Archives for December 2011

5 Essential End Of The Year Tax Planning Tips From The Tax Resolution Institute

End Of The Year Tax Planning Tips

End Of The Year Tax Planning Tips

Recognizing the importance of tax planning as 2011 ends and 2012 begins, the Tax Resolution Institue offers you this handy guide of 5 essential end of the year tax planning tips. Some may apply to you and some may not, but we are certain that there is at least two or three tips in this document that will help you with your tax planning. After all, although the Tax Resolution Institute focuses on helping individual and companies resolve delinquent tax debts, we also believe in providing techniques and strategies as a form of prevention to help you avoid such serious tax problems.

1) Sell Losing Stocks By The End Of The Year To Offset Capital Gains

One strategy you can use to reduce your taxes is to examine your investment portfolio and make sure to offset any capital gains by selling the stocks with capital losses. Capital losses offset capital gains in the year that the investments are sold off. However, if your losses exceed your profits, then the net loss is tax deductible but only up to $3,000 in net losses for that year. Still, the remainder of those losses carry over to the subsequent year as what is described as a “Capital Loss Carryforward” by the Internal Revenue Service

In addition, you must be careful when timing the sale of any losing positions. Any purchase of “substantially identical stock or securities” (from Publication 550) within 30 days of selling a security at a loss will be deferred. The key is to sell one investment at a loss, and purchase a similar (but not “substantially identical”) investment that helps build your portfolio. Always get the advice of a tax planning professional when making such a decision.

2) Be Fully Aware Of Tax Credits You Can Use To Lower Your Tax Bill

Yes, when it comes to tax credits, it often seems that the qualifying rules for each program  are both complex and overly specific.  Nevertheless, you should explore any or all of the options to see if they can be used to lower your overall income tax debt for that calendar year. Here are some of the tax credits used most often:

A. Child Tax Credit + Child and Dependent Care Credit:

The child tax credit provides you with a tax credit of $1,000 per qualifying child under the age of seventeen.  This credit is phased-out for taxpayers with modified adjusted gross incomes (AGI) in excess of $110,000 for married-joint filers, $55,000 for married filing separately, and $75,000 for all other taxpayers. In addition, if you’re paying someone else to care for a child under age 13 so you can work, then you may be able to claim the child and dependent care credit.

B. Hope and Lifetime Learning Credit:

If you are paying secondary education expenses, then the American Opportunity Credit, Hope Credit and Lifetime Learning Credit provide tax credits up to $2,500 for each qualifying student enrolled in a qualifying institution of higher education.

C. Helping The Environment – Hybrid Car Credit + Energy Saving Devices:

If you buy or lease a new hybrid car or truck, then you may be eligible for a tax credit of $250 to $3,400 per car depending on the fuel economy of the vehicle.  New car manufacturers will provide you with the details of these tax savings programs and you can also can find them online. In addition, if you have installed some of the newer energy saving devices in your home such as air conditioners, water heaters, furnaces, boilers or solar panels, then you may be eligible for a tax credit of up to $2,000.  Check with your utility company to find out which energy saving devices provide tax credits or rebates.

3)  Place Funds In Your 401k Retirement Account

401k Contributions Key For Tax Planning

401k Contributions Key For Tax Planning

If you are looking to lower your tax bill, one of the most effective ways to keep more of your gross income is to have it directed into a 401k retirement account. The 401k rules are quite generous when it comes to lowering income.  On a pre-tax basis you can invest up to $17,000 in 2012 (16,500 in 2011), and your contributions are often matched by your employer. Such an investment for your future security is nothing less than a win-win.


4) Please Do Not Forget Or Ignore Your Gambling Earnings And Losses

In this modern age of high-stakes poker online, in the casinos, and on television, more and more people are gambling each year with tremendous losses and some excellent earnings. Whether you play poker or back your favorite college team with a bookie, shoot craps or bet on the horses, all gambling winnings must be reported as taxable income. In addition, gambling losses may be claimed as deductions, up to the amount of your winnings. What is essential to remember is that gambling winnings and losses must be reported separately. If you file a tax return with with the IRS and do not report such figures, it is considered to be tax evasion.

