Archives for January 2018

Yes, Place a Lien on Your Children’s Property

This May Be An Effective Tax Planning Tool

We represent taxpayers who have tax problems. They often owe the IRS thousands of dollars. They may have lost their job, had a serious medical issue, or had suffered some other financial hardship which prevented them from paying their taxes. As is often the case in such situations, they may have borrowed from parents, children, and friends to make ends meet.

Eventually the IRS comes knocking on their door (literally and figuratively) and demands payment of past taxes due, interest and penalties. The interest and penalties often increase the amount owed to the IRS by 50% of the taxes due. One option open to the IRS is to place a lien on the properties held by the taxpayer. When those properties are sold (or seized by the IRS) to satisfy the tax debt, those loans from friends and family members will often not be repaid. Your friendly creditors are the losers and the IRS is the winner.

When monies are lent between friends and family, it is often consummated with an oral promise and a handshake. There is the lack of formality.

Did you know that there is a legal way to ensure that family and friends get to the front of the line (ahead of the IRS) when property is sold?

When property with liens on it is disposed, generally the oldest liens are satisfied first. This is why the mortgage company is protected because its lien is attached to the mortgaged property when it is purchased. The mortgage company could care less who files liens after it does because it is first in line.

So how do you protect your friends and family? You need to [Read more…] about Yes, Place a Lien on Your Children’s Property

Is That The IRS Ringing Your Doorbell?

I recently attended a webinar and an IRS agent warned the audience of a growing popular scam. A supposedly IRS agent shows up at your residence (or place of work) and informs you that the IRS visit is to collect past taxes due. Failure to immediately remit payment is cause for arrest.

What should you do? First, [Read more…] about Scam – Fake IRS Agent Visits Your Residence

Self-Prepared Tax Returns

What Makes the Most Sense to You?

We were curious how much the average American household spends on income taxes. Looking at data released in August by the Bureau of Labor Statistics as reported by CNSNews.com, Americans on average spent more on taxes in 2016 than they did on food and clothing combined. It was also reported that in three years, from 2013 to 2016, the average tax bill for Americans increased 41.13%. The only expense category that exceeded the payment of income taxes was the cost of housing, which included the cost of the housing, property taxes, utilities, public services, household operations and supplies, and furnishings. It is quite apparent that income taxes are a major household expense.

Per the IRS, 51.763 million taxpayers self-prepared their returns for the 2016 tax year. The IRS statistics show that this number has been increasing annually.

Why are more Americans self-preparing their returns? [Read more…] about Self-Prepared Tax Returns – What Makes the Most Sense to You?

FSAs and HSAs allow taxpayers to make tax-free contributions to pay for out-of-pocket (co-pays and deductibles) medical expenses. The monies contributed to these plans are shielded from personal income and payroll taxes (social security & Medicare). However, the payroll tax exclusion does not apply to self-employed individuals.

What are some of the differences between these two plans? [Read more…] about Flexible Spending Account (FSA) vs. Health Savings Account (HSA)