strategies-init

IRS Transcripts – Part Two – W&I and Return Transcripts

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IRS Transcripts – Wage and Income Transcripts

These types of IRS transcripts are a record of all of the wage and income data provided to the IRS by 3rd party providers including your employer, banks, financial institutions, brokerage houses, other government agencies, corporations, casinos, and a few others. All W2s, W2-Gs, 1099s, 1098s, 5498s, K1s, and other records of income on file for your social security number will be listed. Wage and income transcripts are most beneficial when preparing past returns because they are a quick and easy listing of income that you may have earned for that tax year. However, wage and income IRS transcripts should be checked for potential errors and compared with the information that you have in your records. 3rd parties can and frequently do make mistakes. Also, equally important, is to check your wage and income transcript for instances of identity theft. Wage and income transcripts are also an excellent provide insight into what information the IRS has on file for you. Although hopefully you will be able to prevent adverse collection activity before it occurs after reading this book, wage and income transcripts can give some idea of what they may come after (and how quickly they will be able to find it) if collection activity does occur.

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IRS Transcripts – Part One – IRS Account Transcripts

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To assist taxpayers and practitioners, the IRS will provide taxpayers with transcripts of the information that the IRS has on file. There are three main types of IRS transcripts that taxpayers should be aware of before checking their account. These are IRS account transcripts, IRS return transcripts, and IRS wage and income transcripts.

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What if I Cannot Pay an IRS Balance Due?

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In the tax world, to quote Benjamin Franklin, an ounce of prevention is worth a pound of cure. Almost all taxpayers can engage in some level of tax planning to their benefit prior to a return being filed. As a practitioner, I like to perform a mid-year check with my clients to review their current tax situations and to make sure they are on track with where we have identified they need to be. Although particularly helpful with self-employed individuals and those with small businesses, to ensure that they are making proper tax deposits, it can also be helpful for W2 employees who want to adjust their withholdings during the course of the year. In addition, I would recommend checking in with a tax professional to understand the tax consequences of any major life events. Getting married, having a child, changing jobs, getting a raise, buying a house, moving, caring for another individual, and a variety of other changes can all impact your future tax situation. It is always better to be able to be aware that you may have a balance due at the earliest possible juncture in order to try and minimize your liability.

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Tax Liability Resolution Options

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Once an IRS tax liability has become final, the taxpayer has a few options for dealing with an IRS liability. Each of these options carries its own advantages and disadvantages and taxpayers should take the opportunity to learn fully about the different ways of settling their balances before proceeding with one option or another. As a helpful guide to assessing what exactly the consequences of each action are, I have put together a short list of some of the advantages and disadvantages of each option.

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How to Choose an IRS Tax Return Preparer – Part Two

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In addition, I wanted to discuss IRS tax return preparers that I will identify as “others.” This would include enrolled agents, bookkeepers, and national tax preparation chains. Let us be clear from the outset: I know several of these individuals who are excellent and who I would trust with my own return (if the need for someone else to prepare my return ever arose). These people often make a great living or have a decent side business from preparing returns and are quite knowledgeable. Experience is the number one thing to look for when choosing an IRS tax return preparer.

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How to Choose an IRS Tax Return Preparer – Part One

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Introduction to Choosing a Tax Return Preparer

Tax return software, although extremely popular, is often only as smart as its user. I have amended numerous returns for individuals who have made serious errors using tax software. These have ranged from a family member missing out on a $2,000 refund due to sales tax deductions they did not report to a client who missed out on over $200,000 due to failing to properly account for net operating losses. It is important not to be pennywise and pound foolish. For anyone with more than a single W-2, who itemizes their deductions, has a Schedule C business, makes stock trades, or has had other complexities in the life that they may believe impacts their tax returns, please, please, please make the investment in order to have a professional tax return preparer prepare your taxes.

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Tax Season Survival Tips

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Introduction

Every tax season, many fear the tax return preparation process. Preparing and filing your taxes can be complicated and costly; not to mention the impending fear of owing money to the government. Tax season should not be this stressful though. With a little advanced planning and by following a few simple tips, you can make tax season painless as possible. Here’s how to make it through your annual filing obligation and save yourself both time and money.

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IRS Allowable Living Expenses – Part One

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Although a favorite saying of IRS revenue officers is that “The IRS is not a bank” and the Service does take collection of taxes owed seriously, the IRS is prevented from collecting assets that a person needs to survive and meet their basic living requirements. The IRS calls these “Allowable Living Expenses” and they are excluded from the calculation that collection agents use to determine a taxpayer’s reasonable collection potential. Keep in mind that regardless of the size of the liability, whether one thousand or one million dollars, the IRS will always allow the taxpayer to keep enough cash to pay for their allowable living expenses.

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