Many of our clients have reported that persons representing themselves as the IRS call on the phone and ask for money. In many cases they seem to know a great deal about you when they call.
The U.S. federal government could lose almost $3 billion in revenue during the current fiscal year because budget cuts are forcing the tax-collecting Internal Revenue Service to audit fewer people, the agency’s chief said on Wednesday.
Testifying before a congressional panel, IRS Commissioner John Koskinen said the IRS will audit 100,000 fewer individuals this year as part of congressionally mandated cuts to the tax agency’s budget. Audits of high-wealth individuals, businesses and partnerships will also decline, he said.
“This fiscal year, the IRS’s key enforcement programs will operate well below historical levels,” said Koskinen, who was speaking before a House of Representatives subcommittee about the tax season that ended on April 15.
Going through the back door can pay off for high-income retirement savers.
We’re talking about the backdoor route into popular Roth individual retirement accounts, which offer tax-free income in later life.
The front door into Roths is shut for many investors. Married couples earning $191,000 or more and singles earning $129,000 or more in 2014 are barred from contributing directly to Roth IRAs.
But there’s a simple detour that works for many of them. They can put money into a traditional IRA—and then roll that into a Roth IRA, getting all the benefits.
For most of us, tax day comes just once a year—on or around April 15. But for people who owe estimated taxes, Uncle Sam expects a check four times a year. Unfortunately, one of those poor quarterly taxpayers may be you if any of the following applies to your situation.
As Americans across the country rang in the new year, many were unaware that, at midnight, more than 50 different tax breaks expired. According to the Tax Foundation, among them were credits for everything from building motorsports facilities, producing biofuels, conducting business research and development, and even training a mine rescue team.
Clearly, the U.S. tax system can be very complex. Understanding the basics, especially the different types of taxes you may face, can be a valuable tool in financial planning.
Not all taxes are paid at the same time. Some, for example, are deducted from your paycheck. “Generally, three types of taxes will show up on a worker’s pay stub: federal income taxes, payroll taxes (Social Security and Medicare), and state income taxes,” Andrew Lundeen, manager of federal projects at the Tax Foundation, told 24/7 Wall St.
Although the American Taxpayer Relief Act (enacted in January of this year) added or extended several key tax provisions and rates, dozens of tax provisions are set to expire at the end of 2013 (though most relate to businesses, if you have a pass through entity you could feel the affect). Here is a list of a few of them (along with brief commentary):
The report, from the Treasury Inspector General for Tax Administration, pointed out that the IRS’s own employees and contract employees are required under the Internal Revenue Manual to pay any federal tax debts and file their taxes on time, but employees of IRS contractors are not held to the same standards.
TIGTA found that as of June 14, 2012, 691 of the 13,591 IRS contractor employees, or 5 percent, it reviewed had $5.4 million in federal tax debt. These debts were either agreed to by the taxpayers or affirmed by the court. Of the 691 contractor employees, 352 are not currently on a payment plan to resolve their tax debts.
Most of the contractor employees appeared to have been compliant when their initial staff-like access was granted, but at least 319 contractor employees had tax debts assessed after they were granted staff-like access,
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There’s an old adage that “there’s nothing new under the sun” and so it is inside the Beltway. As you are well aware, the federal government suspended most of its operations on Oct. 1 after Congress failed to pass a bill to extend funding to mid-November, the first such shutdown in 17 years. Strong political discourse is alive and well in America and it is part of the price we pay for democracy. It was that way in 1996 when a shutdown lasted three weeks. Hopefully a compromise can be reached quicker this time around.
The Internal Revenue Service has temporarily stopped sending out tax refunds, and the Tax Court has suspended operations during the federal government shutdown, as lawmakers in Congress continue their battle over delaying or defunding “Obamacare” for a year.
“Tax refunds will not be issued until normal government operations resume,” said the IRS. The IRS emphasized, however, that the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.
“Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law,” said the IRS. “The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.”
In addition, the IRS
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