Category Archives: IRS Refund

Tax Help 101: Casualty, Disaster, And Theft Losses

Tax Help 101: Casualty, Disaster, And Theft Losses

Internal Revenue Service (Photo credit: LendingMemo)

You never know when problems can occur, and this year people have experienced their fair share of unexpected problems.  This summer alone people across the country are dealing with blazing wildfires, destructive storms with dangerous winds, and other natural disasters.  Some people are lucky and come out of the damage relatively unscathed, but others aren’t as fortunate.  Some people have had significant damage done to their property, and they’re trying to find a way to rebuild.  There are also some people that aren’t dealing with disasters caused by nature, they’re dealing with problems caused by other people. Theft of expensive objects, damage done by vandals, blackmail, and other problems happen to people every day.

Many people don’t know what to do when disaster occurs. People with insurance may be able to get some help from their policy, but some policies don’t have enough coverage to completely compensate the policy holder for their loss.  Luckily for tax paying American citizens, Uncle Sam has measures in place to help people in their hour of need. Financial losses incurred because of casualty, disaster, and theft losses may be tax-deductible. Tax payers can report casualty and theft can be reported on Form 4684 and Form 1040 Schedule A.

Casualty Losses

A casualty is defined as the loss, significant damage, or destruction of property because of a sudden event.  In order to claim property as a casualty cost, the event that caused it must be easily identifiable and unexpected.  Natural disasters like floods, earthquakes, storms, and wildfires fit the criteria, but Mother Nature doesn’t have to be the only cause of your loss.  Losses due to car accidents, terrorist attacks, and vandalism can all be claimed as a casualty loss.

Theft Losses

The IRS’ definition of theft isn’t too different from what law enforcement officials view as theft of property.  The IRS defines theft as “the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent.”  According to the IRS embezzlement, robbery, blackmail, burglary, extortion, larceny, and even kidnapping for ransom all full under the umbrella of theft losses.

Losses You Can’t Claim

The government offers IRS tax help to taxpayers that have experienced hardship, but there are some situations where you won’t be able to claim the property and finances you lost over the year.  Property that was misplaced cannot be claimed as a loss, nor can property that was accidently broken.  Tax payers may also not claim any property that has gone through progressive deterioration.  In order to be tax-deductible the damage must be cause by a sudden and unexpected event.  As an example, if your home was significantly damaged in a storm you would be able to claim that.  If your home was damaged because of termite infestation or mold over a period of time, you would not be allowed to claim that.

*Not a solicitation for legal services*

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The 5 Biggest Differences Between Tax Preparers And Tax Attorneys

Money

There’s an accounting joke (yes, they exist) that goes like this:

Q: What is a CPA?

A: It’s someone who solves a problem you didn’t know you had in a way you don’t understand.

Even if that joke doesn’t make you laugh, it does contain an interesting bit about the necessity of a tax professional.  The IRS certainly isn’t your friend, but it also isn’t your enemy. It is an organization operating on a mind-numbing system of complexities, the kind most people just aren’t cut out to navigate. The truth is, if you have a business of any size, you need professional help with your taxes. This comes in the form of tax preparers, enrolled agents, CPAs and tax attorneys.

If you’re as confused by the line-up as me, here’s a little clarity on the biggest differences between the bottom and top of the totem pole.

 

1.     Education:

Tax preparers are trained in the general structure of tax returns. The majority of preparers are educated by whatever franchise they work at (H&R Block, Jackson Hewitt, Liberty Tax Service). Independent preparers may attend tax preparer courses, but no formal training is needed to start a practice.

Tax attorneys must obtain a specialized law degree.  Beyond the basic degree, many tax attorneys obtain a Master of Laws degree in taxation as well as a mandatory Juris Doctor degree. In addition to this rigorous education, specialized courses are required covering advanced topics in business taxation. Many tax attorneys also have experience as certified public accountants.

 2.     Certification:

Anyone can become a tax preparer. On Jan. 18, 2013, the District Court put a stop to IRS requirements for registered tax return preparers to complete competency testing or secure continuing education. In fact, all it takes to offer the public service of tax preparation is the acquisition of a preparer tax identification number (PTIN), which costs all of $64.25.

Tax attorneys must pass the state bar.  After completing the years-long process of law school, tax attorneys must pass the bar exam of whichever state they wish to practice in.

