Frequently Asked Questions About Filing Taxes
Filing tax returns is often very difficult and when you do not file your tax returns you can get into a lot of trouble. The tax system can be complex when you don't have a clear understanding of how it works.
In an attempt to educate yourself about taxes and how to file them you may have many questions that need to be answered. Tuttle & Tuttle want to arm you with the most accurate information available to help you resolve your tax problems. In order to do this, we have answered some of the most frequently asked questions about tax resolution.
1. Is there any way to reduce the amount of tax that is owed?
a. Often, when people do not file their tax returns, the IRS will make an assessment which is called a Substitute For Return. The assessment is based on income information the IRS has from W-2’s, 1099’s, or, if the person has a professional license, they will compute the tax based on the average income for that industry. This assessment is computed as if the taxpayer is single with no dependents.
Filing a return is the best way to possibly reduce the assessment. Usually, neither the IRS or the Franchise Tax Board will set up an installment agreement until all unfiled returns have been prepared and filed. One of the first things we tell our clients is that they must get all unfiled tax returns prepared and filed.
b. If they did file a tax return with a balance due sometimes, depending on circumstances, the penalties and some of the interest could be abated which will reduce the balance owed.
2. Will the IRS accept an Offer in Compromise for pennies on the dollar?
An Offer in Compromise is complex, and the amount offered depends on many factors such as equity in assets which can include real property, vehicles, balances in checking and savings accounts, stocks, and any excess income after necessary living expenses are deducted.
We perform an analysis for clients to let them know if they qualify to submit an Offer in Compromise and what they will need to offer based on the outcome of this analysis.
3. Can the IRS or Franchise Tax Board take my house or car?
They can seize assets, but this is seldom done. Both the IRS and the Franchise Tax Board will file a tax lien depending on the amount owed. So if you own a home and sell it the lien will have to be satisfied before any money is paid to you.
4. Are there other ways the IRS and Franchise Tax Board can collect taxes?
a. The IRS can place levies on bank accounts, wages, and other sources of income.
b. The Franchise Tax Board can levy wages and bank accounts in addition to taking away your professional license if you have one. They can also take away your driver’s license.
If you have any more questions about taxes or tax resolution get in touch with the tax resolution team at Tuttle & Tuttle. Deborah Tuttle is a Certified Public Accountant in Fresno, CA. Our office provides individualized personal service for each of our clients. Our goal is to solve your tax problems today and equip you with solid advice that will bring your finances under control in the future. To learn more about how we can help you, please click here or contact us by clicking here.