irs installment agreement

Episode 46:  In this episode, Timalyn discusses 4 various options you have to handle your IRS debt, if you cannot pay it in full.  While you need to pay your tax debt, there are ways to do it so that you’re not overly burdened.  In addition to the lump sum payment, she’ll explain the offer in compromise, installment agreements, currently not collectible status, and bankruptcy. 

Have You Received an IRS CP504 Notice?

If this is a letter you’ve already received, then you know the IRS is notifying you of their intent to levy.  The reality is you’re now in a tough situation.  While you haven’t been able to pay your tax debt, you most likely haven’t communicated with the IRS about your particular situation.  Now, the IRS is going to have the right to access your bank account(s) and decide how much they are going to take. 

The Offer in Compromise

You’ve probably heard about commercials claiming you can settle your tax debt for pennies on the dollar.  In reality, many people won’t qualify for this option.  This is sometimes referred to as the Fresh Start Program, which was implemented by Congress.  However, the Fresh Start Program isn’t just about the Offer in Compromise.   

There are ways to qualify for the Offer in Compromise.  You may be able to claim the debt doesn’t actually belong to you.  This is “Doubt as to Liability.”  Unfortunately, this may be very difficult to prove.  “Debt as to Collectability” means the IRS probably won’t be able to collect the debt from you.  “Effective Tax Administration” is another claim you may be able to use to qualify.

The IRS has a pre-qualifier tool on its website, so you can see if you might be able to qualify for the Offer in Compromise resolution.  In Episodes 39 and 40, Timalyn discussed IRS Form 433-F.  By completing this form, you’ll have a good idea of whether you’d qualify for the Offer in Compromise option.  The form will help to prove your ability to pay or lack thereof. It also takes into consideration your health, age and education.  These are factors the IRS will use to determine if you qualify. 

Any offer you make will have to include a certain percentage of the equity you have in specific assets.  If you have a lot of equity in your home or other assets (including your retirement portfolio), the IRS could require you to sell one or more of the assets to create funds available to pay your tax debt.  So, if that’s your situation, the Offer in Compromise might not be the preferred option for you. 

It’s important for you to consider working with a qualified professional who will help you to best represent your situation to the IRS. 

Installment Agreements

Timalyn discussed this option in Episode 10.  These are generally various payment plans you can have with the IRS.  There are 3 popular options:  Streamlined, Regular and Partial Pay.  Timalyn prefers the Partial Pay Installment Agreement because it looks at your assets, but focuses on your income and your expenses.  Assuming you can’t pay off your tax debt before the Collection Status Expiration Date (CSED), the IRS will still want as much as they can get from you. 

Establishing an installment agreement may be a good option, based on your specific situation. 

Currently Not Collectable Status

Timalyn explains that this option temporarily puts your tax account on hold.  You’ll still complete the IRS Form 433 to prove that you really have nothing left after calculating your income and deducting the allowable expenses. 

The IRS cannot put you in a financial hardship to pay your taxes.  There may be a difference in what you consider a necessary expense and what the IRS considers.  These would include your rent/mortgage and monthly car payment. 

Now, this does not mean you never have to pay the tax debt.  Interest will continue to accrue during the period of not collectable status.  But as Timalyn discussed, the IRS only has the option of collecting the debt before the CSED.  The IRS will not levy you during the Currently Not Collectable (CNC) period. 

Once the period has passed, the IRS can require you to submit documentation to see if you should still qualify.  If this sounds like a good option for you, listen to Episode 18, where Timalyn explains how to temporarily put your tax account on hold.

Bankruptcy

Now, admittedly, this won’t be the right choice for everyone.  However, if you qualify, you can use this to eliminate certain types of debt.  Timalyn cannot provide legal advice about bankruptcy, because she is not an attorney.  She does have relationships with bankruptcy attorney to whom she can refer you, if you need this option.

There is a 3-year, 2-year and 240-day rule, you need to understand. You can’t have any fraud claims, no taxes related to a trust and no Substitute for Return (SFR) on your account.  The tax debt you’re trying to discharge must be at least 3 years old.  It must have been filed with the IRS for at least 2 years.  Additionally, no other tax assessments can have been made by the IRS during the past 240 days. 