3.     What they can do for you:

Tax preparers are capable of assisting you with basic, straightforward tax returns. If you have no special needs or complications involved in your taxes then a tax preparer is a good call. Whatever choice you make, be sure to ask about the full extent of your tax professional’s capabilities.

Tax attorneys can navigate your tax needs at every possible level. If you run a business and require assistance with complicated tax matters, or need year-round accounting, the seasoned tax attorney is your best bet.  They’ll keep you from getting in trouble with the IRS by guiding you through your finances before tax season and/or representing you in front of the U.S. Tax Court if that’s necessary.

4.     Who should hire them: 

Tax preparers are appropriate help for anyone with an ordinary tax structure.  The ideal client of a tax preparer is an individual with run-of-the-mill tax needs who forgoes the option to fill out taxes themselves. A small business without complicated tax structure can use them also, but it is advisable to seek a more experienced professional. It’s worth noting that chain tax services like H&R Block, Jackson Hewitt, or Liberty Tax Service employ people with varying levels of experience, and it’s a good idea to ask if any CPAs are employed there. If the answer is yes, request to work with them.

Tax attorneys are the choice for anyone with intricate tax needs, or issues with the IRS. If you get audited by the IRS or owe an excessive amount of money ($10,000 or more) you should seek the help of a tax attorney. It’s a good to be proactive and hire a tax attorney for management of a more involved account where a traditional accountant will not suffice. This would include businesses with payroll, international business or estate planning. One option is to turn to a company like Burkett, Burkett and Burkett that staffs experienced CPAs and tax attorneys. These kinds of firms benefit from the shared experience of a group.

 5.     What they will cost:

Tax preparers charge in a number of different ways, but are generally affordable. From independent preparers to franchise services, methods of billing range from flat fees to hourly and scaled fees by level of complexity. The average 2012 price for H&R Block was $192 per return where Liberty Tax Service averaged $173.

Tax attorneys are costly.  We all know that hiring a lawyer is going to cost and a tax lawyer is no exception. You will more than likely be charged an hourly rate and can expect to see them ranging from a few hundred dollars to $1,000 or more per hour.  This is obviously what puts such an emphasis on hiring the right kind of professional. If you don’t require complicated tax services, you may be able to get by with a tax preparer or certified public accountant. However, don’t make the mistake of cutting corners in a situation where potential consequence so greatly outweighs the savings.

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Intuit’s Quickbase Decides To Move Headquarters From Current Location

Intuit’s Quickbase Decides To Move Headquarters From Current Location

Quickbase is owned and operated by Intuit, the creator of TurboTax software. A cloud-based collaboration platform, Quickbase allows individuals to create applications with ease. In fact, users don’t even need to write their own code in order to use the platform. This particular company is headquartered in Waltham, Massachusetts, and has been for its entirety. That’s going to change this coming fall, though.

English: Central Square in Waltham, Massachusetts.

English: Central Square in Waltham, Massachusetts. (Photo credit: Wikipedia)

In a few months, Quickbase will move from Waltham to Cambridge and brand new headquarters. The location is nearly 70,000 square feet in size and comprises two floors of a large office building. More space will allow the business to continue growing at a rapid pace. Plus, a location in Cambridge allows the business to attract better employment candidates, which is always desirable in this day and age.

Also, other Intuit employees in the area will join Quickbase at its new headquarters. This includes members of the Intuit Payments Solution Division, Intuit Partner Platform, and CTO team. Each separate entity will continue working on its own projects, including TurboTax software. Of course, Quickbase will continue expanding its resources and features for its users.

Quickbase offers a subscription service for countless business individuals. Undoubtedly, being able to create an application without lengthy coding sessions is desirable. The company doesn’t have much to do with TurboTax software, except for the fact that Intuit owns both businesses. In the end, a new headquarters will improve Quickbase in plenty of ways. It continues to grow each and every day with a number of new subscribers.

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What do you do when there is an invalid charged-off debt?

What do you do when there is an invalid charged-off debt?

It’s nothing new to hear or see a dispute between the tax payers and the IRS. Of course, there are quite a few reasons behind the disputes, but most commonly these disputes involve examination and/or collection issues and also the different interpretations of tax law. The IRS reporting a charged-off account on the credit report also proves to be a great hassle for more reasons than one. Now, if you happen to be one of those whose credit report shows charged-off tax accounts and that too having been reported by the IRS, then it’s definitely worth disputing. In fact, if you sit on it without taking heed, then this’ll definitely have a negative impact on your credit rating and that can be far worse than not having accrued debt, yet souring your credit.

