Tax Relief Blog

Colorado State Taxes – What You Should Know

admin — Tue, 27 Jul 2010 12:56:44 +0000

Taxes are an integral part of everyone’s life who is earning more than the defined sum of money by the tax authorities. Therefore, you must have basic knowledge about the structure of tax law and other associated aspects. Tax law is not an easy thing to know and cope with. Firstly, authorities keep on updating the tax law regularly. Therefore, while preparing your taxes you should not use the information what you have got a year ago. Secondly, tax law changes from one state to another so are the tax relief options. So, You should get to know the tax law which is applicable in your state and if you are residing Colorado and want to know about the few aspects of the state tax law, read on…

Let’s start with income tax. In the state of Colorado the income tax rate is fixed at a particular percentage of the taxable federal income irrespective of what income level you fall into. To know the latest percentage, you should refer authentic information from IRS and other state tax authorities and these days internet is the best place to get information without much of hassle. Like other states, last date to file your taxes is 15th April. In case, 15th is weekend or holiday then next working day will be considered as the last date for filing taxes.

Another common type of tax is sales tax. In Colorado, the rate of sales tax is fixed at 2.9% for all the retail sales. However, it doesn’t mean that this would calculate the final taxable amount that you would be paying some cities and counties in Colorado might charge some additional taxes. Following are some of the special district taxes that would increase the fixed sales tax rate.

Cultural Facilities District Tax or CD
LID (Local Improvement District). It is applicable within the parts of boulder and southeast Jefferson counties.
FTBL or FD is Football stadium district tax which would help to build Denver Bronco’s stadium.
In counties such as Carbondale, Gunnison, Basalt and Glenwood springs, you would need to pay regional transport district tax or RTA.
RTD must be paid while shopping in Denver, Boulder, Jefferson and some parts of Arapahoe, Adams, Broomfield and Douglas.

If you are not sure about the tax rates and want to get sneak peak before start shopping in any of the cities or counties in Colorado, you can visit online rate finder provided by the Department of Revenue. If you own business in Colorado, you would need to pay taxes on the furniture, computers, equipment and all the other items that help you to generate income for business directly or indirectly. The percentage of property taxes is available on the value of your property.

As a taxpayer, you have several options to pay your taxes in Colorado. You can file your tax returns electronically using system known as Netfile. You can also file taxes online. you can also make use of Telefile system and file your taxes using touch-tone telephone which will be available 24X7 in addition to Netfile system during tax season.

Tax Arrears – What is This & What You Should Know?

admin — Fri, 23 Jul 2010 14:02:17 +0000

Recently, the world has seen one of the biggest financial crises. This made even the high earning citizen debtors. People couldn’t pay their mortgage installments, credit card bills in time and tax return remained unfilled for the next year. So, people who have not filed taxes timely they are getting correspondences from IRS with tax bills that are unpaid. These bills re nothing but tax arrears and the amount mentioned on the bill is the money you owe to the government and tax authorities will make use of several steps to recover the money. The collection steps could be very serious especially when you are not responding to the correspondences and calls of the IRS.

What you fall into the issue of tax arrears? Businesses face issue of tax arrears more than employees. There is a reason for it. Employees don’t have tax bills because they have their taxes taken out of their earnings whereas businesses get tax bill several times a year which has not been paid as yet. It doesn’t mean that business avoid to pay the taxes. At times, they find that the authorities have not collected the taxes correctly. There could be several issues attached to it. VAT issues top the list. So, if there are some VAT issues, you will find more tax payable than you have calculated.

Most of the times this happens to new businesses as they are not sure how and at what rate VAT will be charged. Tax arrears would also come your way, if you are using outdated accounting systems and financial management is not up to the mark. Start up businesses relies on experience advice as well. So, before getting in touch with some expert for some suggestions and advice for your business, you should check if the person has knowledge or not. Other reason that can bring up the tax arrears is miscalculation or poor budget management. If you don’t have money to pay the tax bills even then tax arrears would occur.

You can prevent tax arrears. How? Simply pay tax bills in time and budget your expenses properly. However, it is not always possible to ready with the finances to pay tax bills. Therefore, it is necessary to get apt financial advice and to employ sate of the art accountancy systems and financial procedures. For best results, you should consider hiring a tax professional or an accountant. The professionals will make you aware tax credits and tax relief options to minimize your payable tax amount. In case, you fail to pay the arrears, your company would be in serious financial trouble. Tax professional and an experienced would sort out the financial and back taxes issues you are facing by your business. Once you get rid of the current tax issue, you should look out for permanent tax professional who would keep you and your business away from any financial mess.