Assuming you meet the above qualifications, that tax year is eligible for bankruptcy.  However, if there is a tax lien, even if you bankrupt the tax debt, you’ll still have to repay the amount covered by the lien. 

Again, this may not be the best option, but depending upon your situation, it may be the option you can use. 

Final Words of Advice

As Timalyn has advised in previous episodes, it’s important to remember to breathe.  She invites you to contact her to see if she would be able to represent you.  The majority of her clients come owing 6-figures or more to the IRS, they may be facing an audit or even worse, they are actively being levied by the IRS.  Don’t wait for that to happen to you. 

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either.

As we conclude Episode 46, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

  

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 39:  In this episode, Timalyn continues her discussion of the importance of IRS Form 433-F when negotiating with the IRS.  You may want to review Episode 38, which is Part 1 of the discussion.  It’ll help you to better understand today’s episode.

To listen to Episode 38, click here.

What Is IRS Form 433-F?

This is the Collection Information Statement.  This is the form the IRS uses to collect a wide range of financial information including your income, debts, expenses and assets.  When you’re attempting to negotiate with the IRS, you’re asking them to understand that you are unable to pay the full amount of your tax debt, at this time.  They obviously want the full picture about your financial situation, so the information you enter onto this form is the starting point. 

If you’re working with a tax professional to represent you in a tax debt negotiation, but they haven’t discussed the Form 433-F, it’s probably a red flag.  For tax professionals who aren’t using this form with your clients, you may be doing them a disservice.

In Episode 9, Timalyn explained the 3 Phases of Tax Relief.  These are the investigation, compliance and negotiation.  IRS Form 433-F substantiates what you can actually afford to pay and why.  It’s not uncommon for your and the IRS to have differing opinions on this answer. 

Today, Timalyn explains the detailed information you need to input on the form.  Again, if you haven’t already listened to Episode 38, this might be a good time to listen to that brief episode.  She’ll also discuss what you will need to substantiate as proof.  Finally, she’ll help you to know if you’ve completed the form properly.  Basically, “Is it right?”

In Episode 38, Timalyn discussed why you’ll need to use this form if you’re requesting an installment agreement, because you’re unable to pay the tax debt within 72-months or before the Collection Statute Expiration Date (“CSED”).  This includes whether you owe $25,000, but can’t pay it off within 72-months, or if you more than $50,000 but you could pay some of the tax debt.

Understanding the Detailed Information

The IRS wants to know you bank account(s) information.  This helps to prove your cash flow.  If your name is attached to an account, you’ll need to list it. 

Do you have lines of credit?  If so you’ll need to list this information.  This includes your actively used credit cards and the credit card numbers.  They want to see what you’re purchasing.  Are you using these cards for necessities or is it for discretionary items, like steak dinners, concerts and vacations? 

The IRS will want to know about your assets.  You’ll need to submit the account numbers for retirement accounts including 401(k), IRA, Pensions and brokerage accounts.  It would also include the VIN for any vehicles (i.e. cars, motorcycles, boats, etc.) you may own.  They’ll look at what you owe verses how much equity you have in those vehicles.  There’s a possibility that the IRS could require you to sell a vehicle to pay your tax debt.  

Timalyn advises you not to try to lie about your vehicles/assets.  The IRS will eventually find out about them.  This is especially true if you’ve posted pictures of it/them on your social media.  It’s best to be upfront and honest.

In one situation, a client has several vehicles and assumed the IRS would see how much he was paying on the loans, so that would obviously reduce his available cash flow to pay the tax debt.  In reality, the IRS looked at the situation differently.  As Timalyn explains, she had already advised him of what would happen, and it turns out she was right.  Friends, listen to your tax professional.  She/he has been through this, many times.  They’ve studied it.  And most importantly, you’re paying for their advice in the first place.

You’ll also need to provide any loan numbers and balances.  The IRS wants to see what you owe and actually, when you incurred that debt. 

There’s more information you’ll need to include, but the above should give you an idea of the types of information. 

Substantiating the Debt

You’ve listed the assets on Form 433-F.  Now, you need to list the expenses associated with the assets.  As Timalyn explains, if you have a vehicle, you’ll need to supply at least the last 3 months of insurance payments.  You may pay your premium on a semi-annual or annual basis.  No problem, you’ll simply divide the payment by 6 or 12 to get a monthly expense amount.  Any payment information should also match your bank account records. 