5)  Organize And Maintain Your Paperwork And Records

Yes, we know this seems like a hassle, but it is a necessity as well? The IRS recommends that you keep all tax-related records for 3 years in case of an audit. But some old tax documents, such as last year’s W-2’s, can come in handy when you are filling out your tax return this year.

Where Are All Of My Financial Papers?

Where Are All Of My Financial Papers?

Here are examples of tax-related documents you should organize:

  • W-2 forms
  • Pay stubs for the year
  • Mortgage payment stubs and/or home purchase closing statement
  • Receipts from anything you might claim as an itemized deduction
  • Receipts from donations given to any charity, including text message donations
  • Any receipts for business travel expenses + your car mileage log for business use
  • Credit card statements and bank statements, including canceled checks
  • Medical bills (particularly if exceeding 7.5% of your income)
  • 1090G form (for deducting state or local income taxes)
  • 1090 forms (from any dividends or other income paid to you)

To make your mountain of documents easier to store, try scanning them and keeping them as PDF files. This way you can print them out if you need them. If you do this, always remember to back up your computer. The IRS will not take kindly to the excuse that you scanned your financial documents and your hard drive failed. Always be careful!

That covers many of the bases for now. The Tax Resolution Institute are not only experts when it comes to tax resolution services, but we also have extensive experience in tax planning and tax prevention strategies. Contact us today for a free consultation so we can help you ensure the profitability of your financial future.

A Christmas Present Of Essential Tax Information For California Taxpayers From The Tax Resolution Institute

Christmas should be a universal holiday for everyone, a time of seasonal relief and family love and financial support. The Tax Resolution Institute knows how many California taxpayers are in trouble this year as 2011 comes to a close. We want to provide with a Christmas present of essential tax information to help make 2012 a wonderful year for you and your family. Although the statute of limitations for Federal Tax Collection tends to be ten years, the statute of limitations for California Franchise Tax Board is twenty years. In this economic crisis, they are going after ancient tax debts with a particular vengeance these days.

Christmas Awareness - Extended Statute of Limitations

Christmas Awareness - Extended Statute of Limitations

The California Franchise Tax Board is not just going after delinquent income tax bills of current California residents. If you once lived in California and failed to pay your state income taxes, they are coming after you in Michigan and New York, Connecticut and Ohio, Illinois and Florida, Nevada and Pennsylvania. It does not matter what state you now live in, if the California Franchise Tax Board comes after you, they will levy your bank accounts and take tax collecting actions against you. California is in economic crisis with a huge deficit so the revenue agents from the Franchise Tax Board have been given a mission to dig up and collect all past due income tax debts to the state.

The statue of limitations for Federal tax collection in the vast majority of cases is ten years. The statute of limitations limits the time during which an action can be brought by the IRS for a tax audit and the time for IRS tax collection measures and attempts. In general, there is a 3-year SOL (statute of limitations) for IRS audits of your tax returns and a 10-year SOL for IRS collection attempts. There are some exceptions, particularly in cases involving criminal activity and illegal tax evasion. If you knowingly filed a false tax return in order to avoid paying taxes on taxable income, the statute of limitations is waived by the IRS because it becomes a criminal matter.

Christmas Present of Tax Awareness

A Christmas Present of Tax Awareness

Our Christmas present to you is one of awareness if you live in California and you believed you have avoided any back income tax problems because the IRS 10-year SOL has passed. This is not the case. When it comes to collecting income taxes, unlike the vast majority of states in the union, the California Franchise Tax Board can come after you for twice as long as the Internal Revenue Service. Just because the Federal statute of limitations has passed, it does not mean that you are out of trouble and in the clear. California will not stop until they collect your tax debt. If you need professional tax help and the best in tax resolution services, please contact the Tax Resolution Institute in the coming year. We are here as a valuable resource to help you find the financial freedom you deserve!



