Newlywed Tax Tips, Avoid Common IRS Troubles

Don't Pay Your Spouse's Tax Debt Whether you're planning a wedding, or you're newly married, you have a lot to learn in this arena. I'm not qualified to give marriage counseling- long story. But, if you've recently gotten married or plan to get married in the near future, here's some tips to help you avoid stress when tax time rolls around:

1. Name Change Drama: You're required to notify the Social Security Administration Report of your name change. Your name and your Social Security Number must match when you file your next Tax Return.

Here's what you do:
- File Form SS-5, Application for a Social Security card at your local SSA office. You can download the form from their website, www.socialsecurity.gov or you can call 800-722-1213.

2. Address Change: Moving in with the new spouse? You're required to notify the IRS when you change your address.

Here's what you do:
- Send Form 8822, Change or Address to to the IRS. You can download it at IRS.gov, or order it from 800-829-3676 (800-TAX-FORM).

-Don't forget to notify the U.S Postal Service so you can receive IRS correspondence. Don't try to avoid them, the IRS will find you.

-Don't forget to notify your Employer. Report your name and address changes to ensure that you'll receive receipt of your Form W-2 and your Wage and Tax Statement at the end of the year.

3. Check Your Withholding- You and your spouse's combined income could place you in a higher tax bracket. Double check your withholding to make sure the correct amount is being withheld for your filing status. The IRS has a convenient Withholding Calculator that will help you do this now.

Here's what to do:
-Go to IRS.gov and type "IRS Withholding Calculator" into the search bar

-Be prepared with your personal payroll and tax information to enter the information

The IRS Withholding Calculator will provide a new Form W-4, Employee's Withholding Allowance Certificate. Just print it out and give it to your payroll department so they will withhold the correct amount from each paycheck.

4. Don't Marry Tax Debt You can marry debt. Watch out if you're in one of the Community Property States, which include:

-Arizona
-California
-Idaho
-Louisiana
-Nevada
-New Mexico
-Texas
-Washington
-Wisconsin

If you live in any of the States, be careful who you marry. If they owe, YOU OWE. And nothing will turn your marriage into an episode of "Married with Children" faster than a shared Tax debt issue. Here's some more scary facts:

-As long as you are legally married, the IRS can seize money and assets from YOU for your SPOUSE'S Debt

-No Innocent Spouse Relief is allowed, the spouse is guilty by way of the state laws

Scared yet? make sure your spouse doesn't have a Tax Debt issue before you marry them. And if they don't want you to know it, why are you marrying them in the first place?

Final Warning Tip- There are plenty of reasons to rethink marriage. To avoid offending anyone I'm only going to cover the Tax Portion...You may have heard of "Innocent Spouse Relief" or "Equitable Relief" which relieves the "innocent spouse" from Tax Obligation. Well, if you signed the Tax Return for that Tax Year, you're guilty and it will take an act of congress to prove you're "innocent". Basically, it's your fault for signing without double checking all the information on the form! So read, research, and double check your joint Tax Returns before you sign on the dotted line!

IRS Bank Levy- How to Stop an IRS Bank Levy Dead in its Tracks

Silent Strike: Like a skilled assassin- a Bank Levy strikes without notice. One day your debit card will be working fine, the next day your card will be declined while you're buying your groceries. The IRS Bank Levy can be devastating and makes normal day to day living impossible.

Letter after Letter: If you're reading this, you may have received some threatening letters from the IRS about your tax debt. If you receive a letter entitled “Final Notice of Intent to Levy” the IRS is letting you know that they intend to Levy your Bank Account. This means that they are in essence, freezing your account and not allowing you access to it. This is one of the most powerful tools the IRS uses to collect their debt.

Act Now: When the IRS freezes your account, they give you 21 days before they seize all the money out of your account. Take advantage of this small window of time and take what steps it takes to make sure Uncle Sam doesn't keep your money.

Ways To Stop A Bank Levy:

1) Hardship Plan: Send a letter to the IRS with evidence proving that if they Levy your Bank Account you will not be able to meet the standards of basic living.

2) Payment Plan: Negotiate a payment plan with the IRS that will have you paying a monthly amount on your debt. The Bank Levy will be removed as long as you continue to pay monthly and on time.

3) Negotiate a Settlement: It will be hard, but you can negotiate a settlement with the IRS to have your debt quickly paid in one lump slum. With the help of a tax professional this could become a reality.

It's your choice: You can let the IRS seize the funds in your bank account, leaving you penniless- or you can act fast and make the right choices. Take these tips and get on the fast track to being debt free.

Summer Camp and Childcare might qualify for a Tax Credit

Summer is in full swing, and with the kids out of school, Summer Camp, Daycare, and Babysitters may be a necessity. Recently, the IRS released a report about Tax Credit available for child care expenses, and Summer child are expenses are a convenient fit.

1. Day Camp- The cost of Summer Day Camp can count as an expense toward the child and dependent care credit.

2. Overnight Camps- The cost of overnight camps DO NOT qualify, however.

3. Sitters- if you have a babysitter at your home or at a daycare facility outside the home, you'll receive a tax benefit if you qualify for the credit. (this could be up to 35% of your qualifying expenses, it depends on your income amount.)