You’ll need to substantiate all liabilities.  For instance, you’ll need to show credit card and/or loan payments.

If you own or rent a home/condo/apartment, you’ll need to supply a copy of the mortgage or lease agreement.  This is all about proving the debt you’re claiming to owe and the payments you’re making toward those debts. 

Pay Careful Attention to Your Expenses

Expenses are handled differently from debt obligations.  For this reason, you should consider working with a tax professional, who is familiar with tax debt negotiation. 

Certain expenses can be compared to what are called the National Standards or Local Standards.  Timalyn explained what National Standards are and how they can be used to your advantage in Episode 9.  The IRS sets certain levels of acceptable expenses based on various areas of the country.  It’s possible you can list the national standard defined amount, even if you don’t actually pay that much. 

A word of caution, you should consult with a tax professional on this point.  The IRS will find out, if you’re trying to make false representations on IRS Form 433-F. 

By using the limits allowed in the Standards, this can help to substantiate and ultimately lower the amount you’re able to pay as part of your IRS Installment Agreement.  The fact is, you’re using the IRS guidelines to do it. 

Understanding Your Cash Flow

Timalyn explains that any income you receive will need to be substantiated.  This includes non-taxable income, such as social security retirement benefits. This will be factored in as income, even if it may not be taxable. 

If you work a W-2 job, you’ll need to provide all pay stubs for the last 3 months and yes, this must match your bank account information.

Alimony payments will need to be included on IRS Form 433-F.  This is true even if it was ordered as part of a divorce prior to the Tax Cuts and Jobs Act.  You’ll also need to show any child support payments. 

Don’t Go It Alone

If you’re going to negotiate with the IRS, don’t go at it alone.  Even if you don’t hire a tax professional to actually represent you, you should schedule a meeting with one to at least get advice for how you should handle it. Having an experienced tax professional on your side could save you much more than what it cost you to hire them in the first place.

If you’re a tax professional and you would like to become better skilled at helping your own clients, consider signing up for Timalyn’s Tax Pro Journey.  It’s a private podcast, including an article subscription and a private group community. 

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either.

As we conclude Episode 39, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 38:  In this episode, Timalyn is going to discuss a document that’s often used in tax relief negotiations, IRS Form 433-F.  In her previous episode, she addressed the tax relief journey to try to make it easier to understand.  Today, she’ll do the same with a form that plays a big role in your negotiations with the IRS.

NOTE:  Timalyn points out that you need to make sure you’re using IRS Form 433-F.  There’s a similar document, IRS Form 433-F (OIC), that’s used when you’re making an offer in compromise.  However, the “OIC” version is not the form for today’s discussion. 

Timalyn is on a mission to fill the tax literacy gap, one taxpayer at a time.  While she uses these forms all the time, she realizes that most taxpayers don’t fully understand what they are or why Timalyn is asking for certain information that goes on them.  She understands what information the IRS is going to request, so having the correct information can both speed up the process and help to move the negotiations forward.

It’s a Collection Information Statement

The 433-F is more detailed than your IRS Form 1040.  The form provides supporting information for an installment agreement, which allows you to pay your tax debt in installments, rather than in a lump sum. 

If you are going to apply for an installment agreement on your own, and it’s not a streamlined agreement (meaning you can’t pay it back within 72-months or before the Collection Statute Expiration Date – CSED), you’ll need to provide the IRS with additional information to support your situation.   

Timalyn explains that if you owe more that $50,000, you will be required to submit specific financial information, using IRS Form 433-F.  

If you are applying on your own and it is streamlined, you can use IRS Form 9465 to request an installment agreement.  For more information, watch Timalyn’s video.  The IRS will charge you a $225 set-up fee.  However, if you do it online or over the phone, the fee is only $31. 

If you plan to apply for an installment agreement on your own, consider purchasing Timalyn’s Guaranteed Installment Agreement e-book.  It will walk you through the process and to get your plan set up quicker.

What is the purpose for the 433-F ?

This form collects your current financial information used to determine how you can satisfy your debt.  This applies to an individual or a small business owner.  The IRS wants you to prove why you’re going to need more than 72-months to pay the debt.  The form gathers that information. 

