadline. Depending on your situation, an extension can give you between 30 days and six months to file your taxes beyond the due date without being penalized for failure to file. However, you still have to pay at least 90 percent of your balance by tax day unless you want to incur late-payment penalties. While extensions give you more time to prepare your return, they don’t provide much of a buffer for paying your anticipated tax bill.

How to File Late Taxes

If you already have all of the information you need to file your late return, you can go ahead and file it the regular way. Just keep in mind that you need to have any W-2 or 1099 forms for the outstanding years in order to accurately report your income. 

If you’re missing documentation, you can use Form 4506-T: Request for Transcript of Tax Return from the IRS. In many cases, having your late taxes prepared by a tax professional is a good way to ensure that you’re handling the process properly. A tax expert can also fill you in on the process for applying for relief or installment payments if you have tax bills you can’t manage with lump payments.

What You Need to Know About Filing Your Taxes Late

If you owe taxes, you can only benefit from getting them filed now. You’re still entitled to your refund even if you missed the tax deadline. However, the IRS cuts you off from your refund after three years. That means you’ll be paying interest on owed taxes without getting the refund you’re owed. Owing taxes can also cause the IRS to hold back any future refunds.

Get Help With Filing Your Taxes Late

A late tax return is always better than no tax return. When you come to Tax Group Center for help with filing your taxes late, we’ll help you catch up with late tax returns. If you owe money to the IRS or state, we’ll walk you through the process of getting debt relief to reduce your debt, freeze your debt, or space out payments. With 30 years of dealing with the IRS on behalf of our clients to our name, the Tax Group Center team is ready to help you get your late tax return handled the right way. Contact us today!

If you owe the IRS money, you may be wondering how to untangle the confusion regarding the amount of back taxes owed. While plenty of options exist for rectifying a tax issue stemming from unpaid taxes, it’s important to begin working with the IRS right away to avoid messy issues with interest, wage garnishments, tax liens, and more. Fortunately, the IRS provides some clear resources for figuring out how much you owe, getting your taxes paid, or working out a settlement. Here’s a look at what you need to know if you’re trying to pin down answers on IRS taxes owed.

How Do I Know If I Owe the IRS?

If you owe the IRS money, you’ll receive a tax bill in the mail for the full amount. The bill that comes in the mail will inform you of the balance due. In addition, you will see any penalties or interest that you owe tacked on to your tax bill. It’s essential to understand that this bill is just the IRS’s first step in the collection process. If left unpaid, daily compound interest and monthly penalties will begin to accrue. While receiving a bill can be a startling way to learn that you owe the IRS money, another way to be notified that you have a tax bill is by filing or reviewing tax returns. If you have any unfiled tax returns floating around, it’s important to file them to start getting tax payments taken care of before penalties and interest begin accruing.

You may also discover that you owe the IRS back taxes using the IRS.gov website. Following the registration process, you’ll be able to use the IRS Account Information portal to view how much you owe in taxes for each tax year. If you’re not necessarily tech-savvy, you can also contact the IRS by phone at 1-800-829-1040 (toll-free) from 7:00 a.m. to 7 p.m. from Monday through Friday.

How To Figure Out How Much You Owe the IRS

If you’re unsure about how much you owe the IRS, there are several ways to find out. You may want to first check your tax records to confirm you’ve paid your tax bill for the most recent tax year. However, there are more direct ways if you don’t have clear tax records available.

Request a Transcript

If you’ve received a bill from the IRS, the amount on the bill is the amount you owe. However, you may be curious to see your tax transcript for yourself to do your own analysis. You can do this by requesting a copy of your IRS transcript online. If you have an IRS account set up already, you can view the transcript online. If you don’t have an IRS account, you can request that the transcript is mailed to you as long as you provide your Social Security number, date of birth, and the mailing address associated with your last tax return. Transcripts usually arrive within 10 days.

Visit an IRS Office

You can visit your local IRS Tax Assistance Center (TAC) to inquire about a current IRS balance. Simply call the office in your area to make an appointment. Be sure to bring along a current government-issued photo ID and your Social Security number.

