If I Work Remotely Where Do I Pay Taxes
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If I Work Remotely Where Do I Pay Taxes?

Working remotely simply means you work somewhere other than your company’s office either some or all of the time. Working remotely, especially in a different state than your employer, will undoubtedly affect your tax situation. Let’s take a look at taxes when it comes to remote work.

How Do I Pay Taxes If My Employer Is Located In A Different State?

If your employer does operate out of another state, you typically will not have to pay two different sets of remote work taxes. Oftentimes, employee-based income taxes are based on the state where you generate your income, not where the revenue is ultimately generated.

However, there are a few states that double-bill individuals for taxes. These states are listed here:

  • Connecticut
  • Delaware
  • Nebraska
  • New York
  • Pennsylvania

You can exempt yourself from this double taxation using the convenience rule, which says you may not have to pay twice if your employer requested you work in your current location.

How Can A Reciprocal Agreement Simplify State Taxes?

A reciprocal agreement exists between two states in order to simplify tax-gathering rules between one another. Under these terms, you will not need to file non-resident state tax returns. This means you only have to pay in one state.

As of the year 2023, there are 17 states that have reciprocal agreements, including the following:

  • Arizona
  • District of Columbia (DC)
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Maryland
  • Michigan
  • Minnesota
  • Montana
  • New Jersey
  • North Dakota
  • Ohio
  • Pennsylvania
  • Virginia
  • West Virginia
  • Wisconsin

Non-Resident Vs Resident State Taxes

State taxes bill non-residents and residents differently. Here’s a quick look at how the two are different:

  • Residents are taxed based on all income received while living in said state.
  • Non-residents are taxed on the income they performed in the state and from sources of income received from those living in the state.

For instance, if you are a permanent resident living in Rhode Island, you will pay taxes on all income. However, if your employer is located in Nebraska, you will also pay taxes from that state.

If you happen to reside in multiple states and own a home in each of them, the place where you spend most of the year is considered your domicile state. Some states do not require any personal income tax, which means you do not have to pay there. You still have to file taxes for any income earned there most times, though.

Remote Work Taxes FAQ’s

Let’s take a look at some of the most common questions asked about taxes related to remote work.

Do I Still File Taxes In My Employer’s State If My State Has No Income Tax?

Always check your W-2 upon arrival. If your employer reserved income from your tax return in their state, but your state features no income tax, it means taxes have been withheld from your income. You may be eligible for a refund, at this time. In this example, you’ll want to file a return in that state.

Do I Need To File Taxes In Two States?

If your state and your employer’s state both feature income tax, be prepared to file in both states. You will file as a resident for the state that you reside in, and if taxes are withheld by your employer’s state, you will file a non-resident return for that state.

Are There Any Tax Deductions For Remote Workers?

You must be self-employed to deduct expenses related to your remote job. If you are working freelance or as an independent contractor, you can write off job-related expenses on your taxes.

Does Working Remotely Make Me Self-Employed?

No, working remotely is not the same as being self-employed. You are considered an employee if you receive a W-2 from your employer. Head to IRS.gov if you are unsure about your work status.

Do Remote Workers Qualify For Home Office Deduction?

This will be dependent on your employment status. For instance, the home office deduction only applies to self-employed taxpayers. You can write off a portion of your home office expenses if your situation qualifies you as an independent contractor.

Conclusion

This guide can be used as a great starting point for remote work taxes. However, you will certainly have to do more research when it comes to the two states of your choosing.

Why Do I Owe Taxes

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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How Much To Contribute To 401(k) In Your 20s
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How Much To Contribute To 401(k) In Your 20s

Retirement may not be top of mind when you are in your 20s. However, it’s never to early to start contributing to a 401(k). Let’s take a look at how much you should contribute during your younger years.

How Much Should I Contribute To My 401(k) In My 20s?

There are several considerations to make when determining how much you should contribute. In general, it’s best to start with smaller contributions, and expand on the amount later on. Below, are four factors you must consider before contributing to your 401(k).