From CNN: President Obama & House Speaker Boehner Square Off In Payroll Tax Fight With Zero Progress

By Tom Cohen and Alan Silverleib at CNN, the National Payroll Tax Cut that was supposed to be extended to businesses and the American people with a temporary compromise by Congress for an additional two months made zero progress before shutting down for the holiday break. As the Senators and Representatives take off for a season of good cheer, American business owners still do not know whether they will continue to have a break in payroll tax cuts to help them out next year.

John McCain explained the conflict being caused by the Tea Party radicals the best: The lingering dispute is hurting us, veteran Republican Sen. John McCain of Arizona told CNN, adding that the reality of the issue is that the payroll tax cut must be extended to help out Americans still struggling in the economic recovery.

Payroll Tax Cut Helps Everyone

Payroll Tax Cut Helps Employers And Employees

Let’s face the truth! The Tax Resolution Institute recognizes that the first priority of the Federal government, even as an election year rapidly approaches around the bend, is not to take care of and make sure the American business owner is secure and comfortable as the economy continues to be a roller-coaster ride. If you company has serious tax issues and you are confronting a payroll tax debt, contact the Tax Resolution Institute today for help.

Here is the article, cut down to size, as it basically appeared on…

Washington (CNN) — The congressional impasse over extending the payroll tax cut became a showdown Tuesday between President Barack Obama and House Speaker John Boehner. After the Republican-controlled House passed a measure calling for more negotiations, Boehner made public a letter to Obama that urged him to order the Senate back from its holiday break to take part in further talks.

Boehner: ‘I need the president to help’


Leaders in the Democratic-controlled Senate reject that idea, and Obama agreed with them, telling reporters in a previously unscheduled appearance that the House must approve a two-month extension passed by an 89-10 vote in the Senate. “The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1,” Obama said. “It’s the only one.”

The House motion, passed Tuesday with no Democratic support on a 229-193 vote, expressed the chamber’s disagreement with the Senate plan and called for the dispute to be immediately taken up by a House-Senate conference committee — something already ruled out by Senate Majority Leader Harry Reid, D-Nevada. However, Boehner and the Republican leadership prevented a direct vote on the Senate’s two-month extension, signaling they may lack enough GOP support to defeat it in the face of unrelenting pressure from the White House, Democrats and some Senate Republicans.

Obama calls House to vote on extension


Instead, the House approved a separate resolution supporting a yearlong extension of both the payroll tax cut and emergency federal unemployment benefits. House Republicans are also pushing for a new, two-year “doc fix,” or delay in significant scheduled pay cuts to Medicare physicians. All three measures are set to expire December 31.

Meanwhile, House members headed out of town for their holiday break after legislative business ended Tuesday. The Senate measure approved Saturday called for a two-month extension of the payroll tax cut, unemployment benefits and the “doc fix” spending. It was a fallback plan designed to give both sides more time to negotiate.

Now that short-term compromise has slammed into a conservative roadblock in the House, where rank-and-file Republicans are fuming over the two-month time period of the plan, among other things. The lingering dispute is hurting his party, veteran Republican Sen. John McCain of Arizona told CNN, adding that the reality of the issue is that the payroll tax cut must be extended to help out Americans still struggling in the economic recovery. “It is harming the Republican Party,” McCain said. “It is harming the view, if it’s possible any more, of the American people about Congress.”

Boehner called for Obama to order the Senate to return from its holiday recess and appoint negotiators. The House already has come back from its holiday break to respond to the Senate’s two-month proposal. In a letter to Obama made public by Boehner’s office, the speaker said, “I ask you to call on the Senate to return to appoint negotiators so that we can provide the American people the economic certainty they need.”

White House spokesman Jay Carney told reporters Tuesday that the House needs to pass the Senate two-month extension so that a full one-year extension can be worked out. “In order for it to get done, it has to pass the House,” Carney said, adding that Obama “cannot order the extension of the payroll tax cut. Congress has to take action.”