Ask a Tax Professional

Of course, the numbers that you receive from the IRS will be based on the records and findings of the IRS. Your records may show that the IRS taxes owed are actually lower. This is where it can be beneficial to go over your tax records and payments with a tax professional who specializes in tax problems.

Why Do I Owe Taxes?

People can owe taxes for reasons that range from improper tax preparation to math errors. It’s not necessarily true that only people who intentionally skip tax payments can owe the IRS money. In many cases, people owe tax money because they made incomplete tax payments. 

Here’s a look at common reasons why people end up owing the IRS money:

• You forgot to file taxes.
  
• You filed your taxes incorrectly.
  
• You didn’t realize you owed taxes.
  
• You didn’t hold enough from your paychecks to cover your tax bill throughout the year.
  
• You didn’t properly adjust your tax planning strategy when your tax bill rose.
  
• You failed to adjust your withholding amount to keep up with changes in the tax code.
  
• You made a math error when filing your taxes.
  
• You made a math error when paying your tax bill.
  
• You didn’t have enough to pay your full tax bill when you filed your taxes.

Unfortunately for taxpayers, you will still owe money even if you didn’t intentionally skip paying your taxes. If you forgot to pay the IRS, there’s a good chance that you also forgot to handle your state taxes. As a result, you could be about to receive a tax bill for your state taxes. It’s crucial to get caught up with either filing or paying state taxes to avoid the consequences of not filing or paying state taxes.

How Long Can You Owe the IRS?

Penalties begin accruing the day after the filing deadline. Generally, there is a 10-year statute of limitations on IRS collections. That means that the IRS has 10 years from the date that your taxes were assessed to attempt to collect payment. However, the statute for collecting state taxes varies by state.

How to Pay Your Tax Bill to Stop Owing the IRS

The simplest way to stop owing the IRS money is to pay your bill in full. However, not everyone is in a position to make a lump cash payment to the IRS. The IRS is generally very generous with offering tax relief solutions for taxpayers who are unable to make payments in full. There’s only one general condition that impacts your eligibility: you need to file all your tax returns. 

The most common tax relief solution offered by the IRS is something called an Installment Agreement (IA). Under this arrangement, a taxpayer has 72 months (six years) to pay off a tax debt using monthly payments. Additionally, an option like an Offer in Compromise (OIC) may allow you to settle your IRS tax debt for less than the full amount.

Are Failure to Pay and Failure to File the Same Thing?

The last big detail to cover regarding how to take care of an IRS tax debt is the way the IRS handles failure to pay versus failure to file. Failure to pay applies if you do not file by the filing deadline without requesting an extension. Failure to file applies if you don’t pay the taxes reported on your return by the deadline. While you can request an extension to file, the extension doesn’t actually extend your payment deadline. That means you’re required to pay your anticipated owed tax bill by the deadline even if you don’t file your taxes due to an extension. A failure-to-pay penalty may apply if you didn’t pay your full tax amount by the filing deadline. Generally, the failure-to-file penalty is more than the failure-to-pay penalty.

Do I Owe the IRS? Find Out With Help From Tax Professionals

Let the tax professionals at Tax Group Center help you with back taxes owed to the IRS. Our team will help you determine the exact amount the IRS claims you owe. Next, we’ll help you work out payment options or tax relief solutions with the IRS. We’ve been helping taxpayers settle with the IRS for 30 years. Contact us today!

Filing taxes for deceased loved ones is one of the unexpected tasks that can go along with managing final affairs. Many people are uncertain about what goes into filing taxes for a deceased person because they aren’t sure where the responsibility falls. 

The first thing to know is that the IRS does not cancel tax debts upon death. The hard reality is that IRS penalties and interest can accrue if unfiled returns are allowed to linger without being addressed after a person had died. If you’re handling the estate of a loved one, it’s important to know how to file a tax return for a deceased person.

