Companies like Tax Defense Network provide help with IRS problems. Getting $30,000 in credit card debt forgiven can be a huge financial and emotional relief, but before doing it, understand the tax consequences. When debt reduction greater than $600 is granted by a bank or other creditor, they are required to mail you form 1099-C which documents for you and the IRS the amount of forgiven debt. Note that Congress passed legislation to exclude mortgage relief (short sales) from this tax law.

Consulting with a tax professional, like those available at Tax Defense Network, before making a big decision like debt relief can save you from owing thousands of dollars to Uncle Sam.

If you do not pay your taxes on time, the government treats it like you have taken a loan from them. In fact, Congress has passed a law that requires the IRS to charge interest on late payments. The interest charge is not only based on the tax bill itself, but also on the penalties. To make matters worse, the interest is compounded so that you pay interest on top of interest. If you are having difficulty understanding the letters, forms and calculations regarding a tax problem and can not get satisfactory assistance from an IRS Taxpayer Advocate, consider a free ten minute consultation with a professional.

Penalties
In addition to interest charges, there are several kinds of penalties that the IRS can impose:

File On Time; Make A Late Payment: For every $100 you owe the IRS, a late fee of 50 cents is assessed and after 10 days that fee jumps to $1.00 per month. Although this does not sound like much, it adds up fast especially since interest is charged on these fees.

File Late: Make Your Payment Late: If you are late filing and do not pay on time, the penalty is $5.00 for every $100 owed per month. Penalties can add up to almost half of the original tax debt.

Getting accrued penalties and interest reduced is possible. Taxpayers can try to work directly with the IRS to negotiate. Another option is to work with a reputable tax assistance company like Tax Defense Network.

Nathan Randall, editor, DailyDollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI…you can now access the DailyDollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.

What Are Payroll Taxes?

There are federal and state payroll taxes. A CPA can help business owners understand both types, but state payroll taxes usually create more problems for employers because the requirements are different depending on the location. In Nevada, there are no state income taxes. Individuals and business owners are only required to pay federal income taxes, social security, and Medicare. Like most states, Nevada does have an unemployment tax that business owners must pay. Nevada also requires many employers to pay an additional payroll tax, known as the Modified Business Tax.

Federal Payroll Taxes

The amount of federal income tax that a business owner takes out of an employee’s paycheck is determined by an IRS W-4 form. Employers are required to have every employee complete a W-4. Generally, social security and Medicare (FICA) are shared equally by the employer and the employee. But in 2011, the employee tax contribution rate was lowered to 4.2% for social security. Business owners are still required to pay 6.2% on all wages less than $106,800. Medicare tax rates are still 1.45% for both parties.

Unemployment Taxes

Unemployment taxes are collected by the federal government, as well as individual state governments, to fund the unemployment program. Most business owners are required to pay unemployment taxes by filing a Form 940 with the IRS. As of July 1, 2011, the federal unemployment rate is 6%, but a credit of 5.4% is available for employers who pay state unemployment taxes. In Nevada, the state unemployment tax is referred to as unemployment insurance tax, or UI tax. Calculating the UI rate depends on several factors that are best explained by a Nevada CPA.

UI Tax Rate

Any business owner in Nevada who pays at least $225 in wages within one calendar quarter is subject to UI taxes. The amount of the tax is a percentage of every employee’s wages, up to $26,400 (2012 wage limit). New businesses pay 2.95% for the first 14 to 17 quarters in operation. After this period, the UI tax rate is determined by Nevada’s ‘experience rating.’ Depending on how much a business pays in UI taxes and the unemployment benefits its employees receive, the UI tax rate can range from 0.25% to 5.4% of the total taxable wages the business has paid.

Modified Business Tax

On October 1, 2003, the state of Nevada made it a requirement for owners to also pay an excise tax on their paid wages. The Modified Business Tax is quarterly based on an employer’s gross wages and paid to the Nevada Department of Taxation. This is in addition to the UI tax that is paid to the Employment Security Commission. The current rate is 0.63%, and there are no wage limits or caps to benefit the business owner. There are deductions available. Most of these credits are associated with health care payments.