1. Determine Your Ideal Retirement Age

It’s crucial to really think about the age of your potential retirement. You’ll want to estimate when you’d like to retire prior to contributing to a 401(k). Of course, this can be hard to determine at such a young age, but you should already have an idea of what kind of lifestyle you’d like to enjoy in the future.

Start by deciding on your ideal retirement age, then work backward to figure out how much you’ll need to save each month to retire by that age. Compound interest will play a large role in helping you reach your desired savings amount.

2. Figure Out How Much You Can Save

After determining your retirement age, you can work to figure out what percentage of your income you’ll be able to save. Look at your after-tax monthly income and all your expenses. Figure out how much you have left over at this point. If it’s $400, consider putting at least half that amount into your 401(k).

You will be able to schedule automatic monthly withdrawals from your savings or checking account to put toward your retirement fund. After all, if the money goes directly to your retirement account, you likely won’t miss it.

3. Understand 401(k) Contributions

The financial experts recommend saving at least 15% of your pre-tax income and putting that toward retirement. One benefit of contributing to a traditional 401(k) is that this will be done using pre-tax income, meaning you’ll get a tax deduction for the contributions. For instance, if you make $3,000 per month, contributing $100 to your 401(k), you will only be taxed for $2,900 in the month.

Contributing early to your 401(k) gives you plenty of time to make your money back in case of any unfortunate economic swings. Even the most seasoned investors and experts have trouble predicting turbulent economic times.

An employer match is another reason why you should contribute to a 401(k). Many employers will match your contributions up to a certain extent. Essentially, an employer match is free money used to grow your retirement savings.

4. Consider Opening Traditional Or Roth IRA

You should consider opening a traditional or Roth IRA alongside your 401(k). A Roth IRA is funded with your after-tax dollars, while the traditional version is funded via pre-tax income. Both of these IRAs allow you to withdraw money without penalty after the age of 59.

If you have any extra money left in your budget at the end of the month, funding IRAs can put you on a fast track to a comfortable retirement. The more time your funds have to grow, the larger they will be come time for retirement.

Conclusion

If you are still unsure about how much you should be putting in your 401(k), then consider reaching out to a financial expert for advice. Starting to save now will prevent you from having to contribute higher amounts in the coming years.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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Why Do I Owe Taxes
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Why Do I Owe Taxes?

There are many reasons why you might owe the Internal Revenue Service this year. It’s certainly possible to owe taxes even when you have withheld money from your paycheck all year.

5 Reasons Why You May Owe Taxes This Year

Because everyone’s situation is unique, there are several different reasons why you may owe money on your taxes. Five common reasons are outlined below.

1. Failing To File

Failure to file on time is a common reason why you’ll end up owing taxes. State tax dues will vary. Whenever you file late and don’t apply for an extension on time, you can incur late fees and interests that will increase your tax bill. If you are wondering why you still owe taxes this year, it’s certainly possible that you submitted a tax return after the due date.

2. Not Withholding Enough From Your Paycheck

The amount that’s taken out of your paycheck each year is an estimate of what you will owe when it comes time to file taxes. You will receive a tax refund if you overpay. If you do not pay enough throughout the year, though, you will end up with a bill come tax season.

3. Tax Code Changes

Recent tax code changes will undoubtedly impact how much you’ll owe in taxes. If you expect to receive a refund each season, it may not be the case with new tax laws put in place. When the IRS updated its tax brackets, it’s possible you were put into a new category, altogether.

4. Changes In Deductions

If you didn’t qualify for typical deductions and credits you expected, then you may owe taxes this year. For instance, the earned income tax credit comes with annual limits. If you have made more money this year than in previous tax years, you may not qualify. Many parents will take advantage of the child tax credit, which comes with income limits and age restrictions.

