Richard Ebbinghouse

Avoid the April 15 Blues - Take a Step-by-Step Approach to Your Taxes This Year

It is no wonder so many Americans dread the April 15th tax filing deadline. The U.S. tax code already contains more words than the Bible, and hundreds of pages of new rules and regulations are often added.

It is common for many people to put off filing their taxes until the last possible minute because of so much complexity. However, taking that approach can create problems and more stress and potentially land you in hot water with the IRS. What if you cannot get it done on time? You can file for an extension, but you are still required to pay the taxes you owe plus interest. In some cases, you can also end up owing penalties too. However, filing for an extension will prevent you from getting hit with a failure to file a penalty for not filing on time if you haven't filed for an extension. How do you know you didn't make a mistake if you file at the last minute? There should be adequate time to double-check the information before your return is filed. It's easy to make a mistake when rushing to meet a deadline. Your last-minute mistake could cause you to be audited.

We focus on helping people who owe $10,000 or more to the IRS or have years of unfiled tax returns, so we've seen our fair share of mistakes made by innocent taxpayers. Contact our firm today if you have any tax trouble or owe more than $10k to the IRS or state but can't pay in full. We help people get their life back from the IRS. 

We recommend taking a systematic and step-by-step approach to preparing and filing your taxes. Don't bury your head in the sand on April 15th, and hope this problem will just go away. Think baby steps as the way to solve this problem. With unpleasant and complicated tasks, breaking them down into smaller and more manageable chunks can make things easier. This approach works with dealing with your tax returns, too. This year, vow to take a step-by-step approach to your tax return. If you follow these simple steps, you could be done with your taxes before you know it.

Step 1 - Set Up a Command Center or War Room

Chances are you started receiving tax documents in early January, and you may still be receiving those documents in March. That means you need a convenient place to keep all those documents. Setting up a command center or war room in your home makes it easier to store those documents and keep them at hand. Make sure you get your documents rounded up and saved. Keeping them in a designated place is a big help in dealing with all those papers.

If you have a home scanner, take a few minutes to scan each document as it arrives. Set up a special folder on your computer or cloud storage service to hold all those documents. Those electronic copies can be invaluable if the originals are damaged or destroyed.

Step 2 - Choose A Good Tax Preparation Professional (But Use A Tax Attorney For More Complicated IRS Issues)

While they cannot make the task totally painless, tax preparation professionals make the process much easier. We do not prepare tax returns for clients. That's not what we do. We recommend you have someone who is qualified and attends federal tax update seminars to stay current to prepare your tax return. There is that much information a tax professional has to know to prepare a proper tax return. For years, our firm has sponsored the Indiana CPA Society's Federal Tax Update seminars. It's a two-day seminar.

Keep in mind if you owe multiple years of taxes and have multiple years of unfiled returns, we recommend reaching out to a tax attorney who will understand your unique situation and help you with the tax relief you need. Most tax preparers aren't trained in tax resolution, so find the right firm to help you with your case. We regularly litigate cases in U.S. Tax Court. Tax preparers don't litigate cases. Handling a case that needs tax resolution is a completely different skill set from the skills used to prepare a tax return. We have training as attorneys in advocacy. Get the right kind of help you need.

Step 3 - Enter Your Tax Documents As You Get Them

One of the great things about technology is that you organize and file each tax document as you get it. Often you can download all your tax documents from various online services. For example, your direct deposit payroll service will give you your W2, and different vendors provide statements and 1099's online. If the mailman brings you a 1099-INT or a W-2, you can simply scan things as they come in.

Just open each document, scan it to create an electronic backup, and log on to your favorite secure cloud storage to file your documents. Whether you get five tax documents a day or just one, entering the information now can save you time later on.

Step 4 - Review Your Documents and Final Tax Return

After you think you have all your documents organized and your tax return is ready to file, the next step is to review everything and make sure there aren't any obvious issues. Go through the paper and electronic copies and check each one off on your tax return. If any of those documents are missing or anything is wrong, go back and enter them right away.

Step 5 - Bring It All Together

Now that the final review is complete and all the documents have been entered, it is time to bring it all together and actually file your return. Your tax prep professional should include a series of checks designed to catch common errors and point out audit flags. Be sure to ask questions and correct any problems you might find. Be sure to print off a copy of your tax return and save an electronic version to your computer.