4. You can use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

5. The dependent must be 13 years old or younger, unless they are over 13 and are unable to care for themselves (ex: disabled).

First Steps for New Small Businesses, Start Right and Avoid IRS Debt

Starting a new summer business? Before you do anything else, you need to read up on your tax obligations. Nothing will ruin your Small Business' chances of survival more than an IRS issue. Here's the first steps a budding entrepreneur should take to avoid tax mishaps.

Step 1: Determine your Business Type
The type of business you choose will determine which tax forms you use. The five most common business types include:

- LLC
- Sole Proprietorship
- Partnership
- Corporation
- S Corporation

Step 2: Determine Your Business Tax Type
The type of business chosen also determines the taxes you'll encounter and how you'll pay them. Four general types of business tax are:

- income tax
- self-employment tax
- employment tax
- excise tax

Step 3: Get your ID Number
An EIN or Employer Identification Number is used to identify your business. You can apply for an EIN online on the IRS website.

Step 4: Keep Records
With few exceptions, the law does not require you to keep records for your business. This might be a calculated move on the IRS's part, because keeping accurate records is an almost guaranteed method for preventing IRS issues later in your operation! Records you need to keep vary from business type to business type, but some universal things to keep track of include:

- All expenses
- All receipts
- All income
- All invoices

You can keep records manually, with excel, or with accounting programs. Consider hiring an accountant if this all seems intimidating.

Step 5: Calendar or Fiscal Year
Every business taxpayer must figure their taxable income every "Tax Year," which is the annual accounting period of a business. The calendar year and the fiscal year are the most common tax years used.

- Calendar year
- Fiscal year

Step 6: Choose your Accounting Method
As a business you are required to report income and expenses to the IRS throughout the year. You have to choose a consistent accounting method for doing this. The two most commonly used methods are:

-Cash Method: you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them.

-Accrual Method: you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

The IRS does not require any courses on running a small businesses. You don't need to know anything about your tax obligations before you receive your Employer Identification Number. This is why so many small businesses are in huge trouble with the IRS. Use the Resources below to educate yourself and prevent problems before they happen.

Tax Resources for Small Businesses:


The A to Z Index for Business- Just like the title suggests, covers a variety of subjects relating to the IRS and Business.

The IRS Small Business Resources Guide, 2009 This guide covers everything, from starting up, to preparing Tax Returns.

Tax Changes for Businesses - Stay up-to-date on the various Small Business Changes with news directly from the IRS.

Economic Stimulus Payment Info Center for Business- Find information on the business provisions of the economic stimulus payments.

Get the 2009 Business Tax Calendar- This Calendar will help you make quarterly payroll payments and other important deposits on time.

E-File for Business and Self-Employed Taxpayers- This is for helping you find the E-filing option to suit your business needs.

State Taxes- Business tax required by the federal government are tough enough. But you also need to know about you State Tax obligations. This source provides access to key resources that will help you learn about your state tax obligations.

Specific Questions? And if none of the resources help, I'm always available to answer any specific questions you may have. Send me an e-mail at irs-hitman@taxdefensenetwork.com

IRS Penalties: How do you remove them?

Killing you Softly: Penalties and Interest fees are devastating. More than punishment, these outlandish fees are a lucrative source of income for the IRS. If you want to keep your finances from being swallowed by ever-increasing tax debt, know your enemy- the dreaded IRS Penalties.

The Penalty Box:

Accuracy Penalties: The IRS can add a 20% penalty if they find you understated your income tax liability.

Fraud Penalties: If you fraudulently underreport your income the penalty is 75% of the underreported amount. Expect the same 75% penalty for failure to file your tax returns.

Failure to Pay Taxes Penalties: This penalty starts on April 16 for the unpaid amount. It can be as high as 1% per month on the balance due.

Late Filing of Return Penalties: The IRS can impose a penalty of 5% per month based on the the tax balance due, up to 25% total.

Combined Penalties: The IRS can impose a combined penalty of 5% per month for up to 5 months.

Stop the Bleeding: Apply for Penalty Abatement.

Penalties will grow unless you stop them. If you apply for Penalty Abatement you can stop the penalties and reduce your debt by thousands of dollars. But first, you have to qualify.

Qualifications- Reasonable Cause for Not Paying Penalties

- Serious illness of you or a family member.
- Unavoidable absence
- Business Records destroyed (by fire or other cause)
- Taxpayer's ability to make deposits or payments impaired by civil disturbances
- Lack of funds applies, but only when you can prove lack of funds occurred despite exercising ordinary business prudence.

Other explanations may be acceptable, but you have to prove you exercised ordinary business care.

Fight Back: How to request Penalty Abatement.

- Fill out IRS form 843, “Claim for Refund or Request for Abatement.”
- Include copies of documents that prove your case
- Make copies of any letter you send to the IRS

Warning: Convincing the IRS that you need Penalty Abatement is incredibly difficult, even for the professionals! Now you know if you qualify for it, don't let a fast-talking Tax Resolution company take you down that road if you don't qualify, or it will cost you.