owe taxes

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

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You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

home office deductions
Points to Consider
  • Claim business deductions with no business income. Even if your business did not generate income this year, you should claim all business deductions. Such deductions might create a net operating loss (NOL), which would carry forward to offset future taxable income.
  • Claim the home office with no business income. Claim the home-office deduction even with no business income. The home-office expenses not allowed this year carry over to future years in the separate home-office deduction bucket. And this gets even more important when you consider business miles.
  • Loss of business miles. Trips from your home to many business locations are personal miles if you do not deduct your home office as your principal place of business. Establishing that “principal place of business” is easier than it sounds.
  • File a tax return. Without business income, you may be exempt from filing a tax return. Forget that. File a return. You need a filed return to claim the benefits above.
Action Steps
  • Document your home office. Ensure you have appropriate documentation that proves your home office is your principal place of business.
  • Claim all possible deductions. Even in a loss year, claiming all possible deductions is essential.
ConclusionYour home office can provide significant tax advantages, even when your business income is low or non-existent. Make sure you position yourself to take full advantage of these benefits now and in the future.
employee retention credit (ERC)

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim

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Tax Bills, Tax Letters, Tax Resolution, Taxes

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their …

section 529 savings plan family

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?

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Tax Bills, Tax Letters, Tax Resolution, Taxes

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member? Such plans …

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The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes

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Tax Bills, Tax Letters, Tax Resolution, Taxes

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes | Reaction Tax Resolution Services NYC One of the taxpayers’ most significant …

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below. Read More »

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim

Tax Bills, Tax Letters, Tax Resolution, Taxes /
employee retention credit (ERC)
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As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim

employee retention credit (ERC)

Despite the uncertainty of the timing of the credit’s approval, it’s crucial to proceed with the amendment to comply with tax laws and avoid potential penalties.

Our records show that the statute of limitations for your 2020 individual federal tax return expires on May 17, 2024. Given this deadline, you should have us amend your return to reflect the 2020 ERC, even though you have not received the funds. This action is necessary to ensure compliance with Section 2301(e) of the CARES Act and IRC Section 280C(a).

Additionally, I recommend filing a protective claim simultaneously to safeguard against the possibility that the IRS might reject your ERC claim or approve a lesser amount. The protective claim ensures a tax refund after the statute of limitations expires for the wages adjusted should the IRS deny or reduce your ERC claim.

Here’s what we need to do for you if you approve:

 

  1. Amend and file your 2020 tax return before the May 17, 2024, deadline.
  2. File a protective claim to cover scenarios where the ERC is less than anticipated or denied.

I understand these steps might seem burdensome, especially during uncertain times. But the steps are crucial for ensuring compliance and minimizing potential financial impacts.

home office deductions

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below. Points to …

section 529 savings plan family

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member? Such plans …

tax bills resolution

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes | Reaction Tax Resolution Services NYC One of the taxpayers’ most significant …

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim Read More »

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?

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Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?

section 529 savings plan family

Such plans are a great way to help pay for a person’s college education. Contributions are not federally tax deductible, but they grow tax-free, and you can withdraw them tax-free to pay higher education expenses.

But what happens if your child or other beneficiary doesn’t use all the money in the 529 account or decides not to go to college? Indeed, many young people are choosing not to attend college these days.

What do you do with the money in an overfunded 529 plan?

Suppose you withdraw the money and use it for non-education purposes. In that case, you must pay regular income tax plus a 10 percent penalty on the earnings (but not on your original contributions).

If you want to keep tax-free treatment for withdrawals, you can change the Section 529 plan’s designated beneficiary to another qualified family member.

But starting in 2024, you have another alternative: roll over the money into a Roth IRA for the beneficiary.

If you satisfy some pretty complicated rules, you can transfer up to $35,000 to a Roth IRA tax-free. When the beneficiary turns 59 1/2, he or she can withdraw the Roth IRA money tax-free for any purpose. At age 59 1/2, the Roth IRA could be worth hundreds of thousands of dollars.

