I have helped a considerable number of clients resolve their back taxes. One thing that surprises most of my clients is the sheer amount of taxes, interest, and penalties owed. How do people get into this situation? Owing taxes can be compared to a snowball that starts to roll from the top of a hill and gets increasingly larger as the snowball progresses down the hill toward the bottom. Given a long ride, that snowball gets too big to handle. The following narrative, which includes name and location changes to protect client confidentiality, demonstrates how back taxes can erupt out of control. Continue reading…
What is a Substitute for Return (SFR)?
In any year when an annual income tax return is not filed, the IRS files a Substitute for Return (SFR) on your behalf to your IRS account. The IRS does this to estimate the taxes owed and to start the collection process. Continue reading…
Are you a real estate professional?
If you own rental property, the rental activity is generally treated by the IRS as a “passive activity.” This is important to understand because if you operated rental property and sustained a loss, the loss can be claimed against active income, such as wages. This loss deduction is limited to $25,000 for the claimed tax year. The $25,000 loss deduction may be further limited by Adjusted Gross Income (AGI). However, if you are a bona fide real estate professional, the rental activity is treated as an “active activity.” Therefore, there is no limit on the amount of losses that can be deducted. Continue reading…
How does a tax resolution company find out about your tax problem?
Taxpayers with IRS problems are being cold-called or are receiving letters from companies urgently seeking contact and promising that your tax problems can be easily resolved. Some companies are being creative, sending out letters to taxpayers that contain personal information which often mimic official IRS letters. Companies gain access to personal information due to a tax lien being filed by the IRS.
Can I really settle my taxes for less than I owe?
The simple answer to this question is maybe. The more accurate answer, it depends on your current financial situation because not all taxpayers qualify. Even if you are qualified by IRS criteria, the resolution process can be lengthy and expensive.