5. Higher Income

Receiving higher pay this year will mean you are going to pay more in taxes. If you worked more hours while getting paid hourly or a salary gets raised, you could have been bumped into a higher tax bracket.

What To Do If You Owe Taxes

Thankfully, there are numerous options if you cannot pay your entire tax bill when it’s due. Here are a few payment options for you to consider:

  • Sign up for an IRS installment plan.
  • Apply for a full-time agreement if you are able to pay taxes within 120 days.
  • Make an offer in compromise.
  • Consider a loan or other financing options to make tax payments.

Additional Reasons For Owing Taxes

  1. Underreporting Income: Failing to report all of your income on your tax return is a common reason for tax debts. This can result from unintentional errors, such as forgetting to report freelance income or investment gains, or intentional efforts to hide income.
  2. Failure to Pay Estimated Taxes: If you’re self-employed or have income not subject to withholding, you are generally required to make estimated tax payments throughout the year. Failure to make these payments or underestimating the amount owed can lead to a tax debt when you file your annual return.
  3. Changes in Tax Laws: Tax laws can change from year to year, and sometimes taxpayers are unaware of new deductions, credits, or changes in tax rates. Failing to take advantage of available tax breaks can result in a higher tax bill.
  4. Tax Credits or Deductions Disallowed: The IRS may disallow certain tax credits or deductions if you don’t meet the eligibility criteria or if you can’t provide adequate documentation to support your claims. This can result in a higher tax liability.
  5. Tax Penalty Assessments: The IRS can assess various penalties for non-compliance, such as late filing, late payment, or underpayment of estimated taxes. These penalties can significantly increase your overall tax debt.
  6. Tax Audits: If the IRS audits your tax return and identifies discrepancies or errors, it may lead to additional taxes, penalties, and interest. Audits can be triggered by various factors, including red flags on your return or random selection.
  7. Unpaid Payroll Taxes: If you’re a business owner, failing to withhold and remit payroll taxes for your employees can result in substantial tax debts. The IRS takes payroll tax compliance very seriously.
  8. Tax Fraud: Engaging in fraudulent activities to evade taxes is illegal and can lead to severe penalties, including criminal charges. Tax evasion can result in substantial tax debts and legal consequences.
  9. Inheritance or Windfall: Receiving a large inheritance or windfall may lead to unexpected tax liabilities, especially if you’re not prepared for the tax consequences of the transaction.
  10. State Tax Debt: In addition to federal taxes, you may owe state taxes. State tax debts can occur for similar reasons as federal tax debts, including underreporting income, failing to pay estimated taxes, or non-compliance with state tax laws.

It’s crucial to stay informed about your tax obligations and ensure accurate and timely filing and payment of taxes. If you find yourself owing taxes, it’s advisable to address the issue promptly by filing your return or payment, seeking professional tax assistance, or exploring options such as installment agreements, Offer in Compromise, or penalty abatement if you’re unable to pay the full amount owed.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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Tax Attorney Cost
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Tax Attorney Cost

On average, a tax attorney costs about $300 per hour with average tax lawyer fees ranging from $200 to $400 in the US for 2023. However, hiring an experienced tax attorney that works in a large firm can cost you upwards of $1,000 per hour. 

  • Lowest Cost: $200 per hour.
  • Average Cost: $300 per hour.
  • Highest Cost: $400 per hour.

average cost of tax attorney

Average Tax Lawyer Fees

According to Cross Law Group, “Tax attorneys generally charge either an hourly rate or a flat fee for their services. Hourly Rate: The majority of tax attorneys charge by the hour. Every attorney will charge a different hourly rate, but most rates are between $200 to $400 per hour.“

Hiring a tax attorney for installment agreements with cost an average of $1,250 with average prices ranging from $750 to $1,500. Offers in Compromise cost an average of $5,000 with average fees ranging from $3,500 to $6,500. For a simple IRS audit you can expect to pay a tax lawyer anywhere from $2,000 to $3,500 while a complex audit can cost $5,000 or more. Penalty Abatement costs an average of $1,750 with average fees ranging from $1,000 to $2,500. IRS Appeals with cost anywhere from $5,000 to $7,500 and Tax Court Litigation will cost upwards of $10,000 or more. *Disclaimer – These our not the actual cost of our Tax Debt Advisory services. Contact Tax Debt Advisors to get an actual quote for the IRS help you need.