Yes, you do need to file taxes on behalf of a deceased person if you have been tasked with managing an estate, because tax obligations don’t evaporate when a person passes away. Both the IRS and state taxing agencies will hold the estate of the deceased liable for filing and paying taxes on time. If you are the representative of an estate, you must file taxes in the exact way that the deceased person would have. That means filing both state and federal taxes for the year of death. In most cases, the estate representative will need to file an IRS Form 1040. When filing taxes for a deceased person, you must report all income up to the date of death. Family members sometimes discover that a loved one has not been consistently filing and paying income taxes. If this is the case, you’ll need to go back to take care of all unfiled taxes before you can claim refunds or request relief for tax debt.

What Happens if a Deceased Person Owes Taxes?

If you discover that taxes are owed after filing a deceased tax return, it’s necessary to pay the outstanding balance. The consequences of not filing or paying state taxes and federal taxes do not go away just because someone is deceased. If taxes are not paid, the IRS and state taxing authorities may decide to pursue collection from the person’s estate. If unpaid taxes go back several years, the IRS may conduct an audit. In some cases, the IRS will actually attach an estate lien to a person’s property.

Do You Have To File Taxes for a Deceased Person?

Yes, you should file a tax return for a deceased person if they had any reportable income or assets in the year that they died. This includes both earned income and income from investments. While you may not be required to file a tax return for the deceased if the person made less than $12,400 (under 65) or $14,050 (over 65), it’s still a good idea to file because there are various credits and deductions that could actually provide the estate with a refund.

In some cases, the surviving spouse or representative of the estate will have to file a separate return from the deceased person’s personal return that represents the estate. This is determined by the size and nature of the estate. For instance, most estates that receive $600 in income annually will require you to file an IRS Form 1041. Additionally, there is the matter of estate tax for larger estates. If an estate is liable for the estate tax, the estate administrator must file IRS Form 706 within nine months of the estate owner’s death.

Who Should File Taxes for Someone Who Has Passed Away?

Typically, the default is for surviving spouses to take care of filing taxes for deceased spouses. If a joint tax return is filed, the responsibilities of tax preparation and payment of any owed taxes fall on the spouse. If a person is not married at the time of death, the executor or estate representative will be tasked with filing the deceased person’s federal and state income tax returns for the year. 

If a joint return is filed, the surviving spouse shares this responsibility. As far as who signs the tax return for a deceased person, the person who prepared the return should be the one to sign it. If a spouse is filing a joint return, they will sign the return as the surviving spouse. In all other cases, the executor or estate representative will sign the return.

How Long Should You Keep a Deceased Person’s Tax Records?

The minimum amount of time that you should keep a deceased person’s tax records is three years. Generally, returns are only subject to audits going back three years. 

However, there is the rare case where the IRS will go back as far as six years into past returns. For this reason, it’s recommended that you hold on to all tax records belonging to a deceased person for at least seven years. Keeping the tax records of a deceased person can be even more critical than holding on to your own tax returns, because trying to obtain records on behalf of someone else in the event that you need to supply evidence of tax records during an audit can be very difficult. You may not have access to stored documents or passwords that are needed to obtain copies of tax-related documents.

What Happens to a Tax Refund Check for a Deceased Person?

If you are claiming a tax refund on behalf of a deceased person, the IRS requires you to fill out Form 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer. In most cases, you’ll save yourself a big headache if you request a refund in the form of a paper check. If direct deposit is set up using a bank account that is not in the name of the deceased taxpayer, there is a good chance that the bank will reject the transaction. The person claiming the refund must indicate that they intend to distribute the tax refund according to applicable state laws in the state where the deceased person resided. It may also be necessary to supply a court certificate documenting that you are the legally appointed representative of the deceased’s estate to prove that you are entitled to receive the deceased person’s tax refund under state law.

Get Help for Taxes After Death

Filing taxes for deceased family members can be a difficult and overwhelming task due to complicated, ever-changing tax laws. In addition to reporting income, a surviving spouse or estate manager must also figure out tax obligations for things like IRAs and retirement accounts. What’s more, many people are surprised to discover that they can inherit tax problems when they inherit estates. If you discover that an estate owes taxes, many of the same tax relief solutions that apply for all taxpayers can be used to pay down tax debt using an Installment Agreement (AI).If you’ve been left to handle a final tax return for a deceased person, Tax Group Center is here to help you get everything squared away. Our tax experts and CPAs are backed by 30 years of experience. If necessary, we can work with the IRS on your behalf to take care of any lingering tax debts or penalties that are tied to a deceased person’s estate. Contact us today if you have any questions about managing taxes after death.