Obama then made his surprise appearance in the White House briefing room and called for Boehner to allow an up-or-down vote on the Senate proposal. “House Republicans refuse to allow a vote,” Obama said, noting that Senate leaders from both parties had agreed to the short-term extension in order to guarantee that taxes don’t increase for working Americans while negotiations continue early next year on the one-year extension that House Republicans say they support. “What they’re really holding out for is to wring concessions from Democrats on issues that have nothing to do with the payroll tax cut,” Obama said of House Republicans.

Vote on payroll tax bill delayed

The mistrust between the parties was palpable. When asked if Democrats were to blame for the impasse by refusing to name conference committee negotiators, Pelosi said the issue was the refusal by House Republicans to go along with the bipartisan support for the Senate plan. “Whatever they say is irrelevant,” Pelosi declared about Republican claims of wanting a one-year payroll tax cut extension. “What they do is what’s important, and what they’re doing is not giving a payroll tax cut to 160 million Americans.”

A failure to act could have major economic and political fallout. The payroll tax break alone is worth roughly $1,000 a year for an average family and affects about 160 million Americans.

How The Payroll Tax Cut Affects America

State By State Across The Country — How The Payroll Tax Cut Affects America

Meanwhile, five mostly moderate Republican senators have called for the House to support the Senate’s two-month extension. Sen. Scott Brown of Massachusetts issued a statement after Tuesday’s House vote that said House Republicans “would rather continue playing politics than find solutions.” “Their actions will hurt American families and be detrimental to our fragile economy,” said Brown. “We are Americans first; now is not the time for drawing lines in the sand.”

The Tax Resolution Institute completely agrees with the last point. Now is not the time to draw lines in the sand and play partisan politices. Now is the time to help ensure the future of the economic recovery by helping American businesses by continuing with the payroll tax cut. If you are in payroll tax trouble, not taking action right away is like putting a lock on your front doors and shutting down your business for good. Payroll tax problems are extreme, but the Tax Resolution Institute knows how to keep your doors open and save you business.

Contact Peter Stephan and the Tax Resolution Institute for a free consultation  and the professional help you need to avert a crisis and turn 2012 into a year of profitable progress for you and your business.


Could An ETF Investment Cause Problems With The IRS? The Wall Street Journal Advises You To Ask Questions

As the economy tightens and investors look for new opportunities, the exchange-traded fund has become more and more popular.  As an investment fund traded on stock exchanges that contains viable assets such as stocks, commodities, or bonds, ETFs, when used appropriately, are really an extension of the index mutual fund. What is enticing is that they offer investors a myriad of opportunities otherwise not available with traditional mutual funds.

Wikipedia explains how an exchange-traded fund functions and why it often makes sense for an investor.  By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. The structures of the funds, however, are sometimes not examined fully, and they can be taxed quite differently from your everyday mutual funds. As result, the Tax Resolution Institute has noticed that there are specific taxation potholes with ETFs that need to be addressed before taking the leap. Luckily, the Wall Street Journal came to the rescue.

The Traditional Experts of American Finance

Wall Street Buddha: The Traditional Experts of American Finance

Laura Saunders and Jason Zweig of the Wall Street Journal outline some key questions to ask regarding such investments in What to Ask Before Buying. Keeping one step ahead of such investment imbroglios can save you some serious tax problems when it comes time to filing your tax returns later this year. Here are a few pertinent questions to ask in the beginning so you avoid an IRS tax crisis in the end:

1) When it comes to this kind of investment, are there tax potholes that I don’t know about? 

And the Wall Street Journal’s answer is that there are many such quirks in the world of exchange-traded products. For example, there are several ETFs that focus on precious metals like SPDR Gold Trust and iShares Silver Trust. As you can see, they are designed as Trusts.  An investors in such a trust can be caught off-guard when they find out their long-term gains are being taxed at 28% rather than 15%. That’s  not fair! Why is the IRS doing that to me? Well, to put it simply, the metals are deemed “collectibles” by the IRS and subject to higher taxation rates. Sorry.

2) By investing in these complicated funds, will I really have to make multistate tax filings? 