Nothing can make filing taxes fun, and this annual chore will never be pleasant. Even so, you can make the task less "taxing" by breaking tax filing down into its component parts. Following the steps outlined above can help you deal more effectively with your tax return preparation and your final tax bill by having a carefully prepared tax return when it is filed.

OWE BACK TAXES?

Our firm focuses on tax resolution and helping people who owe the IRS or state $10,000 or more. We've seen taxpayers get blindsided every year by a huge tax bill. Many times falling behind your taxes leads to more and more years where taxes are owed but not paid. If that's you, we can help. Contact our firm today to discuss your tax debt settlement option.

by Richard Ebbinghouse

Tax Relief Options for Small Business Owners

If you are running a small business, you have something that digs into your pocket every year, it’s the IRS. Unfortunately, you don’t get to choose whether the IRS can do so. By law you have to pay taxes and you have to file reports - tax returns - at specific times of the year. The IRS wants to know what you are doing, how much you are earning, and most importantly how much you are paying in taxes. Because some people cheat and others don’t pay, the IRS has gotten aggressive. While the audit rate for individual returns is about a little less than 1%, the audit rate for small businesses can be as much as 10 times higher.

It does not matter if you operate as a sole proprietor and use Schedule C to claim your income, or if you are set up as a C-corp, S-corp, or LLC - the IRS is watching what you do. It monitors whether you report all of your income reported by third parties as paid to you. Every year if they think you are not paying your fair share, they will certainly come calling. When that demand letter from the IRS arrives, knowing what to do next can make all the difference. The more you educate yourself, the easier it will be to deal with and eliminate tax debt.

Note: As a tax law firm, we always recommend that you reach out to a professional who knows the rules and will aggressively negotiate and defend you against the IRS. If you owe back taxes or are under audit, our firm can help negotiate with the IRS and potentially settle your tax debt. Call us today. Our tax attorneys can navigate the IRS maze so that you have nothing to worry about. 

Small business owners are increasingly the target of enforcement efforts by the IRS. If you end up owing money to the IRS, it does have some programs to make paying easier. In some cases those small business tax relief and tax resolution programs let you settle for less than what you owe. However, qualifying is not as straightforward as you might think.

For businesses that may be eligible, the assistance of a tax attorney is absolutely critical. Remember, you as the owner of a business can be personally held liable for payroll taxes regardless of what kind of business entity you may have. As tax attorneys we can help guide you through the process and make sure you qualify, so you can rest a little easier and get back to building your business.

Payment Plans/Installment Agreements

If the amount your small business owes to the IRS is relatively small , paying off your tax bill as quickly as possible makes sense. You avoid penalties and more interest. However, many people don’t have the ability at once to immediately pay all of it. If paying in full would be a hardship, the IRS does offer payment plans. Setting one up can make paying back what you owe easier and more financially palatable. However, not all payment plans are the same. You have to have enough to be able to keep operating your business. Many times that means a slow and steady payment plant is what is really needed.

Keep in mind that interest will continue to accrue while the debt remains outstanding. That is something to think about. However, it is just one of many factors that have to be weighed. So, getting the right payment plan is critical to solving your tax problem if you cannot pay all at once the taxes owed.

Offer In Compromise

If you’re under a lot of financial hardship, it may make more sense to try for an offer in compromise, a special IRS program that could allow you to pay back less than you owe.

The offer in compromise program is a popular one with individual taxpayers and small business owners. If paying the entire amount would create a financial hardship for you, your family, or your business, a tax attorney can help you make the case to the IRS that you deserve a break.

Fair warning, the IRS just doesn’t agree to accept a set percentage on the dollar of what is owed. You can’t just throw a number out there and see if the IRS will accept it. It doesn’t work that way. There are lots of standards applied and considerations made by the IRS in evaluating an Offer in Compromise. The devil is in the details. If something sounds too good to be true, it likely is too good to be true. If someone hasn’t done the work necessary to work up your individual situation, they can’t know whether this is a viable solution. The Offer In Compromise program can be a great solution in the right case. A skilled tax attorney can evaluate whether this is right for you.