You’ll use this form to report your income over the last 3 months.  Remember, it may have changed since you filed your tax returns. 

Timalyn takes a minute to explain why you should probably seek a consultation with a tax professional who has specific experience in tax relief.  That information will be extremely helpful, even if you decide not to ultimately hire him/her to represent you in this process.

While the IRS wants the last 3 months, you actually might want to provide the last 6, 9, or 12 months, because certain factors, such as a period of unemployment, may change the picture in your favor. 

Timalyn explains the IRS is really trying to analyze your cash flow.  Some jobs pay weekly, while other sources of income such as social security only pay monthly. 

Over the past 12 years as an enrolled agent, Timalyn knows the IRS is also looking at what you owe other people or companies.  Having other required payments will limit your cash flow, but it’s not that easy. 

The IRS will consider your credit card balance and your available credit.  They may determine you could use some of the available credit to pay your tax debt. 

Additionally, the IRS will review your assets.  For instance, do you have equity in your vehicles?  How much do you owe on the loans?  How much are the monthly payments?  What is the fair market value of the vehicle(s)?  Realize the IRS may require you to sell some assets to pay your tax debt.  Starting to get the picture?

Are You a Business Owner?

If so, the IRS wants to know about your accounts receivable balance.  The IRS can consider you’re A/R because it could increase your normal cash flow.  You need to be open and honest in your negotiation with the IRS.  If they think you’re playing games, they will be much more difficult in striking any type of arrangement with you.  In fact, they could simply decide to issue tax liens on specific tax years.   

Do I Have to Provide All of This Information?

Timalyn’s answer is, “it depends.”  The IRS has the right to specific information when you’re involved in a negotiation with them.  Remember, you owe them and are at their mercy.  If you’re trying to establish an installment arrangement, you’re asking them for a favor (even though we may not look at it that way).   

On the other hand, there are National Standards and Local Standards.  If your expenses fall below these levels, you still get the benefit of the allowable standard.  It’s like taking advantage of the standard deduction on your tax returns.  Be sure to listen to Episode 39 for more information in this scenario.

This is complicated, so you may decide to get a consultation with a tax professional.  You can sign-up for a tax consultation with Timalyn.  There is a fee, but you’ll have a full hour for her to review your specific situation and give you a diagnosis.  You can later decide to hire her or you can decide to hire another tax professional.  Either way, you’ll have solid advice and will be better prepared to take the next step.

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either.

As we conclude Episode 38, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 29:  In this episode, Timalyn discusses the IRS CP14 notice.  You’ll receive this form if you owe unpaid taxes to the IRS.  It’s a demand for payment.  So, what do you do now?  Timalyn will provide all the information you need to know to handle this issue.

Timalyn begins by pointing out that the IRS wants you to set up an account and ideally receive notifications electronically.  This may or may not be the best route for you.  Receiving important notices in the mail may be a better way of making sure you don’t miss out on important communications.

What is an IRS CP14 Notice?

This is an official communication from the IRS informing you of taxes you owe, the specific amount, and it serves as a demand for payment. 

CP actually stands for “Computer Paragraph.”  Understand this is a computer-generated form that no human has handled.  Also, understand that the IRS can and does make mistakes.  It may not be accurate.

The CP14 provides the following information:

●      The amount due

●      The tax year related to the unpaid taxes

●      The date the payment is required to be made

What Should You Do if You Receive a CP14 Notice?

Timalyn explains that your first step is to remember to breathe.  Next, carefully review the information provided.  Compare that information to the copies of your IRS returns.  Do they match? 

If You Think the CP14 is incorrect, Review the 3 Phases of Tax Relief

In Episode 9, Timalyn explained these phases.  First, review your IRS transcript online.  It will tell you when your return was filed, any balance due on the account, and any payments already made.  Sometimes, payments can cross in the mail and this is why you may have received a CP14, even though you paid your taxes.

Timalyn wrote a blog post titled:  “How to Get Your IRS Transcript in 3 Steps.”  This is a good resource if you don’t know how to review your tax transcript. 

What if You Do Owe Unpaid Taxes?

Timalyn released a podcast episode (Episode 22) outlining your options if you can’t pay your tax bill.  You’ll want to determine how long it will take you to pay the taxes you owe.

