Financial difficulty tax issue information

Here is a bit of helpful information for U.S. taxpayers experiencing financial difficulty straight from the IRS website.

Taxpayer Advocate Service Case Intake Line: 1-877-777-4778 or TTY/TTD: 1-800-829-4059

PDFs:

Tax Impact of Job Loss

Job Related Questions During an Economic Downturn

Low Income Taxpayer Clinic List & Info.

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IRS Help for Financially Distressed Taxpayers
IRS website

If you are facing financial difficulties and struggling to meet your tax obligations the IRS can help. As the 2009 tax filing season begins, in addition to new credits, deductions and exclusions, the IRS is taking steps to help people who owe back taxes. Here are some areas where IRS can help:

• Added Flexibility for Missed Payments: The IRS is allowing more flexibility for individuals with existing Installment Agreements who have difficulty making payments because of a job loss or other financial hardship. Depending on the situation, the IRS may allow a skipped payment or a reduced monthly payment amount. Taxpayers in this situation should contact the IRS.

• Additional Review for Offers in Compromise on Home Values: An Offer in Compromise (OIC), an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than full amount owed, may be a viable option for taxpayers experiencing economic difficulties. However, the equity taxpayers have in real property can be a barrier to an OIC being accepted. With the uncertainty in the housing market, the IRS recognizes that the real-estate valuations used to assess ability to pay are not necessarily accurate. So in instances where the accuracy of local real-estate valuations is in question or other unusual hardships exist, the IRS is creating a new, second review of the information to determine if accepting an offer is appropriate.

• Prevention of Offer in Compromise Defaults – Taxpayers who are unable to meet the periodic payment terms of an accepted OIC will be able to contact the IRS office handling the offer for available options to help them avoid default.

• Postponement of Collection Actions: IRS employees will have greater authority to suspend collection actions in hardship cases where taxpayers are unable to pay. If an individual has recently encountered a job loss or other financial problem, IRS assistors may be able to suspend collection in some situations without documentation to minimize burden on the taxpayer.

• Expedited Levy Releases: The IRS will speed the delivery of levy releases by easing requirements on taxpayers who request expedited levy releases for hardship reasons. Taxpayers seeking expedited releases of levies to an employer or bank should contact the IRS number shown on the notice of levy to discuss available options. When calling, taxpayers requesting a levy release due to hardship should be prepared to provide the IRS with the fax number of the bank or employer processing the levy.

If you are behind on tax payments there could be additional help available if you are facing an unusual hardship situation. For assistance with your back taxes contact the phone numbers listed on your IRS correspondence.

East Coast Storm Victims Granted Extensions

* * Storm Victims Granted Extensions * *
via NATP

Victims of severe storms and flooding that began March 12 in Rhode Island, West Virginia, and Massachusetts may qualify for tax relief. President Obama has declared several counties in these states federal disaster areas qualifying for individual assistance. As a result, the IRS is postponing until May 11 certain deadlines for taxpayers who reside or have a business in the disaster area. This includes the April 15 deadline for filing 2009 individual income tax returns, making income tax payments, and making 2009 contributions to an IRA. In addition, the IRS will waive the failure to deposit penalties for employment and excise deposits due on or after March 12 and on or before March 29, as long as the deposits were made by March 29.

Additional information is available on these IRS websites:

Massachusetts - http://www.irs.gov/newsroom/article/0,,id=220830,00.html
Rhode Island - http://www.irs.gov/newsroom/article/0,,id=220829,00.html
West Virginia - http://www.irs.gov/newsroom/article/0,,id=220828,00.html

Summary of the updates of some of the 2010 tax law credits

Here are quick highlights of some of the 2010 tax law credit changes. I think they may make some of you very happy. Know that it is necessary to qualify for these credits based on a number of specific criteria. More information can be found at Internal Revenue Service

Earned Income Credit Expanded:
The credit has been expanded for larger families. As with the original credit, childless and single taxpayers may qualify for this credit as well.

Home buyer Tax Credits:
First-time home buyer tax credit has been extended to April 30, 2010. The limit of the credit remains $8,000.

Current homeowners that have lived in their home as their primary residence for a minimum of five consecutive years may qualify for a $6,500 tax credit when purchasing a new home.

Making Work Pay Tax Credit:
The changes in the tax tables may allow for bigger paychecks, however taxpayers should make sure that with the change in the tax tables, they are having enough tax taken out of their paychecks. Too little tax withheld could result in tax due on their tax return. This credit is also available to the self-employed who qualify. Self-employed individuals should calculate their withholding during the year and adjust if necessary. IRS Withholding Calculator

American Opportunity Credit:
This is a modification of the Hope Credit, allowing for higher income and adding required course materials as part of the qualifying expenses. It is now also allowing for 4 post-secondary years instead of the former two.

Sales Tax Deduction for New Vehicle Purchases:
New cars, light trucks, motor homes and motorcycles purchased between Feb. 17, 2009, through Dec. 31, 2009 may be eligible for a deduction of state and local sales and excise taxes. For those that live in a state that does not have sales tax, a deduction for other taxes and fees is provided. This deduction is not subject to itemized deductions qualification!

Residential Energy Credit:
Homeowners that make energy saving improvements to their homes may now qualify for an increase to 30% of the cost of all qualifying improvements such as energy saving windows, efficient air conditioning & heating, and the installation of insulation. The new maximum limit of the credit is $1,500 for those modifications done in 2009 and 2010.

Still Waiting for a W-2 or 1099?

W-2s and 1099s are to be sent out by January 31st. Many companies send them out earlier, but many do not. Therefore, do not be alarmed if you have not yet received yours.

If you do not receive anything by February 14th, or if your wage statement is wrong, you should first contact your employer. If you do not get a response, you can register a complaint with the IRS and file Form 4852 for a substitute W-2 or other wage statement. The IRS will then send a letter to your employer to get a fire under them. Your employer should send you a letter with the information needed after that.

* You may not submit this form until after February 14th.

* It is important that the number you use on your wage statement matches the ID number you use on your tax return!

Complete Your Tax Worksheets

If you prepare your taxes yourself, you may have noticed worksheets in your tax packet if using the paper method or an icon to open a worksheet in a tax preparation software program. Do not ignore these important tools! Worksheets and tables are used to make sure that the taxpayer actually qualifies for the credits for which they are applying. There is a lot of valuable information contained within and the answers to the questions asked can either make or break your credit qualification. Many terrible mistakes are made by skipping this step and many a taxpayer who received a refund has had to pay back some or all of the monies received. Be smart - be complete. ;)