What’s a charge-off debt actually?

Before you get into surmises about what exactly charged-off debt is all about, it’s important for you to understand the concept behind a charged-off debt in the first place. A charge-off debt actually happens to be that debt which has been determined uncollectible by the original creditor and that’s usually done after the debtor is seriously delinquent. Now, it’s only after 6 months that charge-offs are known to occur. Moreover, creditors still have the right to collect on the charge-offs because the debt still remains valid. Charge-offs are also known to appear on your credit report at least for 7 years since the debt appears.

Hence, it’s obvious that you’d like to validate your debts before coming to any conclusion about whether or not you should dispute the charge-offs. Debt validation is necessary like you do when going for the programs aimed to solve your financial problems. In this case too, debt validation programs serve the purpose of telling you for sure whether or not you can dispute the charged-off account with the IRS.

How’ll you dispute a charged-off debt with the IRS?

As a taxpayer who’s looking to dispute a charged-off debt, it’s rather important that you evaluate all possible options before taking any conclusive steps. Have a look at the steps discussed below and you should know how you can dispute a charged-off debt with the IRS.

  1. Write out a formal protest: The very first thing you should do is write out a formal protest and request a review with the IRS Appeals Office. If an issue arises, then the IRS is bound to issue a Notice of Proposed Adjustment (NOPA), Form 5701 which details the position of the IRS regarding particular financial matters. You might as well reply to this by citing tax laws and other substantial evidences to support your position.

  1. Review alternative dispute methods: You should also try and review alternative dispute methods that might be available. Generally there are 4 alternate dispute resolution tools available at the IRS Appeals Office – early referral to appeals, fast track settlement, post appeals mediation and delegation orders. You can request the tax office for early referral to the Appeals Office.

  1. Look for the best method: It’s always advisable that you peruse for the best method when it comes to your particular case of disputing charged-off accounts. Advisably since it’s a dispute, hence you might as well take the assistance of a tax professional. The ultimate option of course remains litigation in a tax court or federal district court.

Keep in mind the above instances and steps when looking to dispute your charged-off debts with the IRS for unless you’re sure about what you’re doing, things can get even messier ultimately. Take heed now and conclude things smoothly.

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How Your Kids Can Boost Your IRS Refund

Law School

Law School (Photo credit: Tulane Public Relations)

IRS Refund

A considerable amount of tax can greatly help with your tax return upon declaring your legal dependent. Not only will it boost your own exemption but it can also make you eligible for other tax benefits. You can certainly avail of the child tax credit once you have claimed a legal dependent. Keep in mind that the IRS has restrictions or standard qualifications as to whom you can claim as a legal dependent. Never presume that any person or anybody living in your house directly qualifies as a legal dependent.

What is a Legal Dependent?

In general, a dependent is a person who relies on you for more than 50% of his or her finances. He may have an income from a source or totally depending from the help you are giving. But for the IRS, a legal dependent can be your child or anybody that you are providing aid financially.

A child or your spouse living in your home is the most common type of dependents that mostly everyone claims. Your elderly parents and if you have a child in college, they can still be considered as dependent. To claim a brother, sister, stepsister or any of your family relative as a dependent, he or she should only produce an income less than the standard personal exemption rate for that particular year. The IRS has provided 5 attributes to identify legal exemption of a claimed dependent. These are the following: support, citizenship, relationship, gross income and joint return. With regards to citizenship criteria, it requires that a dependent is a U.S. citizen, a legally adopted foreign child currently residing in the U.S., a local of the U.S. or resident of Mexico or Canada within the year.

Are YOU a Dependent?

Before you can claim a dependent, be sure that you are not claimed as a dependent by another person. Each qualified dependent can only be claimed by one taxpayer in that same year. To ensure that only one person has filed the person a dependent, no other relative should claim the child as a dependent. To fully qualify the kid, he should also be residing with the claimant for more than 6 months of the same year. Make sure that you support your claim with documents and keep those important files for future use.

After you have identified that the person is your qualified dependent, you should, at this time, be keeping significant receipts. It would be in your best interest to take note of any medical, daycare or even itemized expenses that was used or occurred for your dependent. It may seem complicated but the rules determined by the IRS are just very easy to follow.

Sean Harris is a tax blogger from Miami Florida. You can check out his blog irs-easy.com for more extensive information on doing your taxs yourself .

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