If the balance is less than $10,000 and you’ve tax compliant, you may be eligible for a guaranteed installment agreement allowing you 36 months to pay it off.  Timalyn has an e-book on her website, which you can purchase.  It will walk you through this process, step-by-step.

If you owe more than $10,000 but less than $50,000, you may have the option of setting up a streamlined installment agreement.  Timalyn discusses IRS installment agreements in Episode 10.

It’s also possible to get the IRS to temporarily delay any collection activities.  Your status would be classified as “Currently Not Collectible.”  This takes effort because you have to be able to prove to the IRS that you’re unable to pay, at this time.  This is usually due to financial hardship.  You and the IRS may disagree on “reasonable” living expenses.  Listen to Episode 18 for more information.

Timalyn urges you to make every effort to pay off your tax debt as soon as possible.  The IRS can and will assess significant interest and penalties based on your unpaid taxes. 

How to Avoid this Issue in the First Place (a Bonus)

While the IRS has been lenient since the pandemic, they still have continued to issue tax liens and levy bank accounts.  You can avoid getting into this situation by making estimated tax payments. 

Self-employed individuals make estimated tax payments on a quarterly basis.  Doing so can help you avoid an underpayment penalty.  W-2 employees already make estimated tax payments through their withholdings. 

Interestingly, Timalyn points out that as a business owner, you don’t have to wait until the end of the quarter to make the payments.  In fact, you can make tax payments on a monthly or even bi-weekly. 

By paying into the IRS, you can create a cushion in case life happens.  Even though you are planning to pay your quarterly payment, an unforeseen emergency can creep up and cause you to have to cover the cost of expenses you didn’t anticipate.  It happens.

If not being able to pay your taxes is a reoccurring problem, consider getting tax planning advice.  You may be able to reduce your overall tax liability during the year. 

The Taxpayer Bill of Rights provides certain rights, such as the right to representation.  Take advantage of that right. 

If you are a tax professional, Timalyn provides a LinkedIn Live Event on Tuesday at 11:00EST.  It focuses on how to negotiate with the IRS on behalf of your clients.  Follow Timalyn on LinkedIn.  You’ll need to sign-up for the events.

The next episode is #30!  Timalyn encourages you to listen to the beginning of Episode 10 to see what a milestone that actually was.  Episode 30 will be even more special. 

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin your life.

 

As we conclude Episode 29, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode. 

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 15:  In this episode, Timalyn discusses injured spouse tax relief: how do you know if you qualify, the difference between an “injured spouse” and  an“innocent spouse” .  She’ll also provide information about the proper IRS form to use when filing for Injured Spouse Relief.

Click this link to go back and listen to the previous episode on Innocent Spouse Tax Relief.

What Qualifies You as an Injured Spouse?

To begin, you have to have filed a married filing jointly with your spouse.  You then have a portion or all of your tax refund taken to satisfy a debt of your spouse's. 

For example, perhaps your spouse owes back taxes from a previous year (even if it was before you were married).  When you file as married filing jointly, the IRS now looks at both of you since your refund is also your spouse's refund. Your joint refund will be offset by their debt.. 

Can the IRS only Offset a Federal Tax Debt?

The IRS can  offset your refund to satisfy federal tax debt, state tax debt and unemployment compensation debt.  If your spouse owes back child support, the IRS can also take your tax refund to offset this debt.  The IRS can also do this to satisfy other federal non-tax debts, such as outstanding student loans.

Seeking Injured Spouse Tax Relief

Regardless of whether you knew about your spouse’s back tax situation or not, you may be able to seek relief for your portion of the tax refund that was taken.

Innocent Spouse Tax Relief

Remember, innocent spouse relief is valid if there was fraud on your returns that you didn’t know about, or wouldn’t have reasonably known about.  This fraud could include an understatement of income or maybe your spouse used “creative deductions” to reduce your tax liability. 

Be sure to go back and listen to Episode 14, if you think you qualify for Innocent Spouse Relief. 

Protecting Your Tax Refund

If you know there’s a chance your spouse has back tax issues, you can file IRS Form 8379 the Injured Spouse form.  You should file this form with your tax return to prevent the IRS from taking your portion of the tax refund. 