Many owners are unsure of the legislation concerning payroll taxes, but failing to comply with state and federal laws can be detrimental to a company. An experienced Nevada CPA is the best resource for learning more about federal payroll taxes, as well as current information on the UI and Modified Business taxes.

Reno CPA Tim Nelson has been helping individuals and businesses with their tax preparation and financial planning for years. Tim has a passion for numbers, so that you don’t have to. Visit Tim Nelson’s Website to download the FREE Business and Tax Preparation Organizer.

To see what else Tim is talking about, visit Tim’s Blog.

When people contact services like independent tax advice providers for assistance, the tax professionals will ask to see a variety of documents, possibly including previous tax returns. Picture all the paperwork you receive throughout the year. Our mail is full of monthly statements from:
banks
credit card issuers
utility companies
car loan servicers
mortgage companies
insurance firms

In addition, you receive receipts from doctor and dentist offices, property and school tax notices, Department of Motor Vehicles correspondence, charities you donate to and more. Having a system to stay organized is key.

One easy process to keep all this paperwork organized is to purchase a four drawer fireproof file cabinet and a box of hanging files. These are inexpensive and may be tax deductible.

Top Drawer Should Have The Label “CURRENT YEAR”
Create a hanging file for each company you receive bills or statements from. Store the current year’s statements and other paperwork in this drawer. Hang them alphabetically. Have one hanging file labeled “Taxes” to store documents you may need to refer to when you do your taxes at the end of the year.

The Second Drawer Should Have The Label “LAST 7 YEARS”
The IRS recommends storing documents for seven years. At the end of each year, move the contents from the top drawer down to this drawer. The hanging files in the second drawer should mirror the categories from the top drawer and the labels should include the year that the documents are from (example “2009 Insurance”). You can consolidate some companies into categories. For example, you could combine your cable, power, water and phone documents into one file called “2009 Utilities”.

The Third Drawer Should Have The Label “LAST 7 YEARS”
You may want to reserve the third drawer for overflow from drawer two. Seven years worth of documents adds up and after a few years you may need both drawers to store all the volume. You can also use this drawer to store all the previous year’s tax returns and supporting documents. If you ever have a tax problem and need professional help from an independent advisory service to work with you to resolve your IRS tax situation, this organization system will save you a lot of time and headache!

The Bottom Drawer Should Have The Label “PERMANENT RECORDS”
A good use for the bottom drawer is for permanent record keeping including jewelry appraisals, title to house, passports, birth certificates, marriage license, social security card and any other documents you feel are important to keep on a permanent basis. If you have room left over you can create some files to store catalogues you want to keep as well as manuals and warranty information for items you purchased like electronics.

After documents are older than seven years, simply remove them from the file cabinet and shred them. Imagine the clutter this system will remove from your house and how easy it will be to find something when you really need it.

Nathan Randall, editor, Daily Dollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI…you can now access the Daily Dollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.

What happened in 2010? Faced with difficult economic conditions, the Obama administration could not allow the tax cuts to expire for all Americans. They suggested extending the tax cuts for everyone except for those individuals with incomes above $200,000 ($250,000 for couples), who represent 2-to-3 percent of Americans. Republicans in Congress blocked these proposed changes, so a compromise was created that allowed all Bush-era tax cuts to remain in place-but only for two years.

Why are we talking about it again in 2011? In September 2011, President Barack Obama suggested allowing the tax cuts to expire in 2013 as part of his $3 billion deficit reduction plan. In addition, he proposed limiting the deductions, which high-income taxpayers-households over $250,000-can use to reduce their tax liability. If Obama gets his way, in 2013 high-income households would see the top two income tax rates increase to 36 percent (from 33 percent) and 39.6 percent (from 35 percent). In addition, investment tax rates for these groups would rise to 20 percent from 15 percent.

Where the tax cuts a good idea? It depends on who you ask. When the acts were passed, Bush touted the idea that allowing more Americans to have more spending money would help stimulate the economy. Republicans maintain that continuing tax cuts for the $200,000 and up crowd allows the wealthiest Americans to create more jobs through spending and by hiring employees in their businesses; however, that plan assumes that the wealthiest Americans will invest the money in activities that provide jobs.

Opponents of the tax cuts point out that such cuts have contributed to the federal deficit and that they give a disproportionately large break to the wealthiest taxpayers. The Congressional Budget Office (CBO) estimates that extending the tax cuts for all taxpayers for the 2011-20 time period would add $3.3 trillion to the national debt.