What’s the best option?

Each of these options has its pros and cons, and it is important to understand how these programs work and who qualifies to use them. If your small business is in trouble with the IRS, taking the right action right away could reduce the amount you owe, give you some breathing room and allow you to focus on your customers - not on your taxes.

Running a small business has its challenges, but those difficulties are nothing compared to the stress and anxiety small business owners feel when dealing with the IRS. Many when faced with the IRS have not had a good night's sleep in months. With so many small business owners now in IRS crosshairs, it has never been more important for small business owners, freelancers, gig workers, and the self-employed to have an advocate in their corner.

If you find yourself on the wrong end of an audit, a tax bill, or an enforcement action from the IRS, the steps you take next are absolutely critical. Trying to take on the IRS on your own is dangerous and potentially expensive. You not knowing a rule, regulation, requirement or deadline could literally ruin the rest of your life. You are gambling with your future if you try to represent yourself. A tax lawyer works to protect your future.

By working with a tax lawyer, you can gain access to vital information about small business settlement programs the IRS offers. You can gain access to the knowledge, skill, and ability by hiring a tax lawyer. Time is of the essence when the IRS comes calling, and with the interest and penalty clock ticking you do not have one second to waste. Call us, tax attorneys, for a case evaluation.

by Richard Ebbinghouse

What Can the IRS Do to Collect Back Taxes?

Opening the mailbox and finding a letter from the IRS is frightening, but what happens next can be even scarier. The IRS wields incredible power, and if they claim you owe additional taxes, they have many different options for forcing you to pay.

When the IRS claims you owe additional money, they will act quickly, and that could leave you reeling and trying hard to preserve the money you need to pay your bills, feed your family and keep a roof over your head. If you are employed, the IRS can reach into your paycheck, forcing the company you work for to withhold part of what you are owed - garnish your wages - until the tax debt has been paid in full.

The IRS can also hold onto any refunds and government payments you would otherwise be due. If you have been waiting for that big fat refund check to arrive, you are going to be out of luck if you owe money to the IRS.

As if all this were not frightening enough, the IRS also has the power to levy your bank accounts, including the funds you need to run your business and your life. Those bank account freezes and taking your money could leave you without the cash you need, putting you in a real bind. It’s shocking to wake up and find that the IRS has cleaned out your bank account. It’s an emergency. How do you pay your rent or mortgage, buy groceries and keep your utilities turned on?

Your home could even be at risk if you owe money to the IRS. The IRS frequently files tax liens that attach not only to your home but any other real estate or personal property you own. In some instances, the IRS has sold taxpayers’ homes. The threat of this kind of action has compelled many taxpayers to cough up the money the IRS says they owe, even if they think the IRS is wrong.

As you can see, the IRS has wide latitude and plenty of power. If you disagree with the amount the IRS says you owe, or if you simply do not have the money to pay the bill, you need to act fast. Ignoring the problem will only make it worse. You cannot simply pretend that you never pulled that fateful envelope out of your home mailbox.

The tax code and IRS regulations are complex and have far more pages than the Bible. Many of those IRS code provisions and regulations are difficult to understand and mind-numbing for the ordinary taxpayer. With IRS problems, you cannot afford to leave anything to chance. You need professional help to fight back.

When fighting the IRS, you need the help of a professional, and that is where a tax attorney comes into play. You can fight back on an even playing ground by working with a professional.

Our law firm focuses on tax resolution and helping people who owe the IRS or state $10,000 or more. We’ve seen taxpayers get blindsided every year by a huge tax bill and often fall behind on their taxes for years on end. If that’s you, we can help. Contact our law firm today to discuss solutions for dealing with your tax debt. 

by Richard Ebbinghouse

Common Tax Relief Programs the IRS Offers

The old saying that nothing is certain in life except death and taxes has never been truer or more frightening than now. In the current environment, nothing will get your heart racing quite as fast as opening the mailbox and finding a letter from the IRS saying you owe money or are being audited.

When the IRS comes calling, you might think that there is nothing you can do. You may worry that you will have to liquidate your assets, sell your car, or even put your home on the market to pay what the IRS says you owe.

The good news is that you may not have to pay that total amount, and before you write that big check, you should check out the alternatives first.