Determining What You Owe the IRS: What Is the Minimum Income To File Taxes?

If you had a relatively low income this year, you might be wondering if you have to file taxes. First, don’t assume that making a modest income means the IRS isn’t expecting a tax return from you. If you skip tax preparation due to a misunderstanding, you’re still subject to all of the penalties that apply for unfiled returns. That’s why it’s essential to know the minimum income to file taxes.

Income tax minimum varies by filing status. The IRS has different income minimums for taxpayers based on both filing status and age. If you’re filing as single, the income threshold for owing income taxes is much lower. The threshold is also lower for people under the age of 65 than for people over that age.

What Is the Minimum Income to File Taxes?

More than 40 percent of Americans aren’t required to file taxes because they don’t meet the income minimum. However, the actual minimum income amount can look different from person to person within that group of millions of people. Here’s how it breaks down for 2020 incomes:

• Filing Single: $12,400 (under 65)/$14,050 (over 65)
  
• Married Filing Jointly: $24,800 (both spouses under 65)/$26,100 (one spouse over 65)/$27,400 (both spouses over 65)
  
• Married Filing Separately: $5 for all ages
  
• Head of Household: $18,650 (under 65)/$20,300 (over 65)
  
• Qualifying Widow(er) With Dependent Child: $24,800 (under 65)/$26,100 (over 65)
• Filing as Self-Employed: $400

You also have some other factors to consider before you shove your tax return into a drawer without sending it to the IRS. While the minimums above will apply in most cases, there could be an additional factor in your case that compels you to file. For instance, a self-employed person who makes below the threshold for their filing category should still file a return. People who purchase health insurance from state or federal marketplaces should also file. Lastly, you may be required to file taxes this year if another person claimed you as a dependent on their return.

What if none of those conditions apply to you? The truth is that you might still want to file your taxes even if you don’t technically have to file this year because you might benefit from some tax perks. For instance, you could receive an unexpected refund if you file, which you won’t receive if you have any unfiled returns. It can be beneficial to file a return every year just to stay on track and keep records of your income. Additionally, the amount you had withheld from your paychecks during the year may be returned to you in the form of a tax refund after you file. This is what’s known as a refundable credit. Not filing your taxes this year could mean that you’re not claiming things like the Additional Child Tax Credit, Health Coverage Tax Credit, or American Opportunity Education Credit. In other words, not filing is like waiving a free check from the IRS!

How can you estimate if you’ll get a refund this year even though you had a very low income? Generally, it’s wise to file your taxes if your employer withheld federal taxes from your paychecks. The same goes if you paid your quarterly estimated tax payments.

Who Doesn’t Pay Income Taxes?

Ultimately, the total income you make in any given year determines your tax obligation. The thresholds above for the various filing categories are what the IRS uses to determine who is required to pay income taxes in any given year. The very basic definition of someone who won’t be required to pay income taxes is a single filer under the age 65 making less than $12,400 per year. When looking at the chart above, you may have noticed that the threshold for all people filing as married filing separately is just $5. No, that’s not a typo. The IRS essentially provides no threshold for people who choose to file as married filing separately.

Do I Need to File a Tax Return?

The only person who can really answer this question is you. First, you’ll need to take a look at your paycheck records for the year to determine if you reached the threshold for your age and filing status. It’s critical to file even if you’ve only made a dollar above the threshold, because not filing when you make a low income opens you up to all of the same penalties for not filing at any income level.

Should You File Your Taxes This Year Even If You Didn’t Make a Lot of Money?

Even if you didn’t meet the minimum income to pay taxes, it’s still generally a good idea to file. The bottom line is that you’re probably entitled to a number of deductions and credits that could result in a nice refund. You also want to look at the whole picture to make sure that you’re accurately reporting your entire income. The full formula for determining if you made the minimum to file taxes includes your filing status, federal income tax withheld for the year, and your gross income.