Do I Need a Tax Attorney?

Believe it or not, you actually don’t have need a tax attorney to settle IRS debt. Instead why not hire a Tax Debt Advisor who can do the same thing as a tax lawyer, and who has been helping customers dealing with tax issues since 1977. Scott Allen E.A. from Tax Debt Advisors has helped over 108,000 people settle their problems with the IRS and can help guide you through any tax situation you may be dealing with. Avoid paying the high cost of hiring a tax attorney when you don’t need one and save money by hiring a tax debt advisor today! 

Settle Debt With Tax Debt Advisors

Need help with wiping out your old tax debt? Tax Debt Advisors has helped resolve over 108,000 debts. Receive a tax debt consultation today by giving Scott a call today at 480-926-9300. Tax Debt Advisors can help negotiate an offer in compromise on your behalf to finally settle your tax debt.

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Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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Can I Retire At 60 With 500K
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Can I Retire At 60 With 500K

With discipline, budgeting and meticulous planning, retiring at age 60 with 500K saved is possible! Follow our how-to guide for early retirement below.

How To Retire At 60 With 500K

While it is certainly possible to retire with 500K, the process will require extreme discipline. It’s common belief that $1-$2 million is needed for a happy and healthy retirement. With two individuals receiving pension or social security, though, retirement with less money can still work.

Follow this simple step-by-step guide below toward retiring by 60 with 500K in the bank.

Step 1. Live On A Budget

Is it possible to keep enjoying your current lifestyle while planning and saving for the future at the same time? Yes it is, so start by putting your housing, utilities, healthcare and transportation costs on a strict budget. When coming up with a budget, the financial experts suggest reviewing all your bills from the past year.

Figure out what costs you can cut back on, then determine exactly how you’ll take the needed steps. If retiring by age 60 is your desire, you cannot wait to start budgeting until your 40s. Start budgeting today!

Step 2. Save Early And Often

Saving as much as you can right now will undoubtedly make your transition to early retirement easier. Save as much as you can afford starting at a young age. There are several different ways to save nowadays, including a Roth or Traditional IRA.

Take advantage of any other savings opportunities that may come your way, such as an unexpected work bonus. Try to put your extra money toward your retirement fund. Ask your employer if they will fully match any retirement plan amount.

Step 3. It’s All About Location

The third step of the savings process is the most difficult step. Consider the idea of moving to a location with lower housing costs, if possible. Of course, this is a very tough ask of young professionals who may be raising a family. The good news is moving could apply to your retirement instead of your working days. Retiring with 500K will mean you most likely won’t live in the most luxurious area. Location is key when it comes to a healthy retirement.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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When Can You Stop Filing Taxes
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When Can You Stop Filing Taxes?

Individuals can stop filing income taxes at age 65 if the following qualifications are met:

  • You are an unmarried senior making less than $14,250.
  • You are a married senior who is filing jointly and making less than $26,450.
  • You are a qualifying widow earning less than $26,450.

The IRS wants everyone to file a tax return when their gross income surpasses the total of the standard deduction for their filing status, in addition to one exemption amount. These specific filing rules still apply to senior citizens currently living on their Social Security. However, seniors do not consider their Social Security income as gross income. You do not need to file a tax return if Social Security is your only source of income.

When Must Seniors File Taxes?

For the tax year 2021, seniors must file taxes if unmarried, at least 65 years old and gross income was $14,250 or more. If you live on your Social Security benefits, however, you do not include this in your gross income. If these benefits are the sole income you receive, then your gross income amounts to zero, meaning you will not have to file a federal income tax return. If you do earn additional income that is not exempt from being taxed, you must determine whether or not that total exceeds $14,250.