If you own a publicly traded partnership, you may have to file a tax return in more than one state. If income is generated in other states that is above a certain level, you will have to pay taxes in that state as well. For example, if you invest in one of those surprise oil fields in Southern California and they hit a gusher,  you’ll have to pay California state taxes even if you live in Chicago, Illinois. In addition, even if the payout on that one particular investment is below a certain threshold, the total payout from your investments across the board may put you over the limit. Although you are not being taxed on those external investments, they can effect whether you are taxed on

Read The Full Menu And The Fine Print Before Making Your Decision

Read The Full Menu And The Fine Print Before Making Your Decision

3) Will I be surprised by the ‘cost basis’ of my investment when I sell it when I am doing my taxes next year?

When you sell such an investment that is taxable and needs to be fully examined, the overall gain or loss of the income source is measured from the purchase price, known as the “cost basis.

Tracking cost basis is difficult to say the least, especially when there are adjustments from different sources. An Exchange-traded fund can include multiple investment sources. When it comes to such investments, your tax professional better be clear about the return of capital and exactly how the dividends were reinvested. If mistakes are made, the innocent taxpayer can end up, either looking like a criminal or a fool. The Tax Resolution Institute have seen clients that have both overpaid such taxes to the extreme without knowing it or underpaid to the point where the IRS came after them for the delinquent tax debt.

What the Tax Resolution Institute advises you to do is to read the fine print and check out the entire menu before making a major investment. Yes, exchange-traded funds have manageable costs and are flexible. In fact, if handled properly, they can even be tax efficient. For example, mutual funds are required to pay out all dividends and capital gains annually. If your mutual fund portfolio has lost value, there remains a tax liability on the capital gains that are less than a shadow. ETFs typically do not have this problem, but, as we discussed, they have other questions that need to be addressed before buying. But make sure you have covered the bases before you write the check.

A Surprise Early Christmas Gift From The Tax Resolution Institute — No New IRS Levies Until January 2, 2012

IRS Christmas Gift - No Tax Levies Or Liens Until 2012

IRS Christmas Gift No New Tax Levies 'Til 2012

Since the holiday season is a time when everyone should be able to celebrate with family without the fear of an IRS Tax Levy, here is a gift of essential tax relief information and a surprise reveal that the Internal Revenue Service has a heart. Everyone is still hurting from the tough economy over the past few years, and the IRS is giving American citizens with tax problems a bit of a breather. Mind you, the policy for the IRS has always been never to file a new Tax Levy during the oficial holiday season from December 22 to January 2.

It is something of an unwritten rule that no new IRS Tax Levies are filed or acted upon during this period. This year, the Tax Resolution Institute has heard rumblings through the grapevine that no IRS tax levies are going to be filed for the rest of December 2011. Although they are the largest collection agency in the world, the IRS understands that the American taxpayer needs a little extra relief this time around. Yes, the IRS respects the family spirit of the Christmas season every year so this year they are giving you a little something extra in your stocking. Please use the bonus and make a New Year’s Resolution to take action on your delinquent income tax debt. Contact a tax professional for honest and effective tax relief.

If you owe a back tax bill and have been receiving notices and warnings from the IRS, you have the freedom to plan your course of future action. The goal of tax resolution is to protect the future security and financial freedom of you and your family over the next two and a half weeks. Even with the knowledge of this holiday breather, a majority of delinquent taxpayers,will remain stuck in a state of procrastination and do nothing. It is kind of the Internal Revenue Service to give you this breather, but they will be right back at it in 2012 as the largest and most effective collection agency in the world. If the IRS is a gift horse, please don’t look it in the mouth and get bit. Instead, take the action and feed the horse what you owe and restore your financial integrity.

Once you have received a Notice of Intent to Levy from the IRS, you have 21 days to act before all financial accounts levied are frozen. You will not receive that notice before 2012, but if you are behind in your income taxes, watch out come this January. If you have already received an IRS tax levy, this gift of a holiday lull by the IRS is the perfect time to take constructive action. An IRS Levy has to be addressed by a tax professional before a dire situation sets in where your future financial freedom is lost. Still, at the Tax Resolution Institute, we are happy and grateful that the IRS has extended that unwritten period of holiday relief because we know you need a breather.

