The Good Tax Guide » Tax Payment

IRS Payment Options

Tax Guide — Wed, 01 Dec 2010 04:20:54 +0000

Many people will be audited in the next few years, and from this they will find out that they may owe the IRS a huge amount of money. It is a time of worry and constant budgeting as they strive to figure out just how to pay the IRS. However, there is a shed of hope for these people. These people are usually offered an offer in compromise (OIC), this is basically like Debt Management Plans in that these offerings give a reduced amount that the person owes, which allows them to pay it off much faster and be less worried.

There are three reasons for why the IRS will offer a person an OIC. The first being that the IRS is doubtful that they will ever be able to pay back the amount that is owed. An example, a small business that has a net worth of $50,000 is going to find it nearly impossible to pay back $2.5 million in taxes. Therefore, the IRS will offer them a reduced amount to pay back since they will get some of their money this way.

Secondly, the money that is in question that is considered owed, may be considered doubtful by the person who owes the money. For example, a company who utilized a certain person for their taxes, years later, after the person has left the firm, they are audited and it is found that they did not provide the correct information about a certain aspect of their taxes. The person can then claim that they are not at fault simply because another person did their taxes and perhaps they did not know the extent of the law regarding the matter.

Third of all, if the person can show that if they were to pay the entire amount that they owe that they would fall into economic hard times, such as losing their home, business and so on , then the IRS could issue an OIC. Recently, this has been the most used reason for obtaining an OIC, and probably will be for years to come as it is the most prudent to the current economy.

Payment wise, the person can pay all that they owe up front or they can set up some type of payment schedule. Contrary to popular belief, the IRS is not out to get everyone. In many circumstances they will work with the person to make sure that the person is not getting cheated of anything because of one tiny mistake, and their families do not suffer because of their mistake either.

Solving Your Tax Debts in the UK

Tax Guide — Mon, 08 Nov 2010 04:40:56 +0000

There are some people that during this tax season, they will owe on their taxes. Many of them won’t make the tax deadline. Some of them will wonder how they should go about to pay this money. The biggest issue is that they are going to have to go about and make these payments.

There will have to be some kind of a deal worked out. Many find that with hard economic times come hard times with trying to pay any bill for that matter. The one that you will want to definitely pay is your tax debt though. But what if you can’t do this? This is where there is a solution.

Recently, there have been some commitments made between debt relief places and the government to work on the tax debt issue. This is how this works. For many who have been unable to pay their tax debts before, this has been a huge help to them as of recently. So, here is how it works.

The way this goes is that any person who finds that they are having a hard time should go talk to an agency. They will take a look and see what you can do as they will help you by looking at what you owe and the money you are spending. They can even then work with the government to find a way to create a plan for you to pay them back. If none can be paid, there are some instances where they will pay the fee for you and then you are obliged to pay them back. Look out for possibility of filing for a Debt Relief Order.

For the most part though, for your sake, they work to create a plan where you pay the revenue department back. The reason for this is that it will help your credit greatly when they see that you have made attempts to pay this off and take care of it yourself.

Some might wonder if they qualify as most often, you have to have so much in tax debt. They don’t want to have to pay only to find out though that they don’t qualify. That is why in many situations, these companies will offer you a free consultation. This will help them to understand your situation and for you to figure if this is something that could help you and is something that you could easily do.

In some situations though, if you call the department that sent you the letter directly, they normally will try to work with you. The thing you have to prove is why you can’t pay it though. If they see that you can’t pay it, they might give you a longer amount of time to pay it or work out another arrangement for you.

There are some people who just ignore the bill thinking that it will go away. This doesn’t work. They don’t go away. What happens then is that your items go into distrait. When this happens, the items that are worth value like your home or car are sold in order to then pay your bill. Sometimes, if you don’t have any items worth selling, you might be taken to court, which is something else that you won’t want to happen to you.

Do I have to pay tax on academic scholarships?

Tax Guide — Wed, 24 Sep 2008 03:59:58 +0000

One can remove the academic scholarship from taxes if they meet some criteria. These criteria are put forward by the responsible tax authorities. Day by day the cost of living is going on increasing. As it increases the college costs also increases. So, more amount of money is required for this purpose. So if a child is getting scholarship it can help a lot.

Also the benefit of scholarship can be improved more if proper steps are taken to avoid it from taxes. In case if the child is attending a private college rather than a government college then the cost will be double. So it would be difficult for the parents to pay the money even with the available scholarships if taxes are deducted from that. So, proper measures must be taken to make sure that such academic scholarships get free from taxes.

If the academic scholarship is used for other purposes like paying room rent and travel expenditures then it should be shown in the tax form. In that case it will become taxable as the scholarship is meant only to be used for paying tuition fees and for buying the necessary books. The scholarship will be free from tax if and only if the person is a candidate for a degree in some educational institution. The scholarship money should not be used for other purposes. If you use it for any other purpose then you will have to pay the tax on that amount.