Can I File IRS Form 8379 after I Filed My Taxes?

Yes, you can file an 8379 after you file your taxes. It's possible you weren’t aware of the back tax debt or other debts.  You’ll need to file it each year that your refund may be taken to satisfy the eligible debts. 

How Long Do I Have to File Form 8379?

Timalyn explains that you must file the form within 3 years of the due date of the original return. 

Timalyn recommends that you file the form electronically.  The IRS has a significant backlog of returns.  If you file the paper form, your form may get delayed or even lost.  If you file electronically, it can reduce the processing time to about 11 weeks.  If you’re filing IRS Form 8379 after you’ve already filed your returns, the IRS takes about 8 weeks to process the form. 

Consult with a Tax Professional

You should discuss this with your spouse and a qualified tax professional to help you  file this form.  There are important factors to consider, such as the proper allocation of your portion of the refund versus your spouse’s portion.  It’s possible your W-4 withholdings may further complicate the allocation calculation.

Resources from Timalyn

• Click this link to watch Timalyn’s video on How to Properly Fill-Out a W-4 for Married Filing Jointly.
• Click this link to watch Timalyn’s video on IRS Form 8379.
• Click this link to find out how to get your tax transcripts in 3 easy steps. How to Get Your Tax Transcripts.

Timalyn wants you to stay in control of your tax situation.  The resources above  will help you  prepare to file your tax return with 8379 so that your tax refund is protected.

Do You and Your Spouse Owe $100,000 or more in Back Taxes? 

Timalyn can help you.  She has a free training on how to negotiate a $100,000 or more debt with the IRS.  Click here to get access to the training.  Feel free to share this training with other people.

As we conclude Episode 15, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.americasfavoriteea.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

 

Episode 14:  In this episode, Timalyn explains how a spouse may do something, or neglect to do something which results in significant tax issues.  But what happens if you didn’t know what your spouse was doing?  Today, Timalyn will discuss Innocent Spouse Tax Relief.  It’s definitely worth the next few minutes to listen and learn.

Note:  Tax Relief with Timalyn Bowens is now available on Apple Podcasts!

Timalyn begins with the example of a widow with limited income, working in a fast food restaurant.  Her deceased husband ran a business and the IRS determined he had filed years of fraudulent returns.  She had to serve prison time and repay the taxes for this fraud, even though she didn’t work in his business.  They filed joint returns, which made her liable for his fraud. 

The Innocent Spouse Tax Relief Option

Back taxes shouldn’t ruin your life, but they can.  Innocent spouse tax relief enables a spouse to avoid full responsibility for the actions of the other spouse (or former spouse).  It includes the additional tax, penalties, and interest assessed due to fraud and/or negligence. 

This is different from the Injured Spouse Relief involving the seizure of a tax refund to pay federal debts, back taxes, etc.

Requirements for Innocent Spouse Tax Relief

There are several specific requirements that must be met in order to qualify:

1. Married Filing Jointly tax returns were filed for the year(s) in question.
2. The return shows understated tax due to erroneous items of your spouse/former spouse.
3. You must prove you were not involved in the fraud and/or negligence, nor would you have reasonably known about it when you signed the return(s).

Common Types of Tax Fraud

• Understating or overstating your personal income or the income of a business.
• Using “creative” deductions.
• Claiming a child who is not yours on your returns.

If you realize one or more of the above has happened, after filing, you can file for Innocent Spouse Tax Relief.  You’ll need to use IRS Form 8857.

Can the IRS Deny My Claim?

Yes.  You will be denied if the IRS determines you were cooperating in the fraud.  This could include transferring the ownership of an asset to avoid tax liability.  Avoiding paying a third-party creditor can also cause your claim to be denied.

What if I Can’t Afford to Pay the Tax Penalties and Interest?

You could still apply for an Installment Agreement, which Timalyn explained in Episode 10.  This assumes you are tax compliant in previous years and the current year. 

Timalyn closes this episode with a reminder.  Back taxes shouldn’t run your life.  She doesn’t want you to serve prison time for your spouse’s tax fraud like the women in the opening of this episode.

