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3 Mistakes To Avoid When Filing A Trust Tax Return

Posted by on Feb 13th, 2017 in Uncategorized | Comments Off on 3 Mistakes To Avoid When Filing A Trust Tax Return

As the executor of an estate, you could have the responsibility for filing a tax return for a trust that was established by the deceased. Individual tax returns can be challenging, but trust tax returns are far more complex. A mistake could have a long-term impact on the estate, so it is important that the return is accurately filed. To help you avoid future tax-related problems, here are some common mistakes you could potentially make.  Filing the Wrong Forms The forms used for individual tax returns differ from those used for a trust. If you file the wrong form, there is a possibility that you will calculate owed taxes incorrectly and the estate could end up retroactively paying for a newly discovered tax bill. The estate could also incur penalties related to filing the wrong form and after the due date.   To avoid this, you need to verify that the form you are using is Form 1041. In addition to this form, there are others that you could potentially need. Which forms you need are largely dependent on the financial details of the trust and the estate.   Failing to Provide Documentation of Assets As part of completing the tax return for the trust, you will be required to detail the assets that are owned by the trust. You have to provide documentation for the assets that are listed. Without the proper documentation, the Internal Revenue Service, or IRS, can question everything from whether or not the assets are truly owned by the trust and the value of those assets.   If that occurs, the trust could miss out on valuable deductions and credits that could help to lower its tax bill. Worse yet, as the executor, you could end up facing an audit. You need to ensure that copies of all pertinent documentation are included with your filing.   Failing to Create Beneficiary Statements Whenever assets are distributed from the trust, a beneficiary statement needs to be generated. A copy of the statement should be provided to the beneficiary and also to the IRS. The statement helps to establish to the IRS that the asset is no longer in the possession of the trust.   The statement should include the name of the beneficiary and his or her address. You also need to include an appraisal or assessment of the value of the asset on the day the beneficiary took ownership of it.   To avoid other potentially costly mistakes, consider working with a professional tax...

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3 Tips For Settling Property Tax Debt

Posted by on Sep 8th, 2016 in Uncategorized | Comments Off on 3 Tips For Settling Property Tax Debt

To be sure that you are able to settle property tax debt problems you are having, the best thing you can do is move forward with the property tax settlement process. When looking to settle your property tax bill, you will need to consider payment plan options, understand what to expect from the settlement process and hire the help of a professional who may be able to look out for you. In this regard, read on and take advantage of these points to the best of your ability.  #1: Find Out What You Owe And Explore Your Options The very first thing you will need to do when settling your property tax bill is find out exactly how much you owe. To do this, you will need to touch base with your municipality and the treasurer’s office in order to get a clear breakdown. In many situations, you will be able to begin settling your tax debt on the spot in the form of a payment plan. The laws regarding government sanctioned property tax installment agreements will vary by state and local municipality, so research the laws to know exactly what to expect.  #2: Understand The Situation  It is important that you work to settle your property tax debt in a timely manner, because there are many drawbacks you will face if you allow the situation to get out of hand. For instance, the IRS can levy a tax lien on your assets, which can cause you to lose property and incur a series of other debts and penalties. The government can also issue tax deeds, which can cause you to incur interest and make your debt balloon. By understanding what you are dealing with, you will understand how to move forward.  #3: Know Your Rights And Actions To Take In order to settle your property tax, you will need to hire the help of a professional who can guide you. One of the first courses of action you can take is to file an objection, which states that you have been charged an unfair amount of tax. This will extend the process and open the door for another assessment. You may also be able to negotiate a variety of settlement amounts or defer the payments that you owe. Hiring the help of a tax professional will give you the protection that you need when going through the process.  Keep these three tips in mind so that you can settle your property tax debt. For more information, contact a business such as Tax Assessment Xperts...

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The Consequences Of Not Filing Taxes

Posted by on May 3rd, 2016 in Uncategorized | Comments Off on The Consequences Of Not Filing Taxes

Let’s face it: no one likes to file their taxes each year, even if they’re owed a refund. The process can be daunting and it can take a long time to gather information and enter it into tax software or make an appointment with your accountant. But for those who have years of unfiled tax returns, the IRS can hit you with some serious penalties. Here are some of the very real consequences you may face if you have not filed your annual tax return for one year or even many years. Penalties And Interest The IRS expects every citizen to file their taxes each year. If you fail to do so, you’ll be hit with some stiff penalties once you finally do file if the IRS determines that you owe. In most cases, the first step will be to take any income tax refunds due to you as part of repayment towards the balance owed. The IRS will also typically add predetermined, flat penalty fees on top of any interest charges on the balance. This amount will either come out of your refund when you do file, or the IRS can even garnish your wages if you fail to pay. For every year you don’t file, you can also be hit with interest that accumulates over time. The rate of interest owed on back taxes can vary but it’s typically determined based on the current federal interest rate. Forfeitures For people with years of unfiled returns, the IRS can take your refund and apply it to any taxes you owe. This means that even if you’ve finally filed taxes, the money you might be owed will go right back to the IRS to pay for any fees and penalties. Another serious implication of failing to file is a process known as the Federal Payment Levy Program. This means your hard-earned social security or other federal-related income could be partially forfeited in order to repay any money you owe. It’s recommended that you respond to any and all correspondence received from the IRS in a timely manner to avoid having money taken from you directly.  Tax Liens If you have not paid or filed owed taxes and you’re not responding to the IRS, they could impose a federal tax lien. In a nutshell, this means that the IRS now has the right to seize your property including your home or vehicles. In order to avoid this very serious repercussion, you’d have to prove that you’re currently suffering an economic hardship. To do that, you’ll have to provide the IRS with information regarding your current income and expenses so they can determine that you’re unable to pay for the taxes owed and seizing your property would result in an even more serious inability to maintain living expenses. Unfiled and unpaid taxes can also negatively affect your credit report and could even result in a summons. When it comes to filing taxes, it’s imperative that you do so each year to avoid these serious financial headaches....