Some people assume they don’t need to file taxes based on their paycheck and later realize that other earnings they made throughout the year do qualify as income. If you made relatively little income, filing your taxes will likely be a very quick process that only includes a few tax forms. Taking just a little time to file your return is a much better option than dealing with a surprise tax lien down the road.

Final Thoughts: Getting Your Taxes Ready If You Meet the Minimum Income to File Taxes

Not being able to pay what you owe in taxes is never a reason to avoid filing your taxes at any income level. The IRS checks all tax records from around the country to calculate income. That means that the IRS will know how much you made in any given year even if you don’t report your earnings. If you’re worried that filing will create tax problems, you should know that not filing will create even bigger problems. Fortunately, there are many options for tax forgiveness and payment plans that allow you to take care of a tax debt without incurring interest and penalties. The team at Tax Group Center helps taxpayers prepare and file taxes to avoid penalties every day. We also negotiate with the IRS on behalf of our clients when taxpayers can’t pay their tax bills in full. If you’re trying to determine if you meet the minimum income to file taxes, we can take a look at your situation to let you know where you fall. We may also be able to identify some potential credits and refund opportunities that will have the IRS writing you a check this year. Contact us today for a tax consultation with Tax Group Center’s team of tax experts and CPAs.

How Giving Impacts Your Taxes: Are Political Contributions Tax Deductible?

If you gave to political candidates last year, you might be wondering if campaign contributions are tax deductible as you gear up for this year’s tax preparation. If you routinely deduct contributions made to charities on your tax returns, you may assume that the process works roughly the same when you make political donations. 

This is not accurate. It’s essential to distinguish between donations made to charitable organizations and political contributions before getting to work on your unfiled taxes. Only one can actually reduce your tax liability for the year!

Are Political Donations Tax Deductible?

No. “Political contributions deductible status” is a myth. The IRS makes it clear that you cannot deduct contributions that you make to any organizations that aren’t qualified to receive tax-deductible donations. This doesn’t just mean that donations made to candidates and campaigns are excluded from being tax deductible. It also extends to political action committees (PACs). Only donations given to registered 501(c)(3) organizations can qualify for tax-exempt status.

Are Political Contributions Tax Deductible for Businesses?

If you own a business, you understandably have a strong interest in how laws and policies will impact your industry. Unfortunately, that doesn’t mean that the IRS bends the rules to allow you to benefit from your political contributions. If you’re wondering if campaign contributions are tax deductible for your business, the same rules apply. You cannot claim political deductions on your tax return for your business. More specifically, you cannot claim any amount paid in connection with influencing legislation as a business expense. This rule is so strict that the law even prevents political candidates from deducting the money they spend out of their own pockets while running for elected office!

Where does that leave you if you made large political contributions last year? If you were hoping that contributions made to political causes would help to offset your tax bill for the year, it’s time to make a plan to avoid the penalties and interest that could accumulate if you can’t cover your tax bill in full. The good news is that there are many other expenses that you paid for throughout the year that many qualify for deductions this year. This is especially true if you take itemized deductions instead of the standard deduction.

If I Volunteer for a Political Campaign, Can I Deduct My Expenses?

We’ve already covered the fact that money donated to political campaigns will not be tax deductible. However, you may be wondering how the IRS treats the time you donate to candidates. Are donations to political campaigns tax deductible if those donations are volunteered time? The rules are the same for donations of both money and time. So the answer is no: any time you donate to a political candidate, political campaign or political action committee (PAC) is not considered a tax-deductible donation by the IRS.

Is Supporting the Presidential Election Campaign Fund Tax Deductible?

You may have noticed that you have the option to contribute to the Presidential Election Campaign Fund when you complete your tax return. The maximum that you can set aside for this contribution is $3. You might be wondering if that $3 deduction is tax deductible since it’s displayed on your tax form. It is not. Checking the box to make this contribution has no impact on your taxes or deductions for the year.

What Are the Political Contribution Limits for the Year?

