Today, Phil gives his top tips on how to avoid IRS levies and liens.
Tip #1: Don’t Owe the IRS
Avoiding owing the IRS begins with responsible financial management and proactive tax planning. First, maintain accurate records of all income and expenses throughout the year, ensuring you’re well-informed about your financial standing. Next, regularly review and adjust your tax withholding or estimated tax payments to align with your actual tax liability. Utilize tax-saving strategies such as contributing to retirement accounts or taking advantage of tax credits and deductions. Stay updated on tax law changes that may affect your situation. Consider consulting with a tax professional for personalized guidance.
Tip #2: Open Your IRS Mail
Opening IRS mail is crucial because it often contains important information regarding your tax obligations, potential refunds, or any issues that may require your attention. Ignoring IRS correspondence can lead to missed deadlines, penalties, or even legal consequences. By promptly opening and reviewing IRS mail, you can stay informed about any adjustments to your tax return, requests for additional information, or notifications about potential errors or discrepancies. Additionally, timely action can help you address any issues efficiently, potentially avoiding escalated problems or further complications.
Tip #3: Pay Your Tax Balance ASAP
Paying your tax balance as soon as possible is essential for several reasons. Timely payment helps you avoid accruing interest and penalties, which can significantly increase your overall tax liability. Paying your taxes on time demonstrates compliance with tax laws, which can help maintain your good standing with the IRS and potentially mitigate any future issues, like liens, levies, or audits.
Join us next Friday as Phil will answer your questions about what to do if you can’t afford to do your taxes!
Today, Phil explains what a tax attorney is, including what it takes to become one and how they can help you with your tax issues.
What is a Tax Attorney?
A tax attorney is a legal professional who specializes in tax law. They are trained and experienced in dealing with complex tax issues, including tax planning, compliance, disputes, and litigation. One of the privileges they have is being able to represent taxpayers before tax authorities, such as the IRS.
Becoming a Tax Attorney
What does it take to become a tax attorney? For one, it means going to and completing law school. It also means passing the bar exam. However, they shouldn’t stop there. Staying updated on changes in tax laws and regulations is essential for tax attorneys to effectively advise their clients and navigate complex tax issues.
Tax attorneys can make a significant impact on their clients’ financial well-being by helping them minimize tax liabilities, resolve disputes with tax authorities, and plan for the future. Just be sure to vet your attorney to ensure they are qualified to represent you before the IRS. Rest assured, the attorneys and enrolled agents at Optima Tax Relief can help.
Today, Phil discusses the Financial Crimes Enforcement Network, also known as FinCEN.
If you’ve never heard of the Financial Crimes Enforcement Network, you aren’t alone. FinCEN is a bureau of the United States Department of the Treasury. The Financial Crimes Enforcement Network’s primary mission is to combat and prevent financial crimes, including money laundering, terrorist financing, and other illicit activities that involve the financial system.
FinCEN is important to know about because they may have filing requirements that apply to small businesses. You can check if you have a filing requirement for your small business on their website, fincen.gov. If your business was founded and registered before 2024, you have until January 1, 2025, to report all beneficial ownership interest.
Today, Phil discusses his top 5 tax tips for 2024.
Tax Tip #5: Gather Your Tax Documents Early
Most tax forms, including your W-2s and most 1099s, should be sent to you by January 31. However, there are some tax documents that come in a bit later. For example, 1099-B and 1099-MISC are due to recipients by February 15. 1095 health coverage forms are due by March 1. Be sure to wait for all your documents to arrive before filing your tax return.
Tax Tip #4: Don’t Forget About Estimated Tax Payments
If you are a small business owner, investor, landlord, or any taxpayer who receives income outside your normal job, you might need to pay estimated quarterly taxes. The 2024 quarterly tax payment deadlines are April 15, June 15, September 15, and January 15, 2025. Knowing these deadlines can help avoid tax penalties. You can use Form 1040-ES to calculate your estimated tax for the year.
Tax Tip #3: Don’t Wait on Your Tax Refund
In general, it takes about 21 days to receive your tax refund. However, some returns may take more time to review than others. That said, it’s best to not rely on your tax refund to make a big purchase or cover large expenses. You can use the online Where’s My Refund tool on the IRS’s website to track your refund status within 24 hours after e-filing and within 4 weeks of mailing a paper return.
Tax Tip #2: Report 1099-K Income – Even If You Don’t Receive the Form
If you receive payments on Venmo, PayPal, Etsy, eBay, or other third-party sites for your business, you probably know what a 1099-K is. The 1099-K reporting thresholds have changed quite a bit in the last couple of years, making the topic confusing for many small businesses. In short, if you receive income from these third-party payment networks, you must report it on your tax return, even if you do not receive a 1099-K form. This income is still considered taxable income, which means not reporting it can result in taxes owed to the IRS.
Tax Tip #1: Create an IRS Online Account
The IRS Online Account allows taxpayers to access various services and information related to their tax obligations. Taxpayers can access their tax return transcripts, make payments, access IRS notices and letters, apply for installment agreements, view payment histories, and more. Put simply, it helps you know where you stand with the IRS.
Join us next Friday as Phil will answer your questions about FinCEN!
If you need help with your taxes in 2024, contact us today for a Free Consultation
Today, Phil discusses the 2024 tax season, including penalty relief and who qualifies for it.
The IRS is providing $1 billion in penalty relief to nearly 5 million 2020 and 2021 tax returns. To qualify, you must owe less than $100,000 on either year’s tax return. This amount includes penalties and interest. Finally, you must have received a CP14 notice from the IRS informing you of a balance due.
The relief will come in the form of waivers for failure-to-pay penalties. Eligible taxpayers will automatically receive penalty abatement in their online accounts with no further action needed. You will then have until March 31, 2024, to pay back all your unpaid taxes. If the balance is not paid, the failure to pay penalty will begin to accrue again.
Tune in next Friday as Phil covers his top 5 tax tips for 2024!
If you need help with the 2024 tax season, contact us today for a Free Consultation
Today, Optima Tax Relief’s Lead Tax Attorney, Phil Hwang, discusses gift taxes, including how they work and who is responsible for paying them.
The government imposes gift taxes on the transfer of property, money, or assets from one person to another without receiving something of equal value in return. These taxes are typically levied to prevent individuals from avoiding estate taxes by giving away their assets before they pass away.
The person responsible for paying gift taxes is generally the person making the gift (the donor), not the person receiving the gift (the donee). In 2023, you can give up to $17,000 each year to as many people as you want without incurring gift tax. Gifts within this annual exclusion amount do not require you to report or pay gift tax.
In addition, the lifetime gift tax exemption allows you to make larger gifts without paying gift tax. However, once you exceed this exemption, you’ll be required to pay gift taxes on the excess amount. As of 2023, the lifetime gift tax exemption is about $13 million per person.
Once you reach either of these thresholds, a giver will be responsible for paying gift taxes. This tax can range from 18% to 40% depending on the taxable amount. In addition, if you give over the current $17,000 limit, you will need to file a gift tax return. This r formally known as the United States Gift (and Generation-Skipping Transfer) Tax Return.
Given these thresholds, it can be fairly simple to avoid the gift tax. However, certain actions can trigger the gift tax. These include unpaid loans to friends and family or excess contributions to a 529 savings plan. Be sure to speak with a knowledgeable tax professional if you’re unsure about how to properly gift your assets.
