Tag Archives: Internal Revenue Service

Income Tax Tips for Year-End Charitable Giving

We are down to the last two weeks of 2012.  For many, the end of the year not only means finishing up last-minute shopping for Christmas gifts and planning for the cooking of family feasts, but also the joy of giving to those who are less fortunate.  Not only do we give to help those out who are in need this time of year, but when you give, you also get the added benefit of being able to deduct the value of gifts on your 2012 tax return. Continue reading

Delaware Estate Taxes

Effective July 1, 2009, Chapter 15 of Title 30 of the Delaware Constitution imposed an estate tax.  The Delaware Division of Revenue is responsible for collecting estate tax.

What follows is an overview of the current estate tax law in effect for Delaware.  For information about federal income tax, please visit our web site’s “Tax Relief” page. Continue reading

Groups Revealed Who Do Not Pay Federal Income Tax

Federal income taxes have continued to be a much-discussed topic as we head into the final month leading up to the presidential election.  The topic gained a great deal of attention when Republican presidential candidate Mitt Romney stated earlier this month that over 45% of Americans do not pay any federal income tax. Continue reading

Itemized Deductions and Federal Income Tax

Many of those who file federal income tax with the Internal Revenue Service (IRS) find that having itemized deductions can be a great way to pay less federal income tax.  Although the Internal Revenue Service offers a standard deduction on federal income tax that varies depending on if you are filing as an individual, Head of Household, or Married Filing Jointly or Separately, itemized deductions can typically exceed the standard deduction.

So what are considered itemized deductions?  Following is a list of the most common itemized deductions allowed by the Internal Revenue Service.

Business Expenses.  Business expenses that are not reimbursed are fully deductible.  Business expenses include travel and entertainment expenses, as well as those related to business use of your home or automobile.

Casualty Losses.  Losses as the result of a disaster, theft, or other casualty that are not reimbursed by insurance are fully deductible as an itemized deductions.

Charitable Contributions.  Amounts given to a charity are fully an itemized deduction.  For cash, property, or services that are given away to be considered a deductible charitable contribution, the cash, property, or service must be given to a qualified organization as defined by the Internal Revenue Service.

Educational Expenses.  Expenses related to your education in order to maintain or improve your job skills as required by your employer or law that are not reimbursed by your employer are fully deductible on your federal income tax.

Interest Expenses.  Interest paid on certain types of debt are fully deductible as an itemized deduction on your federal income tax.  For interest to be deductible, it must related to an investment or a qualified residence.

Medical Expenses.  For years up to and including December 31, 2012, medical expenses may be deducted to the amount that they exceed 7.5% of your adjusted gross income.  Beginning January 1, 2013, medical expenses can only be deducted in the amount they exceed 10% of your adjusted gross income.

Taxes.  The following types of taxes are fully deductible as an itemized deduction: state, local, and foreign income and real estate taxes; state and local property taxes; state and local sales taxes; and motor vehicle taxes.

Miscellaneous Expenses.  Certain other expenses are deductible as an itemized deduction to the extent they exceed 2% of your adjusted gross income.  These miscellaneous expenses include unreimbursed employee expenses and fees paid related to the preparation of your federal income tax.

As noted above, this is only a list of the most common itemized deductions allowed by the Internal Revenue Service.  You should seek the help of a tax attorney for a complete list of itemized deductions.

If you are unsure if you have sufficient itemized deductions in order to claim them on your federal income tax, you should seek the help of a tax attorney.  A tax attorney will know the current tax laws and how to review your specific income, expenses, and overall situation to determine what your itemized deductions are and if they are sufficient for you to claim them on your federal income tax.

IRS audit: Five steps to avoid a tax audit

You are being audited.  Those are four words none of us ever want to hear.  After all, submitting your federal income tax return to the Internal Revenue Service (IRS) can be a lot of work to begin with.  Depending on how complicated your taxes are, simply gathering all the appropriate documentation you need to complete your taxes can be a lot of effort.  And if you actually prepare your return yourself rather than paying a Certified Public Accountant (CPA), tax attorney, or other professional tax preparer to complete your return, then the process is that much more difficult and stressful.  So you certainly want to do everything you can to avoid having to revisit your tax return as a part of an IRS audit.

So is there anything you can do to avoid an IRS audit?  Thankfully, there is… or at least there is a way to minimize the chance of your return being selected for an IRS audit.  As some returns are selected for audit purely at random, there is no way to completely prevent your return from being selected (unless you choose not to file your taxes, which is not a course of action I recommend).  But following are five things that increase the odds of your tax return being audited by the Internal Revenue Service.

