An amended tax return requests the IRS to change the original filed return to a corrected or “amended” return. The new return, when accepted by the IRS, can either lower or increase your tax liability (limited cases, no change in taxes owed/refund). Individuals can use Form 1040-X, Amended US Individual Tax Return, to file an … Read more
If you’ve realized that you made an error on a previously filed tax return, the IRS allows you to correct these mistakes by filing an amended return. Common Errors to Correct: Here’s a guide on how to correct past tax filing errors: Identify the Error Common mistakes include unreported income, incorrect deductions or credits, filing … Read more
Taxpayers need to choose the correct filing status when they do their tax return. Your filing status not only determines your tax rate but also impacts the deductions and credits you’re eligible for. Let’s break down the different filing statuses, so you can make an informed decision come tax time. What is Filing Status? Your … Read more
If you use a tax professional to file your return, the preparer is required to submit your return electronically unless they meet an exception to e-filing. Due to the popularity of electronic filing, there are many different options to e-file your return. Most people purchase tax software to e-file their returns. However, there are several … Read more
You can print out your tax return in your tax software for mailing. Most tax software provide you instructions on where you file. Tax software will also print out a payment voucher (1040-V) if you need to pay with your return. If you don’t use tax software and need to get tax forms, you can … Read more
What is Tax Identity Theft? Tax identity theft happens when someone steals your personal information to commit tax fraud. They might: The IRS has systems to catch fraud, but they aren’t perfect, and some thieves still get through. Types of Tax Identity Theft 1. Stolen Identity Refund Fraud (SIRF) This happens when a thief files … Read more
What Are Unfiled Past-Due Returns? When you miss filing your taxes on time, you end up with unfiled past-due returns, also known as back tax returns. This can lead to serious actions from the IRS, from a request for you to file, filing a return for you, or even a criminal investigation. Important Points About … Read more
In 2023, the IRS issued more than 45 million penalties to taxpayers. Most penalties are for late payment of taxes, late filing, and for making errors on a tax return. There are more than 150 different IRS penalties. However, 4 penalties make up 96% of all penalties assessed. The most common penalties are: These four … Read more
Each year, 3 out of 4 taxpayers get an IRS refund with their filed tax return. The IRS advertises that more than 90% of all refunds are paid within 21 days of filing. The exception are refunds that have “refundable credits,” such as the earned income tax credit or additional child tax credit. These credits … Read more
One of the most common IRS collection enforcement tools used when a taxpayer owes tax debt is the wage garnishment. A wage garnishment or “wage levy” seizes part of a taxpayer’s wages to pay their tax bill. The taxpayer’s employer is responsible for collecting and remitting the levied wages to the IRS. A wage garnishment … Read more
The most common IRS enforcement actions are liens, levies, and wage garnishments. Passport restrictions can be initiated by the IRS if a taxpayer owes more than $62,000 (for 2024- adjusted annually for inflation) and is not in an agreement with the IRS (payment plan or a hardship agreement such as currently not collectible status or … Read more
A levy is different from a lien. A lien secures the government’s interests in the taxpayer’s property. A levy takes the property to pay the taxes owed. There are several types of levies- some are one-time levies (i.e., seize the amount one-time) and some are continuous levies (i.e., continuous seize amounts until the tax is … Read more
Statistics show that there are millions of taxpayers who owe the IRS back taxes. Many hear late night TV infomercials and talk radio advertising that the IRS will settle for less than the amount owed. The commercials are referring to the IRS’ Offer in Compromise (OIC) program. Ideally, this program will allow tax debtors to … Read more
The IRS offer in compromise is solution to resolve back taxes owed to the IRS. The OIC provides a complete, permanent settlement of the taxpayer’s tax bill for less than the amount owed. The IRS has three offer in compromise (OIC) solutions: The OIC for doubt as to collectibility is the most used OIC. In … Read more
When taxpayers are unable to pay their tax bill in full, they can enter into several types of agreements on their back tax bill. Getting into an agreement on a tax bill is crucial to avoiding IRS collection enforcement in the form of liens, levies, garnishments, and passport restrictions. The IRS agreements for back taxes … Read more
At the end of 2023, there were 24 million individuals and business taxpayers who owed the IRS back taxes. When a taxpayer owes the IRS, they must get into an agreement or face possible IRS collection enforcement in the forms of liens, levies, and wage garnishments. High tax debtors can also face passport restrictions (owe … Read more
If you receive an IRS audit notice, following these best practices will help ensure a smooth process: Step 1: Review and Verify the Notice When you receive an audit notice, make sure it arrives by mail—IRS notices are never sent via phone or email. The notice informs you that your tax return has been selected … Read more
The chances of being audited by the IRS are generally low, with less than 1% of individual and corporate tax returns audited each year. However, certain factors can significantly increase the likelihood of an audit. For individual taxpayers, the IRS audited an average of 0.44% of returns between 2013 and 2021, but this percentage isn’t … Read more
Mail Audits A mail audit is the most straightforward type of IRS audit, typically initiated by a letter requesting specific information to verify items on your tax return. The IRS may be seeking clarification on a particular aspect of your return, such as income, deductions, or credits. Before starting the resolution process, it is key … Read more
Here are the top 10 reasons the IRS may audit a taxpayer: 1. High Income High-income earners are more likely to be audited. The IRS focuses on wealthier individuals because underreporting or errors in tax filings can result in larger amounts of unpaid taxes. Historically, taxpayers earning more than $400,000 face significantly higher audit rates … Read more