As we conclude Episode 14, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.americasfavoriteea.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

 

Episode 11:  In this episode, Timalyn begins a 2-part series on IRS penalty forgiveness.  This episode focuses on first-time penalty abatement.  Episode 12 will be about how to remove IRS penalties with a reasonable cause.  Be sure to follow the podcast so in 2 weeks you don’t miss that episode.  Today, Timalyn will discuss what first-time penalty abatement is, how you qualify for it and how you can get your penalties removed (if you qualify), today. 

What Is First Time Penalty Abatement?

This can be confusing.  Timalyn explains that penalty abatement is IRS forgiveness.  If you negotiated to pay back a reduced level of tax debt, that’s not abatement.  For taxpayers who haven’t had previous problems, they may qualify for first-time penalty abatement at no cost to them.  Actually, it also makes it easier for the IRS. 

Note:  The abbreviation FTA stands for “first-time abatement.”

What Penalties are Eligible for First Time Penalty Abatement?

There are 3 eligible types of penalties that could be abated. 

• The Failure to File Penalty – This penalty was imposed because you didn’t file your return on time. This penalty was explained in Episode 2.  For most taxpayers, if you don’t file on time, penalties can be up to 25% of the total tax debt for individuals.  S-Corps and Partnerships are subject to up $210/shareholder or partner, per month. 
• The Failure to Pay Penalty – When your taxes were due, you didn’t make the payment. You are subject to a penalty and interest if you don’t pay. 
• The Failure to Deposit Penalty – This applies if you are a business owner who didn’t pay the required tax withholdings on a scheduled basis.

Timalyn comments that if you file as an S-Corp or a Partnership, and you filed an extension, your deadline for that extension is September 15, 2022.  If you go beyond that date, the Failure to File Penalty will begin accruing. 

Individuals filing a 1040 have an extension deadline of October 15^th.

IRS Compliance

Before being considered for a penalty abatement, the IRS will look at the previous 3 years to verify if you have been compliant.  This also applies to your current tax compliance status.  Did you file timely?  Did you have previous tax penalties?  Did you pay on time?  If you’re an employer, did you deposit on time? 

If you can answer “yes” to all of the above, the IRS will now verify whether you’ve previously had penalties abated for reasonable cause.  If they’ve been removed during the past 3 years, the current year in question may not be eligible.

Can I also get the Interest Removed?

If you’ve had a penalty abated, the IRS will retroactively remove the interest accrued on that penalty. 

IRS Compliance in the Current Year

It’s important that you are making your estimated quarterly tax payments if you are a business owner.  The IRS will check on this status.  If you already have unpaid taxes, you must be on a valid payment plan.  Timalyn explained how to set up an installment agreement in Episode 10.

There’s a Long Way and an Easy Way to Request Abatement

The simplest way to request first-time abatement is to call and request it.  Really, it’s this easy. You’ll ask if any of the penalties are eligible for first-time penalty abatement, and the IRS will review your file. .  No documentation is required.  The requirement is that you have been and are compliant. 

Words of Caution

Timalyn explains that you don’t want to request the first-time penalty abatement prematurely. 

You do not want to request forgiveness of a penalty if it is still accruing. For example, if you request abatement of the failure to pay penalty but have not paid the balance the penalty will continue to accrue. It will just start at $0 again.

This process may sound confusing.  Some of you listening will be able to handle this on your own.  However, Timalyn is available to handle this on your behalf.  She’ll make sure it gets done correctly. 

Remember to come back for Episode 12 for the discussion of IRS Penalties:  How to Remove Them. 

As we conclude Episode 11, we encourage you to connect with Timalyn on social media. You’ll be able to follow this podcast on Google Podcasts, Spotify, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.americasfavoriteea.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 10:  In this episode, Timalyn discusses installment agreements related to your tax payments.  She’ll explain how to set them up with the IRS when you can’t pay your taxes in full.  Grab your pen and paper and let’s get started.

Interesting Facts

Did you know, according to a recent study by Amplify Media, Apple podcasts features over 2 million podcasts?  However, 26% of those only have 1 episode.  Of the 2 million+, 64% of them have fewer than 10 episodes.  For this reason, Timalyn is pretty excited to be launching her 10^th episode today.  If you are new to this podcast, feel free to visit the website and listen to previous episodes.

What Is an Installment Agreement?

