Tax season is looming‚ and unless you’re looking forward to a refund‚ it’s typically not a process anyone enjoys.
It can be especially agonizing when you’re drowning in debt‚ and the IRS is just one more creditor on the pile.
A Chapter 7 bankruptcy can help in a number of ways‚ but it is best to talk with a Woodland Hills bankruptcy attorney to discuss your options. An experienced bankruptcy attorney may be able to settle your tax debt for significantly less than you owe‚ work out a reduction or removal of interest charges and penalties‚ end the garnishment of your wages and stop the seizure of your property.
Of course‚ no one plans to find themselves mired in debt‚ and most people will take whatever steps possible to claw their way out of it.
If at all possible‚ it is better to get ahead of the issue of tax debt before it becomes a problem. One way to do this is to make sure your taxes are properly filed. Consumer Reports recently released some tips on ways to ensure you are organized‚ choose a tax preparer who will work to your advantage and hopefully avoid audit.
First of all‚ if you make less than $200‚000 a year‚ you have a 1 out of 100 chance in being audited by the IRS. Your chances go up quite a bit higher if you are a small business owner – particularly if you are itemizing deductions for a home office‚ business meals and telephone.
Business expenses that seem as if they might be instead personal (i.e.‚ meals‚ travel) are one of the first things that IRS agents will hone in on. It’s important for you to maintain meticulous notes and records about all of your business meetings.
And speaking of records‚ hang on to your tax documents from the previous three years – that’s how far back the IRS can audit you.
It’s also important to check your math. A great deal of IRS notices are sent out because someone forgot to carry over the 1 (or a similar mathematical mistake).
That may be motivation enough to seek the help of a professional. You have a few options in this regard: a certified public accountant‚ an enrolled agent‚ a tax preparation chain‚ or free tax preparation. Explore each option carefully to determine which may be the right one for you. And before you meet with any of these professionals‚ make sure you have all of the appropriate social security numbers. Consider putting your documents in an accordion folder‚ with section dividers for categories such as W2’s‚ Form 1099‚ charity receipts‚ etc.
To avoid getting potentially ripped off by a shady preparer‚ Consumer Reports recommends you first ask for a list of fees upfront. Sometimes‚ preparers will try to charge a “processing fee‚” but this is often just to put more money in their pockets. Be wary of refund anticipation loans‚ which are really just short-term loans that will charge you upwards of triple-digit interest. You may also want to be very careful if your preparer offers to put your refund onto a debit card. These are often loaded with fees.
Cal West Law will provide a free consultation to help guide you in making a bankruptcy decision that works for you. In Encino‚ Glendale‚ and Woodland Hills‚ just call (800) 568-0707.
Consumer Reports: Bullet-proofing your tax return‚ By Consumer Reports
Track down the best tax preparer‚ Consumer Reports