While you won’t be getting a tax deduction for your contributions to political candidates and campaigns, there’s a good chance that you still want to throw your support behind a candidate or party. You should know that there are caps for every American when it comes to political donations. Here’s what you can legally give each year without violating any campaign finance laws:

• Up to $2,800 per candidate per election
  
• Up to $10,000 combined for all state, district, and local parties
  
• Up to $106,500 to a national political party
  
• Up to $5,000 per year to PACs

The Federal Election Commission (FEC) sets these caps, but the IRS will have questions for you if you go above them. Be sure to keep good records of your political donations if you routinely give large amounts of money to politicians and causes, because the IRS strictly enforces these limits.

How Can I Give to Tax-Deductible Causes for Tax Purposes?

While giving to a political cause isn’t going to help you lower your tax burden, there are still countless opportunities to give to charitable causes. From soup kitchens to animal rescues and humanitarian organizations, your options are endless.

The only detail to remember is that a charity must be registered as a 501(c)(3) organization for your donation to be legally tax deductible. Under the IRS’s rules, a donation that you give to an individual or group without that 501(c)(3) status won’t count on your taxes. 

It’s also important to note that purchasing goods from not-for-profit organizations won’t count toward tax deductions. For instance, a local church might be having a bake sale to pay for a new roof following a bad storm. You might purchase a slice of carrot cake during the sale to throw your support behind the effort, but that purchase will not be considered a tax-deductible contribution due to the fact that you received a “good” in exchange for the money you gave.

Final Thoughts on Political Contributions and Your Taxes

Are political contributions tax deductible? Unfortunately, you’re not going to be able to turn your political giving into a tax gain this year. That means that you’re out of luck if you were counting on the money you gave to political causes last year to help you lower a tax debt. The good news is that you have many legitimate options for avoiding the consequences of not filing or paying taxes, including things like installment agreements and debt forgiveness.

If you have any questions about figuring out your tax debt while factoring in charitable giving, Tax Group Center is here to help you get on the right page with the IRS. While using deductions to lower your tax burden may help you, it’s also crucial to understand that getting your return filed quickly can help you to avoid severe penalties like liens and levies. Our team of tax professionals and CPAs can help. We’ve been working with the IRS on behalf of our clients for 30 years. If you have tax problems that have grown too serious or confusing to handle on your own, simply contact us today for a consultation. Tax Group Center will work hard to get you on the road to tax relief. Having your taxes prepared by tax experts can help you maximize deductions of all types to reduce your tax liability for the year in full IRS compliance.

Do you need a tax lawyer? Admittedly, it’s not a question that anyone looks forward to asking. However, the reality is that knowing when to hire a tax attorney can potentially save you from lots of needless legal trouble and IRS fees. You may be looking at some telltale signs that it’s time to get dedicated legal support on your side. Do tax lawyers really help? Let’s break down the reasons to bring in a lawyer to get a tax issue taken care of now.

Reason 1: You’re Being Audited

If you’re being audited by the IRS, this is a case where legal representation is essential. While an IRS audit may appear to be a simple case of “paper shuffling” for now, you want to make sure you’re not mishandling the situation, exposing yourself unnecessarily, or failing to sufficiently comply with the IRS. You may also want to bring in a lawyer if you think you’re at risk of being audited.

There’s also the post-audit support that a tax attorney provides. For instance, you may disagree with the conclusion reached by the auditor. At this point, it will be time to move to the appeals phase. Are tax attorneys worth it during an IRS audit appeal? Absolutely! With an audit appeal, your attorney will try to negotiate a settlement with the IRS on your behalf. If the IRS is unwilling to do a settlement, your attorney will then represent you in tax court.

Reason 2: You’re Confused About a Notice You’ve Received From the IRS

The big advantage that the IRS has is that IRS agents deal with their own forms, rules, and lingo every day. As a taxpayer, it’s all new and unfamiliar to you. What does a tax attorney do to help? Like the IRS, a tax lawyer speaks the language of the IRS because they deal with tax laws all day long. They also have experience with working directly with the IRS on settlements.