The IRS knows that taxpayers fall behind on their taxes. You are supposed to immediately pay the total amount it says you owe. However, they also know that when the tax bill arrives, many people find themselves in a situation where they can’t pay the total amount owed. The IRS has programs in place that can reduce the amount you owe or make paying the tax bill a little easier.

Note: As a tax law firm, we always recommend that you reach out to a professional who knows how to negotiate with the IRS on your behalf. Our tax attorneys can navigate the IRS maze so that you have nothing to worry about. If you owe back taxes, our firm can aggressively negotiate with the IRS for you and potentially settle your tax debt. Call us today.

With that said, here are some of the most common tax relief programs the IRS has to offer - and how you can access them.

Payment Plans

Otherwise known as installment agreements, one of the most common ways taxpayers pay their back taxes is by setting up a payment plan. This type of program is a popular one, and for a good reason - it can significantly reduce the stress you feel as you deal with an unexpected tax bill. Payment plans will prevent the IRS from taking more drastic action against you.

There are pros and cons to this approach, and it is important to explore your other options very carefully. With a payment plan, you will need to pay the entire amount you owe, but you can stretch the repayment out over months or even years. However, keep in mind that the IRS will continue to charge interest on the remaining balance, so this option will require you to pay more than the amount you owe. You also will have to keep making monthly payments to the IRS until you’ve paid off your tax bill.

Offer in Compromise

Another program the IRS has is known as an offer in compromise, or OIC. This option allows eligible taxpayers to settle their tax debts for less than the IRS says they owe, and that means you could save money if you qualify for this program.

The offer in compromise is not right for everyone, and it is important to work with a tax relief professional if you are exploring this kind of solution. Don’t believe those late-night T.V. commercials. They make it sound too good to be true, and what they are telling you is too good to be true. This is a program where you do pay money to the IRS. If you have significant assets, the IRS may not be willing to settle on terms that you like. The IRS does not have to agree to an offer. It’s discretionary. It will only settle your tax debt on terms it finds favorable. That said, if you are strapped for cash, an offer in compromise could be the way out of your tax trouble. A real tax professional can make a difference between a rejected offer in compromise and one that is accepted.

IRS Hardship Program - Currently Not Collectable

The IRS hardship program is another option for taxpayers who are financially unable to pay what they owe to the IRS. If you are genuinely strapped for cash and worrying about your tax debt, you should check out the hardship program, but you should not try to work with the IRS on your own. You will have to prove to the IRS that you either cannot pay your monthly expenses or don’t have any money left over to pay the IRS after paying your monthly expenses (at allowable amounts under IRS standards).

You should be aware that the IRS hardship program does not relieve you of your tax debt. It simply delays taking action to collect the tax debt so long as you can prove you can’t afford to pay and meet basic living expenses accordingly to IRS standards for food, clothing, shelter, and other necessary expenses.

The hardship program has some very specific requirements, and if you make a mistake when applying, you could find yourself locked out of the process when you really should be in hardship status. By working with a tax lawyer, you can increase your odds of success and possibly save yourself a lot of money in the process.

What is the best option?

As you can see, the IRS does offer several programs that can reduce the amount you owe - or even forgive your tax debt altogether. If you are eligible for one of these tax relief programs, you could find yourself breathing a lot easier. However, the IRS is not likely to give you the information that makes the ultimate difference – the nuances that a tax professional knows. We have spent hours and years learning them and applying them for the benefit of our clients.

As a taxing authority and agency, the IRS is not there to advocate on your behalf. That’s not its job. The IRS’ job is to fairly administer the tax laws and collect money owed to the government. A tax attorney’s job is to represent your best interests considering all of the facts, circumstances, applicable law and gather the evidence to prove those facts. Think of it this way. The umpire does not go up to the plate to bat in a baseball game. He calls balls and strikes. That’s what the IRS does. An attorney steps into the batter’s box and hits the pitch (facts and applicable law), regardless of whether it’s a fastball, curveball, or slider.

For all of those reasons and more, it is important to work with a tax attorney to deal with whatever is your IRS problem. Whether it is debt from years of unfiled taxes, a discrepancy in the amount reported and what the IRS says you owe, or anything else, a tax attorney can make a difference. They have important specific training, education, and experience. Their knowledge, skill, and ability can make a huge difference - and save you a lot of money in the process.