In previous tax years, these amounts were based on the year’s standard deduction, in addition to the exemption amount for both your age and filing status. For tax years after 2018, only the standard deduction is applied. This is because exemptions are no longer used in calculating your taxable income.

You must file a return if your gross income is $27,800 or more if you and your spouse are at least 65 years old and filing jointly. If your spouse is under age 65, the threshold amount goes down to $26,450. Be aware that these income thresholds apply to the 2018 tax year and they typically increase each year.

When To Include Social Security In Your Gross Income

There are a few circumstances that call for seniors to add Social Security benefits to their gross income. If you are married and filing an individual tax return while residing with your spouse during the year, 85% of your benefits are considered gross income. This may require you filing a tax return as a result.

Tax Credits For Seniors

There are several ways to decrease the amount of tax you will pay on your taxable income, even if you have to file a tax return. As long as you are at least 65 years old and have income from a source(s) other than Social Security that is not too large, then tax credits for seniors, the elderly and disabled, can lower your tax bill using a dollar-for-dollar arrangement. This tax credit, though, only comes in handy when you owe tax to the IRS.

What Age Do You Stop Paying Taxes On Social Security?

You are eligible to stop paying taxes on Social Security when you are age 65 and your income is not too high.

TurboTax says, “As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill on a dollar-for-dollar basis. However, this tax credit is only useful when you actually owe tax to the IRS.”

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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Real Estate Taxes vs. Property Taxes
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Real Estate Taxes vs. Property Taxes

If you’re a homeowner, you probably know what real estate taxes are. You might even refer to them as property taxes since the terminology has become interchangeable. A lot of people may not realize the two taxes are different.

Though you may whine when getting your “property tax” statement letting you know the amount of tax you are going to have to pay annually or the amount your mortgage company is going to shell out for your real estate taxes. When you have a mortgage, it’s typically part of your payment. The misperception comes from the word “property”, due to the fact that there is additionally a personal property tax.

The Way Real Estate Taxes Work

Real estate taxes are yearly taxes homeowners are required to pay on the evaluated value of their house. Each city and state metro area establishes how much the real estate tax rate is by multiplying the fair market price of a home by the prearranged percentage in that metro area to come to the tax assessment valuation. When hearing people complain about the high cost of real estate taxes in their around their home. This is what they’re complaining about, and higher tax rates are typically found in larger cities such as Phoenix or Houston.

The amount of real estate tax you are going to pay is subject to how much your home is valued in addition to the part of the country your house is located in. For instance, a rural city in Arkansas probably has a lower real estate tax rate than popular big cities on say, a costal city or in a major metro area such as San Diego or Denver.

What Are Personal Property Taxes?

Property tax is different name for personal property tax. Your personal property is in reference to items that are not enduring, or items that you can move. For instance, your vehicle is personal property and when it gets registered each year, you’re basically paying a property tax on it.

Things such as boats, jet skis, campers, RVs, side by sides, farm equipment, and business equipment such as desks or equipment are taxed under personal property. Because they can all be moved, the personal property tax is estimated on their value, likewise to the way your house’s tax value is estimated.

The amount you are going to pay for your personal property tax on these articles also is subject to your metro area and city, and the average personal property tax rate in addition to how much estimated value each personal article is worth.

Why Real Estate and Personal Property Are Different Taxes

First, the tax rate that you are going to pay is different. It is enough to say that real estate taxes are a lot higher than personal property taxes. For instance, you can usually register a vehicle annually for a fee of $45 to $80, with a value of $25,000 to $65,000. Your home is assessed at a lot higher value with a lot higher tax rate. Even the most affordable real estate taxes in the US for a commonly valued home would probably be several hundred dollars.