  1. Calculation Errors.  Be sure that all of your math calculations are correct.  Simple errors in addition or subtraction can cause your taxes not to foot properly when entered  into the IRS’ computer systems.  Such errors can lead to the Internal Revenue Service reviewing your return in more detail and potentially trigger an audit.
  2. Interest, dividend, and W-2 reporting errors.  Certain statements you receive for use in your tax return, such as those for interest and dividends (e.g., 1099 forms) or wages you earned during the year (e.g. W-2s), have very specific numbers that must be entered from the statements into your tax forms.  And copies of some of these statements are sent to the IRS as well.  Therefore, if you do not enter the numbers correctly, it will raise flags that may result in your return being audited.
  3. Over-abundance of itemized deductions.  If you use itemized deductions rather that the standard deduction, and especially if your itemized deductions are exceedingly high for your income level, the IRS is more likely to select your return for an audit.  Therefore, be sure your itemized deductions are accurate and you have the documentation necessary to support them.
  4. Incomplete return.  The Internal Revenue Service has specific forms they want a taxpayer to complete based on the type of return being filed.  If you do not include the correct forms with your return or you do not complete the forms fully, it can trigger an IRS audit of your tax return.
  5. IRS knowledge about your inappropriate tax items.  Remember that the Internal Revenue Service pays bounties to people who turn in others who have not paid their appropriate amount of tax.  Therefore, if you brag to your friends on Facebook, MySpace, Twitter, or other social media sites about how you cheated the IRS, know that you may be turned in by your “friends.”

In summary, you should make every effort to submit an accurate and complete tax return, which will put you in the best possible position to minimize the chance of having your return audit while being able to defend your tax return should an IRS audit arise.

Federal income tax and asset protection

If you owe money to the Internal Revenue Service (IRS) related to unpaid federal income tax, you have likely experienced an escalating series of attempts by the IRS to collect that unpaid money.  The taxes we pay to the IRS are used in large part to fund the federal government of the United States.  If federal income tax is not paid or collected, the government simply will not have the funding needed to function.  Therefore, the IRS has been given powerful authority to seek and collect payment of unpaid federal income tax.

If you do not willingly pay the federal income tax you owe or work with the IRS to establish some form of payment plan, the IRS is able to enforce its authority to collect those unpaid taxes through the use of a levy.  A levy is a legal means by which the IRS is able to seize property from a taxpayer.  An IRS levy leaves you little in the way of asset protection, as the IRS can use a levy to seize your wages, checking and savings account balances, cars and trucks, retirement accounts, and real estate.

If you owe money to the IRS and believe they may obtain an IRS levy against your property, what you may be more interested in understanding is asset protection–that is, what assets are protected from an IRS levy?  Following is information about two ways you can establish asset protection against an IRS levy.

Obtain an IRS Exemption

The easiest means of asset protection is through an asset exemption offered by the Internal Revenue Service.  When the IRS exempts an assets from a levy, it means the IRS will not attempt to seize that asset.

The IRS generally exempts assets in two cases.  First, the IRS will not seize assets that are required in order for you to earn an income.  For example, if you are a handyman and you need your truck and tools to perform work, the IRS will likely allows you to keep those assets.

Second, the IRS will not seize assets that have no value.  This may include things that they simply cannot sell or assets that already have a liability attached to them.  For example, if you own a home but your mortgage is for an amount equal to the value of the home, then the IRS likely will not seize your home, because there would be no money left over after funds from the sale are used to pay off the mortgage.

Transfer Ownership

Assets that are transferred to ownership by someone else are not subject to seizure by the Internal Revenue Service, simply because they are no longer your asset.  However, such a transfer must occur well before the IRS levy goes into effect, as any asset transfer after the IRS levy is in place will be reversed by the IRS levy so the IRS can seize the asset.

Even if you transfer an asset to someone else before an IRS levy is enforced against you, if the transfer was purely to try to keep the IRS from seizing the asset, the IRS levy will still give the IRS power to seize the asset.


Some people may advise you that you can hide assets from the Internal Revenue Service by not telling the IRS about the assets and placing them in difficult-to-find locations such as offshore accounts.  However, hiding assets from the IRS is technically illegal and can result in serious repercussions if the IRS finds out you have lied to them or otherwise misled them about the assets you own.

Before you take any steps to shield your assets from an IRS levy, you should speak with a tax attorney.

How can I discuss my situation with a tax attorney?

By completing the short form found below, it will allow a tax attorney to contact you to discuss your situation.  The tax attorney will be knowledgeable about the statutes related to Internal Revenue Service tax levies and asset protection and will be able to evaluate your situation in light of these laws.

