The new tax law passed by Congress in December 2010, will impact almost every American. Here is a brief summary of some of the changes.
- MARGINAL TAX RATES: The lower “Bush Tax Rates” are being extended through 2012
- UNEMPLOYMENT BENEFITS: An extra 13 months of benefits
- ESTATE TAX: The tax rate will be 35% on an inheritance of $5 million or more. It would have been 55% on $1 million plus.
- SOCIAL SECURITY TAX BREAK: You will have only 4.2% deducted instead of 6.2% out of each paycheck for Social Security on wages up to $106,800.
- TAX CREDITS: The $1,000 per child tax credit stays through 2012 instead of reverting to $500. The tax credit of up to $3,000 for dependent care was renewed. The American Opportunity Credit for college expenses was also renewed.
These are just a few of the areas that may affect you. Others include Alternative Minimum Tax patch; Marriage Penalty Relief; Making Work Pay Credit; and other energy & business related tax credits. If you have questions on how these may affect you, give us a call.
Biffle & Associates Services
Our firm offers a wide range of services to our personal and business clients in the Columbus area. Because our firm is relatively small, our clients benefit by getting personalized, quality service that is beyond comparison. Below we have listed some of the services we offer to our clients.
|•Tax Preparation for Individuals||•Entity Selection and Restructuring|
|•Tax Preparation for Corporations & S-Corps||•Financial Statement Preparation|
|•Partnership Tax Preparation||•Financial Projections and Forecasts|
|•Trust Tax Preparation||•Cash Flow Analysis & Budgeting|
|•Accounting Services||•QuickBooks Accounting Assistance|
|•Payroll Services||•Other consulting & Financial Services available|
|•Sales Tax Preparation|
What to do if you can't pay the IRS
Failure to pay your tax bill by April 15th (the 18th in 2011) could trigger several unpleasant consequences. Interest and penalties will inflate the amount you owe in taxes. But you do have options!
First, you should file your tax return on time even if you can’t pay the entire amount. Filing an extension does not give you additional time to pay, only additional time to file. The IRS will charge a late payment penalty, but that penalty is only ½ of 1% per month. The next part is important: COMMUNICATE WITH THE IRS. There are several options for you work with.
- Get a short term extension. If you know you’ll have the money in 120 days or less, ask the IRS for a short-term administrative extension. You’ll still be liable for the failure to pay penalty and interest, but collection actions won’t start against you.
- Pay with a credit card. The IRS accepts plastic, but unlike most retailers, the IRS won’t cover the cost of processing the transaction. You’ll have to pay the fee which ranges from 2.35% to 4%, depending on which provider you choose. The fee will be added to your balance.
- Set up an installment plan. The IRS offers a program that allows taxpayers to pay their bill in monthly installments. If you owe $10,000 or less and are in good standing with the IRS, the approval is usually easy. There is a fee to set up an installment plan and you also pay interest. But this interest is usually considerably lower than the interest on a credit card balance. You must make every payment on time or the entire balance will become immediately due.
- Request an offer in compromise. Under certain circumstances, the IRS will agree to accept less than you owe. But despite what you may have heard on late-night TV, the IRS approves only a small percentage of applications submitted to this program. You must convince the IRS that it’s unlikely you’ll ever earn enough money to pay what you owe. You’ll be asked to document your assets and liabilities in excruciating detail. There is a fee to apply for an OIC.
If you can’t pay the IRS, don’t panic. You do have options. If you have questions, we can assist you to find the best way to solve your problem with the IRS. Give us a call.