What was the impact on the economy?This is also up for interpretation. Conservative economists claim that the tax cuts have been beneficial for the economy and advocate a 10-year extension of the cuts, which they predict would generate a GDP increase of$75 billion annually and a substantial growth in employment. Other studies observe that tax cuts to the wealthiest Americans have not done much to stimulate economic growth. When adjusted for inflation, median household income was lower in 2007 than in 2000; during the same time, the number of jobs grew at .9percent average annual rate, as compared with a 2.5percent average for comparable periods of economic expansion.

The mission of Financial Executives International (FEI) is to advance the success of senior-level financial executives, their organizations and the profession. Learn more about FEI.

This is a great convenience so you don’t have to file each separately. You can pay a direct tax through a tax software, which will go to the government and then you can be expecting a tax return. Now many of us deal with indirect tax everyday. Indirect tax is the usual seven cents per dollar you spend on goods or products that you may buy at a store.

In case you do decide to change or stop using a professional income tax or small business software, you can transfer your tax info to a different software or file. These kinds of softwares keep tabs on everything for you to make it a little less stressful for you. The tax program you use will even keep track of purchases you make with your credit or debit card. This makes it so you may not need to keep track of every receipt, but keeping receipts is still a good idea.

Having your purchases on record will make keeping track of your money will make it easier to handle your budget because you can see exactly where your money went and when it went. There is a range of tax softwares you can use, although they have and use the same basics, others may perform for you better and some may be better for you. You don’t need every available feature, you just need what will cover your needs.

Using a professional income tax software may be a great idea for an employer. Simply because he can keep tabs on his payments on products and see the indirect tax from customers. Having these programs will make just one thing easier in your life. Things are not always easy but it can make at least one thing better.

Tax softwares are even a simple way to save money on filing your taxes. You can have someone do them for you or you can use a tax software and have the same results and save some money at the same time. It is personal preference though. Some people just might trust an accountant and feel more comfortable about it.

A professional income tax software is as reliable and safe as an accountant. You can trust that the software you are using is completely private. There is really no need for an accountant

Some people do taxes themselves which is easily manageable if you have the time. You can save time by having a good tax software. Having a tax software does not mean that you are not in control, you can still manage your own hard earned money.

Jordan McPelt has been writing and teaching about tax software for a long time. He has dealt with small business tax software all the way up to professional income tax software. Read this article and others from him to learn more about this field.

This is especially true when you are dealing with a business. There are so many things that you can write off as a business, though making one mistake will cause the wrath of the IRS to come down on you. And if you don’t want to spend the money to get one of those expensive tax guys to take care of your taxes, you should seriously look into getting some tax software.

The tax software that you find on the market will help you not just do the simple forms that you fill out if you are single and working at a job with no write-off’s, but also if you run your own business that has dozens of salaried employees. It allows you to go line by line to see what you need to fill out, and gives you explanations on anything that you don’t understand.

A really good small business tax software program will give you everything that you would typically get from a tax person, including ideas on how to get the most amount of money that you can legally get back. Obviously, the program should also be easy to use, as well as give you access to a real live human being if you have any questions.

So why do you need a tax program? Technically you don’t. If you are one of those wizards with math and know the tax codes up and down then you probably don’t need any help filling out your taxes. On the other hand, if you are like 99% of the people out there and you need a little to a lot of help filling out your personal or business tax form, a specially formulated program can help you out a bunch.

The last thing that you want to do is get an audit from the IRS. While it’s not as bad as you may have heard (at least not most of the time), getting audited by the IRS can be confusing, stressful and full of a lot of questions that you may not have exact answers to. Heck, all it takes is one lined filled out incorrectly for serious issues to arise.

If you are in the market for professional income tax software for your personal or business taxes, you have a whole lot of options at your disposal. This is both a good and a bad thing. Having so many options means that you are going to need to know the program that works best for you, which is also going to depend on what type of taxes you are going to need to fill out.

Typically those who are filling out a simple 1040EZ form can get one of those free programs that you’ll find online. Any more confusing, those will take the work of a tax program that you will need to pay for. It’s money well paid, though, if you can get the maximum amount back without getting audited.