An IRS installment agreement is a payment arrangement between you and the IRS.  If you are a  qualified taxpayer, you can set it up or it can be handled by your authorized representative.  Your representative must have Form 2848, Power of Attorney and Declaration of Representative on file with the IRS. .  An authorized representative is empowered to negotiate, on your behalf, with IRS. This is what Timalyn does when she steps into her client’s shoes.

You Must be Compliant

A qualified taxpayer is a compliant taxpayer.  This means your tax returns for prior years have been filed and you are making payments on the current tax year.  This is through paycheck withholding or for business owners, which means filing your quarterly, estimated tax payments.  In Episode 2, Timalyn discussed the importance of getting the missing returns filed. Timalyn also addressed compliance in Episode 8.

Owe $10,000 in Taxes or Less?

If you owe $10,000 or less in taxes, have no missing tax returns, haven’t defaulted on a previous tax plan during the past 5 years and could pay off the tax debt in 36-months, you may qualify for a guaranteed installment agreement.

Timalyn has written an e-book with step-by-step instructions on how to set up a Guaranteed Payment Plan.  You can click here to purchase this e-book via her website. 

If you owe the IRS more than $10,000, keep listening.

Interest Accrues on Your Installment Agreement

You may be exposed to interest and penalties on the balance of your tax debt.  In Episode 7, Timalyn explained the importance of tax transcripts.  These may help you to get some of the penalties removed. 

How to Apply for Your Installment Agreement

You will use IRS Form 9465 to begin the process.  There is a significant IRS backlog, so Timalyn doesn’t recommend filing tax forms on paper.  Rather, you should consider filing electronically.  The Form can be filed along with your tax return.

Timalyn walks you through completing IRS Form 9465, step by step in the video IRS Installment Agreement.

Is There a Cost to Set Up an IRS Installment Agreement?

Timalyn explains there’s a $31 monthly fee to set up the plan.  Also, you will still accrue penalties and interest, until the balance is paid.  Low-income taxpayers may be eligible to have the $31 fee waived. 

Note, that the IRS will take the $31 monthly fee based on a debit card installment agreement for your bank account or as a payroll deduction.  The direct debit method is usually required if your balance is $25,000 or more.

Owe the IRS $25,000 or More?

If you decide not to set up a direct debit installment agreement, the IRS may file a tax lien to make sure you don’t try to avoid paying them.   You’ll also pay a higher set-up fee. The non-direct debit installment agreement setup fee is $130, plus the penalties and interest accrued.  Low-income taxpayers will pay a fee of $43, instead of $130.

Avoiding a Revised Payment Plan Fee

Timalyn explains the importance of setting up the plan correctly.  You want to avoid submitting the wrong information about your address or other information.  There is a $10 fee to correct it.  If you change your bank account, there’s a $10 fee.  Bottom line, make sure you thoroughly review your paperwork before submitting it to the IRS.

Streamlined Installment Agreement

What if you owe more than $10,000 and you don’t qualify for a guaranteed installment agreement?  If you can pay off your tax debt in full over 72 months, you can qualify for a streamlined installment agreement. 

As long as the Collection Statue Expiration Date (CSED) doesn’t expire before the 72-month period you should not have to submit your financial information.  Timalyn explains the importance of your CSED when negotiating with the IRS in Episode 7.  However, to avoid having to submit your financials, your tax debt must be lower than $50,000.

Remember, if you owe between $25,000 and $50,000, you still may have to deal with an IRS tax lien, if you don’t have a direct debit installment agreement in place. 

Owe $50,000 or more to the IRS?

You can still set up an arrangement, but you’ll be required to submit your financial information.  It’s now more complicated. You’ll be required to submit IRS Form 433-F Collection Information Statement.

Owe the IRS $100,000 or more?

This situation is even more complex, but it can be done.  Timalyn works with people in this situation. The IRS will require your financial information. This includes your financial investments and business assets.  You’ll use IRS Form 433-F to show how much you can afford to pay the IRS. 

Remember, back taxes don’t have to ruin your life.

You Don’t Have to Do This Alone

If you’d like to speak with Timalyn and her team about your specific situation, visit www.BowensTaxSolutions.com .  Penalties, interest, and other fees are building.  Don’t wait to address your tax issues.

As we conclude Episode 10, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.americasfavoriteea.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.