March 12, 2012
In blogging about more tax tips we decided to highlight some key points to today’s Internal Revenue Service’s (IRS) latest bulletin. For taxpayers who have a balance of taxes owing and are finding it difficult to keep up, today’s note expands on the IRS’ Fresh Start Program. Here are the 3 key areas:
- Penalty Relief – provides some relief for taxpayers from failure-to-pay penalties, essentially giving the taxpayer a six month extension to pay taxes
- Instalment payments – for taxpayers who cannot pay all the balance owing,IRS allows negotiated instalment payments, with new maximum limits of $50,000 and extended time frames to six years to pay off tax debt
- Offer in compromise – an agreement between a taxpayer and theIRS that settles the taxpayer’s tax liabilities for less than the full amount owed
For more detailed information on the above initiative, you should review the IRS link at http://www.irs.gov/newsroom/article/0,,id=255470,00.htm. You will need to check in, contact and apply to the IRS for some of these initiatives.
Helpful Tax Tips
Here are some addition tax preparation and filing tips and information:
- Get organized – ensure you have the proper documentation and forms for your tax return
- Pay attention to deadlines; April 17th is an important date
- Take advantage of tax deductions and incentives such as incentives around volunteering, donations, and charitable gifts
- Take advantage of tax exemptions on dependents
- Investigate and claim for the tax benefits for caring for parents
- This is the last year to claim the American Opportunity Tax Credit – be sure to claim this
- New form 1099-K – make sure you use this to report online income, payments received by credit cards, and other platforms such as PayPal.
- If you will be receiving a tax refund, spend it wisely, starting with paying down the most expensive debt with the highest interest rate charges
Deadlines to file are approaching, with over 1 month to go. Check out the IRS website for up to date information, forms and information on preparation and filing.
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