Knowing about the tax relief and favorable resolution options the IRS offers is the first place to start, and that education can be a huge point in your favor. Now that you know what types of programs are available, it is time to take the next step, so pick up the phone and call us, a tax attorney, today.

by Richard Ebbinghouse

Tax Deductions You May Be Eligible for as a Small Business or Freelancer

Tax season can be stressful, especially for small business owners or freelancers who might owe taxes at the end of the year. It can be overwhelming to look at the tax debt you owe from the profits you have made.

Our law firm focuses on tax resolution and helping people who owe the IRS or State of Indiana $10,000 or more. We’ve seen small business owners and freelancers get blindsided every year by a huge tax bill. That nasty surprise often leads to them falling behind on their taxes for years on end. If that’s you, we can help. Contact our firm today to discuss your option to deal with what you owe the IRS or the State of Indiana.

So, if you’re worried about how you’re going to pay your tax bill this year, here are some things to review. There are many legitimate deductions you can utilize as a small business owner or freelancer to bring your tax liability down. We encourage you to talk to a tax professional to see if any of the following deductions apply to you.

1. Home Office

If you have a home office, you will be able to deduct a part of your rent or home expenses as an expense for your business. Be careful. Home office deductions require a dedicated office space with exclusive use for business. That means no other use, including personal use. So speak to a tax professional to find out if you qualify. In addition to your home office, you can deduct any related office supplies you used over the year. Keep the receipts for paper, ink, and any other home office supplies you’ve purchased. You should also be able to deduct any technology you bought specifically for work. If you have a work computer, internet, and office furniture, those can maybe qualify you for a tax deduction. Furthermore, you can deduct any expensive software programs you need to purchase for work like adobe photoshop or your word processor.

2. Insurance Premiums

If you work from home, you may be able to deduct your health insurance costs or any other insurance that is required for your job. If you have to purchase liability or malpractice insurance, that is a work-related deduction.

3. Travel Costs

If your work requires you to travel, the cost of that travel is a deduction. Hotel costs, mileage, and even food you eat during work trips are deductible expenses. However, if you are partially traveling for work and luxury at the same time, you have to be careful. Any portion of your trip used for a personal vacation is not a deduction. You can only deduct expenses that are specific to your work costs.

NO ESTIMATING!! Remember that you have to keep a mileage log if you are claiming car or truck expenses which must be recorded near the time of use. You also must keep receipts of your expenses. Credit card statements are not enough to prove the actual expense - the specifics of what the expense was for must be verified with a receipt.

4. Advertisement Expenses

If you’ve spent any money advertising your business, you can use that expense as a write-off. Any advertisement will qualify as a deduction whether you created online ads or utilized influencer marketing for sponsored posts. If you spent money promoting your business, record that expense for your tax records and keep your bills and any receipts.

5. Car Expenses

If your automobile is an integral part of your work, you can deduct expenses associated with it. You can itemize costs like auto insurance, gas, and any maintenance work you paid. However, you can only deduct the expenses you utilized while working. If you used your business car as a personal car, you could not deduct all these expenses. You will have to apportion them. It may be simpler to claim the business mileage rate. You have to keep a mileage log that records the beginning odometer reading, end of the trip odometer reading, where you went, and why you made the trip. Also, record your odometer reading on January 1st of each year and December 31st, too. Your mileage log is just about the first thing an auditor asks to see in an audit if your claim this expense, so keep good records.

6. Occupational Licenses

If your business or freelancing job requires you to have a license in your field, then that license is a business expense in any tax year you have to pay for your occupational license.

Owe Back Taxes and Need Tax Relief?

While many of these tax breaks may seem incredibly appealing, incorrectly claiming them can result in an audit or the IRS disallowing your deductions and charging you penalties and interest on your tax debt, making your problems worse.

If you want a tax lawyer who knows how to navigate the IRS maze, reach out to our firm, and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. 

by Richard Ebbinghouse

Four Ways Small Business Owners, Freelancers, and Gig Workers Can Trim Their Tax Bills

It is hard to beat the freedom and flexibility of being a small business owner or freelancing and gig work. When you work for yourself, you are the boss. You can set your own hours, turn your home into an office, and even ditch going into “the office” and the daily commute.

