Posts Tagged ‘tax payments’

The IRS was giving away money. Did you get yours?

Tuesday, May 4th, 2010

When you don’t pay your taxes, the IRS is on you like ants to a picnic. I know that because everyday I work with people whose tax problems are exacerbated by strong arm IRS tax collection techniques.

But what about people who overpay their taxes? It might seem hard to believe but the IRS had $1.3 billion sitting owed to 1.4 million people who did not file a tax return for tax year 2006. (You can read more about it at this IRS press release). This outstanding amount owed back to taxpayers happens because someone might pre-pay their tax based on quarterly estimates but then they fail to file a tax return at tax filing time.

The problem is, if you didn’t file your income tax within three years you generally forfeit your right to receive that refund. That means the money will not be leaving the U.S. Treasury, and Congress will be able spend it for its many “important” projects.

It doesn’t seem fair does it. The IRS gets a much longer time period to collect any money you owe them, but you get a much shorter time period to collect money from the the IRS that they owe you.

I guess Congress, who makes up these screwy rules thinks it’s fair, but that because it benefits them.
They fix the rules in their favor.

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Posted in IRS, Income Tax, Tax Collection | 1 Comment »

The True Cost of Tax Credits

Friday, April 16th, 2010

Everyone loves tax credits. There’s no better feeling than finishing your income tax return on (or preferably before) April 15 and seeing that you own nothing… or even that the IRS owes you. Long before the money arrives in your mailbox, you’ve probably spent it on something.

Tax credits seem great! But they come at a cost and it is threatening the fabric of our economic system.

As governments support specific groups or reward specific behaviors, they look to income tax credits as a way to manage that support and people make the mistake of thinking that their “great” income tax credits are a bonus.

But the real result is much more startling: A dwindling group of people are paying for a larger and larger group of people. Since the dawn of the new millennium, one in four taxpayers are considered “non-payers” because they owe no taxes (or receive money back). The number of non-payers grew by 36% while the number of tax filers grew by just 13%. So the gap is narrowing and the IRS is evolving into a turnstile of money, taking it in and then pumping it back out again.

This is increasing dramatically and it’s not just for impoverished families any longer! In fact, some families earning as much as $50,000 are able to combine deductions and credits to get out of paying taxes.

In this chart, notice how the percentage of returns with no liability is increasing!
no tax liability

Here’s the reason why this upsets me: tax credits mean the the government, instead of you and I, is deciding to give away our hard-earned money, and deciding whom to give it to.

Democracy being what it is, politicians will buy votes by giving away money that’s not their’s to give away. That will enevitable result, just as it already has, in more and more people getting “tax credits”. This means that a smaller group of high income earners are paying an increasingly disproportionate amount of taxes to support everyone.

If the IRS says you owe money, it’s not just because they want you to pay… it’s because they need to pay off others who are getting an increasing amount of tax credits.

The problem isn’t going away any time soon: Tax credits sound great and win elections. But politicians are just borrowing against the future.

Read more at the Tax Foundation about how Americans are getting out of paying taxes and avoiding societal obligations.

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Posted in IRS, Tax Collection, Tax Problems | No Comments »

The Four Stresses You’ll Face During Tax Time

Saturday, March 20th, 2010

Americans face 4 very different kinds of stresses during tax season. I call them the “April 14 stress”, “April 15 stress”, “April 16 stress”, and “April 17 stress”.

April 14 tax stress
In the weeks and months leading up to the April 15 tax deadline, you (and most other Americans) will be facing the stress of tax preparation. There’s the effort of gathering paperwork, pouring through difficult-to-understand tax forms, juggling paper and a calculator, and hoping desperately that you don’t have to pay taxes this year. The stress comes from finding the time to do taxes and then from trying to figure out each separate line in your tax return.

April 15 tax stress
No sooner is that stress over then the next stressor appears: April 15 is tax deadline day. Most Americans just barely squeak their tax returns in on time and the stress of trying to get it done and rushing through those last minute calculations feels rushed. Did you get everything? What if you didn’t do something correctly? You vow to do your taxes earlier next year (but who has the time?)

April 16 tax stress
Fortunately, not everyone feels this stress, but many people do. If you owe tax and you have to pay it, guess what: your bank account may be drained on this day to cover the check you wrote for your taxes. That’s stressful as you watch your tiny nest egg now devoured. Goodbye to that new sofabed you were hoping for.

April 17 tax stress
Have you ever played roulette and hoped desperately that the ball lands on your number? April 17 tax stress is the opposite: It’s audit stress. You hope desperate that you don’t get picked for the probing and invasive procedure known as the tax audit. And realistically, this stress doesn’t go away on April 18; it hangs over us like a cloud every single day.

If you’re facing these stresses, you’ll find some good advice for handling the April 14 and April 17 tax stress in this article at CNN Money called “A guide to avoid an IRS tax audit“. And if you want to avoid the April 16 stress, give our office a call.

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Posted in IRS, Tax Collection | No Comments »

Mark Your Calendars For Tax Payment Deadlines

Monday, March 30th, 2009

I was thinking that it would be helpful to provide a calendar of important upcoming dates for taxpayers so they can mark their own calendars and plan accordingly.

I’ve got this one on my web site, which counts down to the
April 15 tax filing deadline.

But I wanted to provide you with a fuller list of dates.

I googled “2009 tax dates” and found this link showing tax filing deadlines on irs.gov, which seemed promising. Until I clicked it. Not very helpful at all to determine when one must file income tax returns.

This is typical of the IRS: There is the obvious, basic questions that people want to know. And those obvious, basic questions should have obvious, basic answers that are quick and easy to find. With just one or two clicks from the site.

But why should the IRS do anything the easy way? Why spend $1 of taxpayer’s money to create a simple set of tax rules accessible from an easy to find site when you can spend $100 of taxpayer’s money to do the same thing???

And so, when we look for “2009 dates” or “2009 deadlines” or “2009 tax dates” (etc.) we get a whole bunch of useless information.

Note to IRS: Post the filing dates on your home page… or at least a link to open a tax calendar. It’s not difficult to do. (Heck, a high school student with a list of dates could probably do it in an evening with Google Calendar).

Now, I realize that April 15 is THE DAY. It’s the day that is burned on most people’s psyche as the darkest day of the year. But there are other important filing dates and tax deadlines throughout the year that need to be adhered to.

If you want to mark your calendars with relevant tax-related dates, this calendar from MSNMoney is a lot better.

Here’s another tip that the IRS will ignore: They should allow syncing options with Blackberries and personal online calendars so that we can click a button on the IRS site and download the filing dates to our calendars… perhaps even with helpful reminders built in to remind us in the weeks leading up to a tax deadline. The technology is there, the federal government needs to implement it.

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