Jordan McPelt has been writing and teaching about tax software for a long time. He has dealt with small business tax software all the way up to professional income tax software. Read this article and others from him to learn more about this field.

Marital Status on The Last Day Of The Year Determines Tax Filing Status

Many things come into play as far as taxes are concerned when going through a divorce. The first thing to know is that you are supposed to file based on your status on the last day of the tax year. That means if you get divorced on December 28, you file single for the entire year! Similarly, if you get divorced on January 2, you will need to file jointly (or married filing separately) for the prior year.

Don’t Forget About Alimony

Alimony may be a factor, and is governed by the divorce decree or separation agreement. Note that if you get into a situation where Spouse A owes Spouse B for alimony, and Spouse B owes child support back to Spouse A, do not NET them! The IRS only allows you to take the NET amount as alimony. If you pay the entire amount, and get a separate check back, you can take the FULL amount.

Refund Checks Can Be Tricky

Refund checks (or direct deposits) are always an exciting factor. If you are due a refund with your former spouse, make sure it goes to a neutral party who will give you ONLY the refund you are entitled to. If your former spouse gets you to sign on the back of the check and cashes it into their account, you may never see the refund! Similarly, do not direct deposit it into an account you do not have control of! My recommendation is to have a check sent to the CPA’s office. Then have both spouses come in to sign it. The CPA can then cash the check and remit the appropriate amounts to each spouse.

Get Help!

Even before you get divorced, it is important to get advice to determine the tax issues at hand. For example, what if he gets the primary residence and you get the rental house to live in? The tax bases are likely very different, and you will end up owing tax on a gain of a former rental that he can exclude from his residence since it qualified as a primary residence. There are many other factors to consider in divorce taxation. The IRS publication number 504, Divorced or Separated Individuals, deals with many of these issues, but it is important that you discuss all of these with your CPA before they bite you!

Reno CPA Tim Nelson has been helping individuals and businesses with their tax preparation and financial planning for years. Tim has a passion for numbers, so that you don’t have to. Visit Tim Nelson’s Website to download the FREE Business and Tax Preparation Organizer.

To see what else Tim is talking about, visit Tim’s Blog.

Don’t Forget The Little Things

After the marriage, there is usually a move. Whether it is one part of the couple moving in with the other or the couple moving into a new place, a new home means a new address. It is important to remember to update your employer, the post office and even the IRS of your address change. You want to make sure that all of your tax information will arrive at the proper address.

Another thing that commonly happens after marriage is the changing of a last name. Whether a spouse changes their last name to the other’s or adds a hyphen between the names, it is important to remember to notify your employer, the post office, the IRS and, well, everybody. The last thing you want come tax season is confusion over who you are.

Filing Jointly

After getting married, the couple usually files their taxes jointly. By filing a joint tax return, the couple doubles the limitations and deductions that you otherwise would get if you filed two single returns. However, there are certain differences in the tax code where the “marriage penalty” comes into play.

This is a situation where filing jointly causes higher tax than you would pay if you filed two single returns, even though the taxable income is the same. This has largely been eliminated for the lower income tax brackets through 2010, but would apply once you reach a taxable income of $137,300 (in 2010) or higher. For example, assume that a married couple earned $120,000 for one spouse and $100,000 for the other, then the tax as a married couple would be $44,607.50. If they each filed single, the total tax would be $43,782.50, or $825 less than joint filing. The “penalty” increases with the amount of taxable income earned as the couple.

When In Doubt Ask For Advice

After getting married, you do not need the added stress of taxes on your plate. If you are concerned that you may have missed something or just want clarification on how you should file as a couple, you should contact a CPA. Depending on your tax situation, the CPA will be able to tell you the best way to file. The CPA will also be able to talk you through the name change and address change process. They may not be able to help you with the actual steps, but they will able to remind you of anything you may have missed.

Reno CPA Tim Nelson has been helping individuals and businesses with their tax preparation and financial planning for years. Tim has a passion for numbers, so that you don’t have to. Visit Tim Nelson’s Website to download the FREE Business and Tax Preparation Organizer.

To see what else Tim is talking about, visit Tim’s Blog.

