Tax Day Freebies
While tax day might be a terrible day for some, there are some freebies out there that you can take advantage of. Read more here…
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Iggy Azalea Tax Troubles & Tips For Paying Off The IRS
Pop singer Iggy Azalea has skirted confirming rumors of IRS troubles to the tune of $400,000. Iggy recently tweeted @IGGYAZALEA “The IRS gave the option to pay them monthly or lump sum. i picked monthly, who wouldnt?”
Great question Iggy. Read below for facts regarding late payments, installment agreements and tips for taxpayers who owe the IRS money.
Failure-to-pay Penalty – If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If Iggy owes the Feds $400,000, that means she is accruing $2,000/month of failure-to-pay penalty until her installment agreement is accepted, then reduced there-after.
Installment Agreements – An installment agreement is an option for those who cannot pay their entire tax bills by the due date. Penalties are reduced, although interest continues to accrue on the outstanding balance. In order to qualify for the new expanded streamlined installment agreement, a taxpayer must agree to monthly direct debit payments. Taxpayers seeking installment agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement (Form 433-A or Form 433-F). Taxpayers may also pay down their balance due to $50,000 or less to take advantage of this payment option. The maximum term for streamlined installment agreements has also been raised to 72 months from the current 60-month maximum.Ten Tips for
General Tips for Taxpayers Who Owe Money to the IRS –
- Tax bill payments If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS.
- Additional time to pay based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at www.irs.gov or by calling 800-829-1040.
- Credit card payments You can pay your bill with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card contact one of the following processing companies: Link2Gov at 888-PAY-1040 (or www.pay1040.com), RBS WorldPay, Inc. at 888-9PAY-TAX (or www.payUSAtax.com), or Official Payments Corporation at 888-UPAY-TAX (or www.officialpayments.com/fed).
- Electronic Funds Transfer You can pay the balance by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer, use the Electronic Federal Tax Payment System by either calling 800-555-4477 or using the online access at www.eftps.gov.
- Installment Agreement You may request an installment agreement if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments.
- Online Payment AgreementIf you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
- Form 9465You can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope you received from the IRS. The IRS will inform you (usually within 30 days) whether your request is approved, denied, or if additional information is needed.
- Collection Information Statement You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
- User fees If an installment agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43.
- Check withholding Taxpayers who have a balance due may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. A withholding calculator at www.irs.gov can help taxpayers determine the amount that should be withheld.
More info about Iggy’s Tax Troubles
Call Mr. Smart Tax, Inc. if you need help with IRS tax debt relief. (800) 425-0570
Best and Worst Job Prospects Per Industry
While the government talks about low unemployment figures, there is strong evidence that a lot of people have left the work force thereby artificially lowering the unemployment rate. Before you consider taking on a new career take a look at the following Economic Policy Institute graph illustrating unemployed vs job openings per industry.
IRS Urged To Improve Corporate Tax Collections
Per the guidance of Senate Finance Committee ranking member Ron Wyden, Oregon-Dem, the IRS is being urged to establish a better system of collecting corporate taxes that are owed, but not paid. Wyden hopes to improve the collection of corporate taxes and is leading an investigation into the IRS collection efforts during next weeks budget hearings with the U.S. Treasury Department. Read more here…
California’s “Jock” Tax Explained
Better listen up Cam. California, like many other states, taxes a percentage of professional athletes’ income from “duty days” in the state. Duty days are days services are performed under contract during the pre-season, regular-season and post-season. Each state will get a pro-rata share of the professional athlete’s annual income allocated by duty days performed in the state divided by total duty days multiplied by annual compensation. Super Bowl L will be played in California where the top tax bracket is 13.3%.
Example: If Cam Newtown, the QB of the Carolina Panther’s, earns $13-million in 2015-2016 seasons and he has 200 total duty days, 10 of which are duty days in California, then he will have $650,000 of California taxable income.
If you have any tax questions please call Mr. Smart Tax, Inc. today! 949-877-3143 or toll-free 1-800-425-0570 or email us at Contact@MrSmartTax.com
Real Estate Inherited From a Deceased Spouse? Step Up Your Tax Knowledge
Did you inherit real estate from a deceased spouse? The internal revenue code has special tax treatment for valuing the basis of inherited property regardless if you have estate tax filing requirements and no doubt this will impact you.
If the inherited property has appreciated in value, the surviving spouse will generally receive a step up in basis of the inherited property to the fair market value (FMV) at:
1) the date of decedent’s death or
2) on the alternate valuation date (within 6 month of the date of death).
Further, in community property states (i.e. California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), married individuals are typically considered to each own 50% of the community property. As such, when either spouse dies, the entire value of the community property, including the part owned by the surviving spouse, receives a step up in basis to the FMV. For this rule to apply at least 50% of the value of the community property must be included in the deceased spouse’s gross estate regardless if the deceased spouse’s estate must file a estate tax return.
These rules can come in handy when a surviving spouse is in need of liquid capital. It should be noted that this special tax treatment can have adverse consequences if not handled correctly. Consult your tax adviser for more information.
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