Second, you might be able to deduct real estate taxes on the home as costs on your federal tax return when you reside in the home and itemize deductions on Schedule A. A personal property tax may also be deducted when you itemize, however the deductions are going to be a lot less on a jest ski or motorhome than they would on your house and go in a different place on the federal return. This isn’t only since your personal property usually has less value than a home but also since it’s taxed at a lower rate than the real estate tax.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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What is a Tax Lien?
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What is a Tax Lien?

Federal tax liens are the government’s legal claim toward your property if you disregard or fail to pay your tax debt. The lien safeguards the government’s involvement in all of your property, comprising of real estate, private property and financial assets. Federal tax liens exist following:

The IRS:

  • Posts your overdue balance on the books (evaluates your liability);
  • Mails you a notice explaining the amount you owe (22 CFR § 34.8); and

You:

  • Disregard or decline to entirely pay the debt in time.

The IRS files public paperwork, known as Notice of Federal Tax Lien, to give notice to creditors that they legally have rights to your property.

How to Be Free of Your Tax Lien

Paying your tax debt – entirely – is the ideal way to be free of your federal tax lien. The IRS discharges your lien within 30 days following you having paid the tax debt owed by you.

When circumstances are in the best interests of both you and the government, other options for decreasing the effect of a lien exist.

Discharge of property

A “discharge” withdraws the lien from particular property. There are numerous Internal Revenue Code (IRC) requirements that establishes eligibility.

Subordination

“Subordination” doesn’t eliminate the lien but enables other creditors to move in advance of the IRS, in which could make it easier to obtain a loan or mortgage.

Withdrawal

A “withdrawal” eliminates the public Notice of Federal Tax Lien and asserts that the IRS is not in competition with additional creditors for your assets; nevertheless, you are still responsible for the amount owed.

2 added Withdrawal alternatives were the consequence of the Commissioner’s 2011 Fresh Start initiative.

One option may permit withdrawal of the Notice of Federal Tax Lien following the lien’s discharge. Common eligibility comprises of:

Your tax liability has been fulfilled and your lien has been discharged; and also:

  • You are in accordance with the prior 3 years in filing – every individual return, business return, and informational return;
  • You are up to date on your approximated tax payments and federal tax deposits, as relevant.

The other alternative may permit withdrawal of your Notice of Federal Tax Lien if you have entered in or modified your regular installment contract to a Direct Debit installment contract. Common eligibility comprises when:

  • You are a qualifying taxpayer (such as individuals, businesses having income tax obligation only, and out of organizations with any kind of tax debt)
  • You owe twenty-five thousand dollars or less (When you owe more than twenty-five thousand dollars, you could decrease the balance to twenty-five thousand dollars before petitioning withdrawal of the Notice of Federal Tax Lien)
  • Your Direct Debit Installment Contract is required to fully pay the amount owed by you inside of sixty months or prior to the Collection Statute expiring, whichever comes first
  • You are fully compliant with other filing and payment obligations
  • You’ve carried out three direct debit payments in a row
  • You cannot have defaulted on your present, or any prior, Direct Debit Installment contract.

How a Lien Impacts You

  • Assets — A lien is attached to each of your assets (like property, stocks, vehicles) and to future assets obtained throughout the length of the lien.
  • Credit — After the IRS has filed a Notice of Federal Tax Lien, it could limit your capacity to obtain credit.
  • Business — The lien is attached to all business property and to every right to business property, including assets.
  • Bankruptcy — When you are filing for bankruptcy, the tax debt owed, lien, and Notice of Federal Tax Lien could continue following the bankruptcy.

Avoid a Lien

You can avoid federal tax liens simply by filing and paying each of your taxes in full and when they are due. If you aren’t able file or pay when they are due, don’t disregard the letters or communication you receive from the IRS. If you are unable pay the full amount owed, payment options are available to assist you in settling your tax debt in due time.