Unfortunately, lawmakers have not gone out of their way to make such rollovers easy. To qualify for tax-free treatment, you must follow the rules below:

  • the 529 account must have been in existence for at least 15 years;
  • you can only roll over money that has been in the 529 account for at least five years;
  • each year, you can roll over an amount equal to the beneficiary’s IRA contribution limit for the year ($7,000 for 2024);
  • the beneficiary must have earned income at least equal to the amount of the rollover amount; and
  • you must reduce your maximum $7,000 rollover by any contributions the beneficiary makes to a traditional or Roth IRA.

 

Section 529 plan rollovers to a Roth IRA require a long-term commitment. You need at least five years to transfer the entire $35,000 to a Roth IRA. Such rollovers must also be coordinated with the beneficiary since they impact his or her ability to make IRA contributions.

And there’s the little wrinkle of your state’s rules. The transfers may be subject to state income taxes.

Despite the complexities involved, 529 to Roth IRA rollovers give 529 plan owners who overfund their plans welcome new flexibility in deciding what to do with their unused money.

home office deductions

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below. Points to …

employee retention credit (ERC)

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their …

tax bills resolution

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes | Reaction Tax Resolution Services NYC One of the taxpayers’ most significant …

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member? Read More »

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes

Tax Bills, Tax Letters, Tax Resolution, Taxes /
tax bills resolution
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The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes | Reaction Tax Resolution Services NYC

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One of the taxpayers’ most significant mistakes is failing to pay their back taxes. This is a common problem for many Americans, especially those who are self-employed or have multiple sources of income. When you owe back taxes, it can be tempting to ignore the problem and hope it goes away, but this is not a good strategy and will worsen the situation.

In this blog post, we will discuss the consequences of avoiding paying back taxes and what you can do to resolve the issue.

Consequences of Avoiding Paying Back Taxes

There are several consequences of avoiding paying back taxes. The first and most obvious consequence is that you will incur interest and penalties on the amount you owe. The longer you wait to pay, the more interest and penalties you accumulate, making it more challenging to pay off your debt.

In addition, the IRS can impose liens and levies on your property, including your wages, home, car, and bank accounts. This can make getting credit, selling your property, or accessing your funds extremely difficult.

Another consequence of owing the IRS is that it may damage your credit score, making it harder to get approved for loans, credit cards, and other financial products.

How to Resolve Back Tax Issues

If you owe back taxes, taking action as soon as possible is essential. The longer you wait, the worse the situation will become. Here are some steps you can take to resolve your back tax issues:

Seek professional help – Do not contact the IRS alone. That’s like going to court without a lawyer. Sometimes, you can reduce the amount you owe to the IRS, but only a tax resolution professional can help walk you through the maze of dealing with the IRS. If you need help with how to proceed or help to negotiate with the IRS, consider seeking professional help from a CPA, Enrolled Agent, or an attorney who is also a tax resolution expert.

When you are working with a tax resolution specialist firm like ours, we can help you as there are several options to resolve your back taxes. The good news is that the IRS has several debt settlement options, including its Fresh Start Initiative, and is generally willing to settle with taxpayers who can prove that they need more funds to pay the IRS in full.

If you owe back taxes, it is essential to take action as soon as possible to resolve the issue. The IRS offers payment plans and other options for taxpayers who cannot pay their total tax debt. By working with a tax resolution specialist, you can resolve your back tax issues and avoid further problems in the future.

If you need an expert tax resolution professional 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 resolve your tax problem permanently.

Tax Problems? Issues with the IRS? Call us now! Click here to send us a message

home office deductions

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below. Points to …

employee retention credit (ERC)

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their tax returns accordingly. It appears that the IRS has not yet processed your ERC claim

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

As you may know, the IRS requires that anyone claiming the 2020 employee retention credit (ERC) adjust their 2020 wages on their …

section 529 savings plan family

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?

•
Tax Bills, Tax Letters, Tax Resolution, Taxes

Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member? Such plans …

The Biggest Mistake Tax Payers Make Avoid Paying Back Taxes Read More »