The conversation you have with the tax attorney will be free of charge, completely confidential, and will not obligate you to anything further.  Therefore, please take advantage of this opportunity to have an initial consultation with a tax attorney about your tax issues.

Federal income tax return penalties and what to do next

Federal income tax returns are due to the Internal Revenue Service (IRS) each year on or around April 15.  Once you have filed your tax return, it is generally the end of the matter for you.  Your federal income tax return is processed and you do not think about your taxes again until the following year.

But this year for some reason you received a notice from the IRS.  Specifically, the IRS notice indicates that they are charging you a penalty related to your federal income tax return.  Why?  Read on to find out the main reason the IRS may say you owe them money and what you need to do about it.

Once you file your federal income tax return, the IRS will review the return to determine if it appears to be complete and accurate.  If the IRS deems the return is complete and accurate, they will process it.  If the IRS detects some sort of issue, they will send you a notice describing what the issue is and what it means to you.  A list of many notices the IRS may send appears on the IRS’ web site at http://www.irs.gov/individuals/article/0,,id=96199,00.html.

If you receive a notice from the IRS indicating they are charging you a penalty, it is usually because you owe a tax liability to the IRS that you have failed to pay.  Many people do not realize that when you file your federal income tax return, if you owe a tax liability to the IRS, the IRS expects you to pay the tax liability at the time you file.  Even if you file an extension for your tax return, the extension only relates to allowing you more time to file your tax return.  The IRS still expects you to pay your tax liability due on or around April 15.

If you filed your tax return and did not owe a tax liability, yet you still received a notice from the IRS that you now owe them money related to a penalty, it is possible that you made an error on your taxes.  In the process of the IRS reviewing your tax return for completeness and accuracy, if they detect and correct an error, it could mean that you now owe money to them.  And since the IRS detected the issue after the time when you should have paid the balance due, you may not be assessed a penalty.

Whatever the reason for the penalty or money you owe to the IRS, your best option is to get help from a tax attorney.

Obtaining help from a tax attorney

If you need help with your federal income tax, you can the help you need from a tax attorney.  If you complete the short form found below, a tax attorney can review your case free of charge and start giving you direction on how to address the penalty you received from the IRS.  The tax attorney can help you with the completion of any forms or other steps necessary to address the issue.

Any conversations you have with a tax attorney are completely confidential, and the initial consultation does not obligate you to anything further.  Therefore, take advantage of this opportunity today to help minimize the money you owe to the IRS and put the matter behind you.

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Federal income tax have the IRS on your back?

If you owe money on a past tax return to the Internal Revenue Service (the IRS), you have probably found that they are very persistent in hunting you down in an attempt to get their money.  The initial contact from the IRS may simply come in the form of letters and phone calls under the guise of being sure you are aware that you owe them back taxes related to your tax return.  However, as time passes and the IRS continues to either not hear from you at all or not receive the money you owe them, they will realize that the non-payment of the back taxes is not simply an oversight on your part.

As the IRS can in general seek to collect back taxes for up to 10 years from the date when you filed the tax return related to that money, it is very difficult to outlast the IRS.  Before the 10-year statute of limitations runs out, the IRS will generally file a levy against you to take your property, forcing collection of the back tax owed.

However, you do have options to keep the IRS from continuing to harass you.  Here are some solutions you should consider.

Pay the federal income tax you owe.  If you are looking for help with your tax return and back taxes you owe, then odds are that you simply cannot afford to pay the back tax that you owe on your tax return.  Regardless, this point is worth mentioning and evaluating fully to ensure this solution is not an option.

If you do not have the cash available to pay the tax you owe on your tax return, do you have any other assets or property—cars, boats, homes, jewelry, real estate—you could sell for enough money to cover the back tax?  If you do and you have not been willing to sell the property because it has sentimental or other important value to you, remember that selling other property you have may be a viable solution to get the IRS off your back.

Negotiate a settlement with the IRS.  The IRS has options available to help people pay back federal income tax they owe.  One of these options is a payment plan or settlement agreement, which means that you will pay all the tax you owe not as a single lump-sum payment but as a series of payments over time.  This means that you may be able to work out with the IRS a monthly payment you can afford to address the back taxes you owe.

A second option is an offer in compromise.  An offer in compromise is when the IRS agrees to accept less than the full amount of federal income tax you owe.  But before you assume this is the best option for you, simply because it means you will have to pay less money than you thought you would, keep in mind that the IRS does not enter into an offer in compromise with a taxpayer without a good reason.  For the IRS to accept an offer in compromise, they must believe that they are unlikely to ever receive the full payment, because you have no assets or income.  In addition, you must file every past due tax return you have not filed previously.