If you’ve received a notice from the IRS that you don’t understand, the worst thing you can do is to ignore it. This is where many people get into trouble with missing deadlines for appeals or allowing interest and penalties to accrue. The IRS doesn’t always provide the highest level of clarity when it comes to naming and numbering forms. Taxpayers are expected to navigate their way through complex forms that are coded based on the IRS’s standards. The best thing you can do when you get a document from the IRS is to call up a tax attorney to figure out exactly what the IRS is asking of you. You can rest assured that whatever form you’re looking at is something that a tax lawyer has seen thousands of times. It’s important to remember that “not understanding something” is not considered an acceptable or reasonable excuse by the IRS. A notice that goes ignored due to a misunderstanding will incur the same penalties as a letter that was intentionally ignored. 

Reason 3: You’re Going to Pursue IRS Tax Debt Relief

If you feel that your solution to tax problems is to ask the IRS for a relief or forgiveness option, it’s best to do it with a lawyer by your side for a number of reasons. First, a lawyer can help you understand which tax relief solutions or forgiveness programs you qualify for based on your positioning. Next, your lawyer can help you to prepare the documents and records the IRS needs to get your request processed and approved quickly.

If you’ll be asking the IRS to settle your debt for less than what you owe using something like an Offer in Compromise (OIC), it can be beneficial to do so with the help of a lawyer because the IRS only approves a small fraction of the OIC requests it receives each year. The application can also be slightly precarious because you’ll be asked to submit detailed financial records to prove to the IRS that you’re incapable of making payments in full. What’s more, you could have your approved OIC plan nullified if you violate any of the terms of your agreement down the road. In short, having a legal expert guiding you can remove much of the guesswork that goes into entering into what can be a complex arrangement with the IRS.

Reason 4: You’re Making a Big Change to Your Personal Income Stream or Business

Can a tax lawyer help me even if I’m not in trouble with the IRS? Yes, tax lawyers can provide “routine” support to ensure that you’re handling taxes properly. You may want to consult with a lawyer if you’re in the middle of starting, expanding, or merging a business to get an understanding of what that means for your future tax classification and obligations.

Reason 5: The IRS Is Coming at You With Criminal Charges

If the IRS is coming after you for fraud or tax evasion, there’s a lot that a lawyer can do to help you clear up the situation. First, a tax lawyer can help you to provide documentation and clarity if you believe that the IRS is mistakenly charging you for an honest mistake. If you’ve failed to meet your tax obligations knowingly, a lawyer will help you to pursue the legal options that are available for preserving your best interests. A tax attorney may potentially be able to reduce your penalties and help you avoid jail time.

Reason 6: You Simply Want to Make Sure the IRS Is Handling Your Case Properly

There are thousands of reasons why you might be corresponding with the IRS. While not all of them may seem dire enough to require legal representation, it’s still not a bad idea to have your correspondence come from a lawyer. The bottom line is that the IRS wants to collect what is owed and resolve issues as quickly as possible. Once they see that a lawyer is involved, IRS agents tend to find the motivation to move things along quickly. Having a lawyer “do the talking” for you with an IRS matter of any scope is simply a good strategy for putting your best foot forward, getting clear answers, and resolving the situation quickly.

Should I Hire a Tax Attorney? Are Tax Attorneys Worth It When I Only Have a Small Issue?

If you have any questions at all regarding tax issues, there’s no harm in consulting with a tax lawyer to simply learn more about the options that are in front of you. If you’re being pursued by the IRS, a lawyer can potentially help you to avoid penalties and enjoy a better outcome. If you’re seeking some type of relief, a tax lawyer is able to walk you through the process by “putting on the mind” of the IRS.

If you have a question for a tax lawyer, Tax Group Center is here to provide tax-specific and IRS-specific legal guidance. We help clients navigate stressful IRS situations every day. When bumping up against the IRS, you have everything to gain by not assuming that your problem will just vanish with a quick do-it-yourself fix. Reach out today for a consultation. Our team of lawyers and tax professionals offers 30 years of experience to help you avoid costly penalties and missed opportunities for debt settlements.