If it turns out that the IRS will be sending back some of your money, congratulations. Seriously consider stashing some of it away in a rainy day fund to help cover unexpected car repairs or medical bills.

IRS wants you to know:
1. Refund Options
You have three options for receiving your individual federal income tax refund: direct deposit, United States savings bonds or a paper check. You can now use your refund to buy up to 5,000 USD in United States Series I savings bonds in multiples of 50 USD.

2. Separate Accounts
You may use Form 8888, Allocation of Refund (Including Savings Bond Purchases), to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts. You may also use this form to buy United States savings bonds.

3. Tax Return Processing Times
If you file a complete and accurate paper tax return, your refund will usually be issued within six to eight weeks from the date it is received. If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.

H&R Block Worry Free Audit Support.
If you successfully file (via e-file or print and mail) your personal state and or federal income tax return using the H&R Block Tax Program, you are eligible to receive audit support at no additional charge for your 2010 personal tax returns for up to three (3) years. You must retain a copy of your e-file confirmation or a copy of your tax return as proof of your eligibility for audit support.

4. Check the Status Online
The fastest and easiest way to find out about your current year refund is to go to internal revenue service website and search for the link entitled “Where’s My Refund?” on the home page. To check the status online you will need your Social Security number, filing status and the exact whole dollar amount of your refund shown on your return.

5. Check the Status By Phone
You can check the status of your refund by calling the IRS Refund Hotline as well. When you call, you will need to provide your Social Security number, your filing status and the exact whole dollar amount of the refund shown on your return.

6. Check the Status with IRS 2 Go
IRS 2 Go is a smartphone application that lets you interact with the IRS using your mobile device. Apple users can download the free IRS 2 Go application by visiting the Apple Application Store. Android users can visit the Android Marketplace to download the free IRS 2 Go application. Simply enter your Social Security number, which will be masked and encrypted for security purposes, then select your filing status and the exact whole dollar amount of your refund shown on your return.

7. Delayed Refund
There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 available on the Internal Revenue Service website, which includes a Checklist of Common Errors When Preparing Your Tax Return.

8. Larger than Expected Refund
If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.

9. Smaller than Expected Refund
If you receive a refund for a smaller amount than you expected, you may cash the check. If it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call the toll free number for the Internal Revenue Service.

10. Missing Refund
The Internal Revenue Service will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If they were unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, they can reissue the undelivered check.

Nathan Randall, editor, Daily Dollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI…you can now access the Daily Dollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.

Instead of throwing away old eyeglasses or holding onto them ‘just in case,’ why not donate them to a charity that can pass them on to someone who can really use them? As an added bonus, you may be able to deduct your donation on your tax returns!

Where To Drop Off Unwanted Eyeglasses
Here are a couple of charities that accept donated prescription eyeglasses:

OneSight: a global organization providing free eye care to children and adults in need throughout the world, including North America. Donated glasses are accepted for OneSight at Pearle Vision, Sears Optical, LensCrafters and many other locations.

Lions Clubs International: the world’s largest service club organization, and eyeglass recycling is one of the Lion’s Club most popular activities. Donation boxes are typically located throughout local communities, including libraries, optometrist offices and schools. Contact your local Lions Club to find out where drop boxes are located in your area.

Frequently Asked Questions About Donating Eyeglasses

Do I Need A Receipt For My Donation?
According to the IRS website, you must get a donation receipt any time you make a noncash donation to deduct the donation on your tax return, even if the donated item is worth less than 250 USD. The receipt needs to include the name of the organization the item was donated to, the date and location of the donation, and a description of the donated item. Ask your chosen organization how to get a receipt for your donated eyeglasses.

How Much Should I Deduct For My Donation?
The deductible amount for eyeglass donations is the Fair Market Value (FMV) of the donated pair of glasses. FMV is the dollar amount the item would typically sell for in its current used condition. To determine the FMV of your donated eyeglasses, ask the charity you are donating to for a valuation guideline.

When Should I Claim My Donation?
Donations can be claimed on the tax return filed for the year in which the donation was made. For example, if you donate your eyeglasses this year, the deduction can be claimed on the tax return filed next year for the current tax year. The good news is that it is never too early to get started on next year’s deductions!

Nathan Randall, editor, Daily Dollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI…you can now access the Daily Dollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.