Lien vs. Levy

Liens are not levies. A lien attains the government’s involvement in your property when you fail to pay your tax debt. A levy is going to take the property to pay the tax debt. If you fail to pay or make arrangements for settling your tax debt, the IRS could levy, seize and sell any kind of tangible or personal property that you are owner of or have an interest in.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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Can The IRS Take Your 401K
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How Many Years Does The IRS Go Back To Collect On Unfiled Tax Returns?

The IRS will require any taxpayer to go back and file your last six years of tax returns. Taxpayers are encouraged by the IRS to file all missing tax returns if possible, though.

All payments can be arranged via the IRS, with several programs like installment agreements and offer in compromise settlements, among others. 

How To File Back Tax Returns

Here are five simple steps to follow when filing back tax returns:

Set Up Payment Agreement With IRS

If you cannot afford to pay back your tax returns immediately, you are allowed to set up payment agreements with the IRS. There are numerous payment options available, depending on your financial needs. If you don’t set up a plan and avoid paying the IRS altogether, the IRS can and likely will put their collections department on the case. 

Only Go Back Six Years

Before starting this process, call the IRS or a trusted tax professional. Confirm with them that you only have to go back as far as the past six years for unfiled taxes. 

Help With Transcripts

It is crucial to match the IRS’ exact records when preparing a return. Trace your income history by first requesting wage and income transcripts from the IRS. The IRS can question the accuracy of your return without this information being obtained. 

Request Penalty Abatement

It is true that the IRS can be lenient in these situations. You can request that the IRS not charge you for failure to pay or face the burden of other financial penalties. You can file a first-abatement for the first year if you qualify. Another option would be to file a reasonable cause agreement for some late filing relief. Always be aware of any penalties you may be facing ahead of time. 

IRS May Have Already Filed A Return For You

It is possible for the IRS to start a process referred to as a substitute for a return up to three years after the due date of return. Whenever you file a return to replace the substitute of return, the IRS will check the replacement return by comparing it to statements already on file. In some cases, this process can take as long as four months for the IRS to complete.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation. This family owned tax practice has been serving the public since all the way back in 1977!

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2024 arizona tax brackets
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What Are Tax Audits?

A tax audit is when the IRS chooses to look into your tax return a little more comprehensive and verify that your income and deductions are true. Usually, your tax return is selected for audit when something you entered on your return is not common. There are 3 main kinds of IRS audits: a mail audit, an office audit and a field audit.

Mail Audits

No matter what kind of audit the IRS chooses to carry out, you will get notification of it through mail. A mail audit is the most straightforward kind of IRS review and doesn’t require you to meet with an auditor personally.

Usually, the IRS petitions for additional documentation to prove different items you reported on your return. For instance, if you claim $5,000 in philanthropic deductions, the IRS might send you a letter calling for evidence of your donations. Typically, submitting adequate evidence will complete the audit in your favor if the IRS is content.

Office Audits

An office audit is a face-to-face audit carried in a local IRS office. This type of audit is usually more detailed than a mail audit and typically comprise of questioning by an audit officer about details on your return. You will be requested to bring particular information to an office audit, like the books and records for your company or your personal financial institutional statements and receipts. You additionally have the right to bring a CPA or attorney to represent you during the audit.

Field Audits

A field audit is the most comprehensive kind of review that the IRS carries out. In such a situation, an IRS agent will carry out the audit at your home or business. Usually, field audits are done when the IRS is double checking more than one deduction. A field audit is typically very detailed and will cover a lot, if not all, issues on the return.

Potential Results of an Audit

There are three potential results of an IRS audit. When the IRS is content with your explanations and the documents you submitted, then they won’t change anything on your return. If the IRS suggest changes to your tax return, you could either agree and approve the changes or question the agent’s evaluation. If you are in agreement, you will sign an review report or other document offered by the IRS and establish some kind of payment agreement. When you are in disagreement with their findings, you can schedule a meeting with an IRS supervisor to further examine your case or you can petition for a formal appeals meeting.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

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