Declare bankruptcy.  Bankruptcy is an option for addressing money you owe on a past tax return in certain cases.  Specifically, if the back tax is related to the previous three tax years, an amount assessed by the Internal Revenue Service in the past 240 days, or an amount related to an income tax return you never filed, bankruptcy cannot be used to get rid of the back taxes.  This is true whether you use Chapter 7 or Chapter 13 bankruptcy, the two most common types of bankruptcies used by individuals.

Whatever your situation, before you decide one of the above options may be for you in addressing your federal income tax situation, it would be wise to speak with a tax attorney.

Can a tax attorney help me figure out what I should do?

Yes, a tax attorney will be able to help evaluate your back taxes and determine what options is best for your situation.  The tax attorney will have experience working with cases related to past due federal income tax–situations like yours–and will know what to do.

The initial conversation you have with a tax attorney will be free of charge, completely confidential, and not obligate you to anything further.  Therefore, please take this opportunity today to learn what options you have to address your back taxes and get the IRS off your back.

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Clearing a Federal Tax Lien in Norfolk

If the Internal Revenue Service contacted you about a Federal Tax Lien, your Norfolk property could be in jeopardy. The Internal Revenue Service threatens overdue taxpayers with these powerful Liens. Whether you feel helpless, frustrated or irate, your next moves could change your and your family’s future. Continue reading to learn about the components and dangers of Federal Tax Liens and how a Norfolk Tax Law Attorney can help you.

After the Internal Revenue Service attaches a Federal Tax Lien to your property, you will receive written notice of:

  • The property address against which the Federal Tax Lien is filed;
  • The Lien amount;
  • The county in which the Lien is recorded; and
  • Contact information for the Internal Revenue Service.

What You Should Know

After filing your Federal Tax Lien, the Internal Revenue Service waits ever so patiently for you to sell your property. Whether it takes months or years, they will be poised to swoop in at closing and take the full Lien amount from your proceeds, before you (and your mortgage company, if any) can take anything. They also take from you your right to determine how you spend your sale proceeds.

Perils to Consider

The risks of Federal Tax Liens are a mystery to most Virginians. Consider your:

  • Career Choices: If you seek a higher salary position to pay-down your Federal Tax Lien, beware of positions requiring you to relocate. Should you sell your home, before you can apply your profits to a down payment on your next home, the Internal Revenue Service will apply those profits toward your Lien. Even moving expenses or an apartment deposit could prove beyond your reach. Your Federal Tax Lien can limit your career choices.
  • Golden Years: If you dream of a comfortable retirement, partially funded by downsizing your current home and living on your equity, remember the Internal Revenue Service does not share your dream. They have first rights to your equity at closing to clear your Lien. You may need to work longer or live less comfortably. Your Federal Tax Lien can change your golden years.
  • Home’s Worth: If your home’s value has declined lately, selling it may not be enough to clear your Federal Tax Lien. Your may not yield enough profit to pay-off your Lien and your mortgage, if any. How then will you fund your down payment on your next home? Your Federal Tax Lien can turn your biggest asset—your home—into your biggest nightmare.
  • Credit Worthiness: If you work diligently to improve your credit score, you may see it worsen when news of your Federal Tax Lien reaches Experian, Equifax and TransUnion. Get ready for several possibilities: more expensive credit and possibly even the withdrawal of offers of credit, insurance and employment. Your Federal Tax Lien can impact every area of your life.

How Do I Clear This Federal Tax Lien?

Your best first step is to contact a Norfolk Tax Law Attorney. If you want to attempt clearing the Lien yourself, consider:

  • Your Past Performance: Since you could not prevent the Lien from being filed, how can you expect to remove it yourself?
  • Your Insider Knowledge: The Internal Revenue Service routinely credits partial payments as “payment in full” on Federal Tax Liens, if such an arrangement has been agreed to in advance. However, they frequently do not share information like this with taxpayers, as they want the highest collections possible. What else do you not know that may hurt you?
  • Your Proficiency: How conversant are you in Internal Revenue Service regulations and procedures? How many Federal Tax Liens have you personally cleared?

The Internal Revenue Service looks after its own interests: collecting as much money as possible. Who will safeguard your interests?

Even past skirmishes with antagonistic creditors or belligerent litigants may not prepare you to contest a Federal Tax Lien. Taking on the Internal Revenue Service means taking on the United States Federal Government. Doing it alone is naïve at best, treacherous at worst.

Start today making better decisions. Contact a Norfolk Tax Law attorney. Find someone to help safeguard your interests.