The IRS Gift Horse Cannot Be Ignored

This IRS Gift Horse Cannot Be Ignored

No New IRS Tax Levies will be filed for the rest of 2011. The goal of the Tax Resolution Institute is to help effectively resolve your delinquent tax problems and restore your financial freedom. So please do not look a gift horse in the mouth this time around! Take advantage of the generosity of the Internal Revenue Service by contacting TRI and saving your ability to take care of your family and be truly self-supporting in a tough economy. The IRS has opened the door to future freedom; the Tax Resolution Institute can help you through and find the tax relief you desperately need and desire. That is our Holiday wish for you!

Small To Mid-Sized Companies With Delinquent Payroll Tax Debts Need A Tax Professional In Their Corner

The Tax Resolution Institute has seen payroll tax problems close a business overnight and lead to criminal sanctions against the owners, including prison time. Due to the economic downturn, the IRS has been increasingly aggressive in their collection attempts for past due payroll taxes. For example, if you are a struggling business owner in Orange County with delinquent payroll taxes, you need to know right away how to protect your company and livelihood. Why stick your head in the sand and let the IRS levy your funds and take control of your cash flow and your incoming finances Peter Stephan and the Tax Resolution Institute can help you resolve payroll tax penalties with the best in tax resolution services and avoid any long-term devastation to your company and your reputation.

Payroll Tax Borrowing Is Criminal Theft From The IRS

Payroll Tax Borrowing Is Criminal Theft From The IRS

In these difficult days in a questionable California economy, TRI has seen a couple of past clients in Orange County and Irvine go under. Luckily, they went under on their own terms and not in the clutches of the IRS. We warn every business client that delinquent payroll taxes can be the downfall of an otherwise successful company. Payroll tax problems can cause long-term damage that your business may never recover from while staining your professional reputation. None of your clients who owe you incoming invoices wants to be contacted the IRS and told to pay the money to them directly. But this is what will happen if you are not careful and smart.

It makes sense that in tough times a small business may find themselves in a cash crunch with a lack of financial resources. It is no surprise that you might be tempted to borrow from the money they collect from employment taxes to pay operating expenses. Not stealing the money, just borrowing it for a short period until things improve and invoices are paid and that big deal happens. This is a huge mistake because what many businesses don’t know is that the IRS views non-payment of payroll taxes as a criminal act of theft. The Internal Revenue Service does not care about your cash flow crisis. The payroll taxes you hold are called a trust fund because the federal government trusts you to make your payments. If you don’t, the penalties and consequences are quick and severe.

Collecting Payroll Tax Debts Is The Top IRS Priority

Collecting Payroll Tax Debts Is Now A Top IRS Priority

With highly effective collection methods, the IRS is ruthless and the biggest risk that business owners with payroll tax problems can take is incurring their focus. They will levy your customers and clients, and they will use every tool in the book to collect that delinquent payroll tax debt. In addition to having your cash flow cut off, you will also risk permanently losing valued customers because your payroll tax problems can damage your reputation. After being contacted by the IRS, your clients may no longer want to do business with you. Can your company afford in these times to lose any ongoing source of revenue. Even worse, if they can’t be paid, the IRS will close your doors, shut you down and start criminal proceedings against the responsible party, the signer on the payroll tax bank statements.

Do you want to find the doors to your company padlocked overnight while you face such charges and a possible prison sentence. And the Federal Government needs money. They need to fund deficit-reduction strategies as well as close the growing tax gap. As a direct result, the IRS is making the collection of delinquent payroll taxes their top priority. The IRS Revenue Officers are taking a closer look at employment tax returns and other possible reveals of a delinquent payroll tax problem.

If you have a payroll tax debt, the time to take action is today. You do not have the luxury to wait. Contact the Tax Resolution Institute and we will give you a free consultation that lays out possible methods of paying off the tax and avoiding the penalties. To protect the future of your business, you need a respected tax professional like Peter Stephan in your corner!