Is Tax payment on accelerated death benefits and viatical settlements necessary?

Tax Guide — Wed, 24 Sep 2008 03:54:18 +0000

Everyone knows that day by the cost of living as well as medical expenses are increasing. So, more money is required if a person gets admitted in the hospital. As the cost of medical care is very high, most of the insurance companies are having insurance policies with the accelerated death benefit feature. The cost paid by the insurance company on the insurance policy to the terminally ill for surrendering his/her policy is known as accelerated death benefit.

Another option is to sell the policy to a viatical settlement company. These companies buy this policy mainly for their investors. Some companies also buy the policies for themselves. Both, accelerated death benefit and viatical settlement are tax free. But if the benefits are used for a long term care, then the excess mount is taxable and should be shown when filing the tax returns. This is applicable if and only if it exceeds IRS per diem limit. So make sure that you show the proper amount when filing the tax forms. Make sure that you get the tax reduction by placing the accelerated death benefit or viatical settlement below the limit mentioned by them. So choose appropriate measures to keep it away from the tax zone.

Tax on Life Insurance death benefit

Tax Guide — Sun, 01 Feb 2009 08:49:10 +0000

Under normal condition one does not have to pay any tax on life insurance death benefit. But it can be taxable if the amount paid exceeds a particular limit as mentioned in the rules. The amount will be included in the gross taxable income if the amount paid by the life insurance company is more than what they agree to pay at the time of death of the person. This can be explained in a better way with the help of an example. Suppose if the life insurance death benefit is $60,000 and if the company paid you $60,500 at the time of payment. Then the additional $500 paid will be taken as the taxable amount and should be included in the tax return form while filing it. If the amount paid is equal or less than the amount agreed then it will not be included in the taxable amount. Certain companies pay the life instalment benefits on instalment basis. So, if the money is received in the form of installments then you can remove that amount from the taxable part. But proper proof should be given. Also by dividing the amount received into payment in different years one can free it from tax.

Tax on Sick Pay

Tax Guide — Thu, 08 Jan 2009 08:46:12 +0000

Sick pay is a type of wage received by the employee. So as per the rules all salaries and wages are taxable. Hence sick pay is taxable. So a person getting the sick pay must include this amount in the tax return before filing. It should not be left out. If left out then penalties would be charged as the pay will be reported in the tax return of the person who pays you the sick pay. It is a taxable income. It is the money received by a person in case if he faces any injuries or accidents. All companies will allot some amount of money for their employer’s sick pay. It is given as the health insurance allowance. The taxable amount should be submitted in a Form W-4S to the insurance company. This is to be done to withhold the IRS tax. If the premium for the health insurance is made through cafeteria plan then the premium will be taken as the one paid by your employer and benefits can be reaped by you on the tax returns if the money paid as premium was not included as taxable income to you. In case of long term care insurance it will be exempted from tax in most of the time.

Properties for which you can take depreciation tax deduction on one’s tax return

Tax Guide — Tue, 07 Oct 2008 17:51:44 +0000

There is a list of properties for which a depreciation tax deduction can be made. The properties that they mention in the list include those properties which are used in trade or business or other income generating activity. No depreciation in tax return can be obtained if the property is used by the person for his own interest. An example of it is the personal residence. The properties include equipment, machinery, vehicles, furniture and buildings. But tax depreciation is a difficult task. There is a system which generates the depreciation percentage tax deduction. It is called as the Accelerated Cost Recovery System. It will show the percentage and the eligibility criterion for obtaining the depreciated tax reduction. There are some items listed for which you cannot get the depreciation on tax. The things for which depreciated tax return is applicable include land and farmlands. Also property and other inventory which are made for sale are not eligible for obtaining the depreciated tax deduction. So, all properties are not eligible for depreciated tax return. So before applying for the depreciation tax deduction on tax return one has to make sure that he is eligible for that. The depreciation percentage should be found out. The Good Tax Guide.

Tax deduction on alimony paid to former spouse

Tax Guide — Wed, 24 Sep 2008 06:29:30 +0000

The money paid to a spouse or person as per certain agreement is called alimony. The agreement can be a separation agreement or divorce agreement. These agreements are usually made with those people from whom you separate from rest of your life. It does not involve any kind of property settlement amounts. The alimony must be included in the gross taxable income. It is applicable for you as well as for your spouse also. The rules regarding the taxation in the alimony category changes at different times.

Also in case any voluntary payment is made, no tax benefits will be given. In case of alimony, the payment should be made under an agreement. But one has to check for the payment limits that favours the tax deduction benefits. After this agreement you and your former spouse must not live in the same apartment. The payment liability to the spouse must be terminated on the death of the spouse. Also, if the former spouse received any taxable alimony from you then, he/she should report it. Also while making the agreement between you and your spouse make sure that you mention about the alimony which is not tax deductible for you and also for the spouse.