That’s great, but there is one thing small business owners, freelancers, and gig people usually forget. Compared to their corporate counterparts, self-employed people face an additional tax burden, an expense that takes many of them by surprise. Since they aren’t employed by an employer who pays employer’s taxes on an employee, they have to pay self-employment taxes.

Note: If you end up falling behind on your taxes and the IRS or state claim you owe $10,000 or more, reach out to our tax law firm, and we’ll schedule a confidential consultation.

If you love the freedom of being your own boss but not the big tax bill, you need to think ahead. A little proactive planning can go a long way to keep more of your hard-earned money in your pocket and not Uncle Sam’s. Here are four smart strategies you can use to trim your tax liability and get more out of your freelancing and gig work.

#1. Fund a Health Savings Account

If you work for someone else, there is a good chance your boss picks up part of your health insurance costs, but small business owners, freelancers, and gig workers do not have that benefit. Self-employed people face additional challenges when it comes to health care. They face seeking affordable policies on the open market and trying to save money where they can.

The self-employed can save money and trim their tax bills with a Health Savings Account. Eligible individuals can contribute to a health savings account on a pre-tax basis. This tax savings can be a very big deal. It also creates a significant tax deduction while making their health care more affordable.

#2. Contribute to a Retirement Fund for the Self-Employed

Small business owners, freelancers, and gig workers need to look out for their own retirement, but plenty of options are available. The annual contribution limits on retirement plans for the self-employed are among the most generous around, so you may be able to shelter a significant portion of your earnings from the taxman.

If you have a tax ID for your business, you may be able to contribute to a solo 401(k). This plan works much like a traditional 401(k) plan, but the contribution limits could be even higher. Even if you do not have a tax ID, you can shelter part of your freelance or gig work income with a SEP-IRA or similar retirement plan.

#3. Take the Home Office Deduction

If you work out of your home, taking the home office deduction could save you a lot of money. If you are eligible for this valuable deduction, it creates deductions for things you already pay. You could write off a portion of your property taxes and other homeownership costs, reducing your tax bill and keeping more money in your pocket.

Remember to qualify as a Home Office you can deduct, it has to be used exclusively for your business, no personal use. There are specific rules regarding the home office deduction, so check with your tax preparer to make sure you qualify. If you can take the deduction, be sure to keep accurate records and take photos of the office in your home.

#4. Pay Estimated Taxes

No employer is taking your withholding taxes out of your paycheck when working for yourself. Instead, you have to make estimated tax payments each quarter. If you don’t make them, you will be penalized by the IRS and the Indiana Department of Revenue for not making them.

Perhaps, even more critical, when it comes time to pay your taxes, you could easily end up without enough money to pay your taxes when you come up to the deadline to file your tax returns. This is an easy way that people end up behind the eight-ball. I encourage people whose income may fluctuate, such as small business owners, freelancers, and gig workers, to find out what is their tax bracket. Then, each time they get paid, immediately send in an estimated payment. You multiply your tax rate multiplied by the amount you just got paid, Don’t forget to do the calculation for your Indiana tax rate, too. Send two payments, one to the United States Treasury and the other to the Indiana Department of Revenue. This procedure will keep you from spending money each time you get paid. That money no longer belongs to you. If you treat it like it’s still yours, you could quickly end up with no cash to pay both tax bills. There’s a reason why there are wings on a dollar bill. Don’t spend it. Send it when you earn it and avoid the headache of no money when it’s time to file your tax returns. Small business, freelance, and gig income can be notoriously unpredictable. One month it is great, while the next is terrible. Paying your estimated payments in this way will keep you out of harm’s way.

You face serious tax challenges as a self-employed individual, including the dreaded self-employment tax. That higher tax burden makes smart planning essential, and you can start that planning with the four tips listed above.

Owe Back Taxes and Need Tax Relief?

If you want a law firm that knows how to navigate the IRS maze, reach out to our firm, and we’ll schedule a confidential consultation to explain your options to resolve your tax problem permanently. 

by Richard Ebbinghouse