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Background Checks: 4 Dos And Don’ts To Limit Your Liability

Posted by on Feb 19th, 2016 in Uncategorized | Comments Off on Background Checks: 4 Dos And Don’ts To Limit Your Liability

When it comes to hiring someone new for a position, background checks are critical. While many assume that this is a simple process, it really isn’t that straightforward. This is because one wrong move can open you up to liability, which is the last thing that you want. Here are a few dos and don’ts that will help keep you out of hot water: Do Make Sure That You Get Consent. Liability is always a risk when it comes to job applicants and background checks. Therefore, before trying to access any type of background information on an applicant, it is important to get his or her consent. Some specific types of information, such as credit checks, require that you get the applicant’s consent. Not only do you need the individual’s consent, but you must get it in writing. Usually, the best way to go about this is by having the applicant consent for any necessary checks when they fill out a job application. Do Remain Reasonable and Keep It Related to the Business. When it comes to conducting background checks, there are certain privacy laws that put a limit to just how deep into an applicant’s background you can go. Essentially, you only want to delve deep enough to find information that specifically pertains to the performance of the applicant and that is tied to the job. Otherwise, seeking and viewing the records could be seen as irrational, which could open you up to unnecessary liability. For example, if you are hiring a school bus driver, you will likely want to obtain driving and criminal records of the applicant. However, the same would not be true if you were simply hiring a dog walker. Don’t Discriminate or Fail to Communicate. If you require the background check of one particular applicant in order to help make a hiring decision, then you must require the background check of all applicants in order to make things fair. Otherwise, you could be seen as performing a discriminatory act, which opens you up to a lawsuit. Apart from conducting a check on one applicant and not another, you should also make sure that you check in with the applicant when you receive negative results before making a final decision. There may be a logical reason for the results which they can explain. Communication is key in any business transaction, so it is important that you give the applicant a chance to explain the situation. Don’t Forget to Follow the Laws. Each state varies when it comes to regulations and guidelines for conducting background checks. Therefore, it is important that you know the law. For example, in Texas, arrests and convictions of a criminal nature that are over seven years old cannot be part of a background check for positions that pay an annual salary of $75,000 or less. However, in a state like Vermont, there are no restrictions on how an applicant’s criminal record can be used. If you are unfamiliar with the laws regarding background checks in your state, you can consult with an attorney. Alternatively, you could opt to outsource all employment screening to a professional company like AccuChex who is familiar with all the laws and can handle the grunt work for you, which will leave you more time to actually...

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The Tax Differences Between A Traditional IRA And A Roth IRA

Posted by on Dec 9th, 2015 in Uncategorized | Comments Off on The Tax Differences Between A Traditional IRA And A Roth IRA

An individual retirement account is an effective vehicle to save for the future while also deferring income tax. The two most widely known types of IRAs are the traditional IRA and the Roth IRA. An individual planning to fund an IRA and defer income tax can benefit from contrasting the differences between a traditional IRA and a Roth IRA. There are a few similarities between the two account types. You must have earned income to fund either type of account. The annual contribution limit for either type of account for 2015 is generally $5,500. A noteworthy aspect of both IRA types is that you can also fund a separate IRA for a non-working spouse. The main differences in the two account types are in the timing of the tax benefits. Traditional IRA In a traditional IRA, you receive a current tax deduction for your contribution, up to the annual limit. The amount contributed to the account grows tax-free until withdrawn. When funds are eventually distributed from the account, the withdrawals are usually fully taxable. As a retiree, you may be in a lower tax bracket at that future time. Your earned income for the current year must be at least as much as the IRA deduction. The annual contribution limit is the full $5,500 if you are not covered by a retirement plan with your employer. If you are covered by an employer’s retirement plan, your deduction for a traditional IRA is reduced at higher income levels. Roth IRA In a Roth IRA, there is no tax deduction up front in the current year. As with a traditional IRA, earnings grow tax-free until eventually distributed. The distinct difference of a Roth IRA is that the entire withdrawal is generally tax-free, including the accumulated interest. Participation in an employer retirement plan has no effect on a Roth IRA, but Roth contributions are limited at higher income levels. If you are age 50 or older, you are allowed to contribute $6,500 to either type of IRA. An additional account of either type can be established for a non-working spouse if the working spouse earns more than the total contributed to both accounts. The IRA for a non-working spouse is a separate account since all IRAs are owned individually. You are not necessarily limited to one account type, but the annual contribution limit applies to IRA contributions in total. Contact a tax services specialist like RJ. Garner CPA & Associates, PLC) for more information about how individual retirement accounts affect your tax...

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About Me

The wonderful world of taxes - not something anyone wants to have to deal with. Each year, new laws are introduced and old ones can expire. How do you know what you are doing with your taxes if you don't follow the changes being made each year? Do you run a business or are you a self-employed contractor? Everything can really complicate taxes, so you should seriously consider hiring a professional tax preparer to do your taxes each year. To learn how my tax preparer has benefited me over the past few years, visit my website. Hopefully, what you learn there will convince you of how well the money spent to pay for professional preparation is worth it.

February 2017
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