Are You a Military Person – Few Tax Tips for You

admin — Tue, 20 Jul 2010 13:19:37 +0000

Taxes, their calculation and their filing procedures vary from one profession to the other. If you own a business you might need to spend a good amount of time with your CPA or accountant so that an error free return can be filed else you would need to hire an experienced tax attorney. You would be entitled to several tax credits and tax relief options. However, if you are a military person the filing procedures and tax relief would quite different from that of the business owners and self employed tax payers.

For active Military member, there is a specific act known as Service members civil relief act (SCRA). As per this act, on duty military personnel can avail several benefits. The day you receive the orders for active duty, Your SCRA starts. For military personnel state income taxes would be included, if they are non-residential servicemen or women. For example if you are working as military personnel in “X” state then the state government can’t impose income taxes on your wages. Moreover, state tax liability can’t be increased for the spouse of the servicemen or women with the inclusion of service member’s income. So, if your spouse is working then you don’t need to pay any extra income tax to the state government.

As a service member, you have a flexibility to delay the payment for your income tax. However, it doesn’t mean that you can delay the payment in any and every condition. You get this flexibility only when on active duty for up to 180 days after the termination of the duty. At times, you get relief on your travel expenses as well. But every travel expenses are not included in this. You can only claim for the travel expenses that have been spent under military responsibilities that too if you have traveled for more than 100 miles from your residence. To avail the claim of the travel expenses, you should file the expenses under miscellaneous deduction.

You can get much exclusion in your income taxes. If you are enjoying military benefits and pay, you are eligible for the exclusion from income of military taxpayers. You are also entitled to deduct the interest on real estate and mortgage taxes. Even if you have you have used BAH to pay the expenses, you can avail the deductions on the interest. Being military personnel, you can also avail some tax credits. Child tax credit is one of the most common one. To get this tax credit your kid must be under the age of 17 by the end of the financial year. You can reduce your tax liability by availing claim for the expenses on the education of your kid. If your tax liability is zero, you can get tax credit as refund.

Few Common Mistakes While Preparing Taxes

admin — Fri, 09 Jul 2010 14:11:39 +0000

Tax preparation is one of the most important tasks of everyone’s life and errors are an integral part of the procedure. These errors are enough to put you under the spotlight of IRS’ systems. There are several reasons for committing errors while preparing taxes. First of all, coping up with the ever changing tax law is not everybody’s cup of tea. Moreover there are several tax codes that will definitely make you confuse and if you are preparing taxes without any professional assistance, you might find yourself in big mess because of tax codes and tax forms.

Using incorrect tax form is one of the most common errors which are made by the tax preparers. Many a times, taxpayers use 1040EZ instead of 1040 to file their taxes. Despite correct mathematical and computation, several tax filings receive notice for tax audit just because of the wrong form used to file taxes. You might find it easy to fill out the short form and expect to get the same tax deduction or IRS relief however; this cannot guarantee that you are going to get complete refund or relief.

Computation and mathematical errors are other mistakes that are made by the taxpayers. Calculation mistakes will let you pay more or less than you should instead of correct amount. To get rid of mathematical errors, you should review your again. If you are fed up of doing calculation, take a break before going further. It will allow your mind to relax a bit and you get time to regain your strength to calculate the complicated tax amount. Once you are done with the calculations recheck that all the expenses and income have been included and no mistake is there in the calculation.

Do you know what your taxable income is? Are you aware of all the tax credits you are entitled to? If your answer is yes then you should not have any kind of computation errors. In case you are not sure about your taxable income, earned income tax credit and estimated tax payments, you should take your time to know about all these things. If you are taking tips from an expert then you should also get knowledge about standard deduction for senior citizens, taxable amount on social security benefits and child and dependent care credit. To get the best out of your tax preparation, you should have good book keeping skills.

If are out on a dinner or on holiday, you should keep all your bills and invoices with you. It will help you to deduct your expenses without any worry of arranging a duplicate copy of it as a proof. It is very simple to keep your bills however, it one of those things that are usually overlooked. So, you should maintain a file in which you can keep all your bills receipts and invoices.

Looking for Tax Relief from Unfiled Tax Returns or Back Taxes

admin — Thu, 08 Jul 2010 14:00:41 +0000

Have you filed your taxes regularly? No! It means you are delinquent in your tax returns and you must be receiving calls and correspondence from the IRS. The issue of back taxes can get onto your nerves and will hinder your business or job. You must have heard about aggressive collection tactics of IRS. However, if you could not pay your taxes in time and have a genuine reason for it, you don’t need to face aggressive attitude of IRS agents. If you are going through a divorce, experienced a job loss or death in family, IRS will consider these kinds of genuine reasons for not paying taxes in time and you might get some extension to pay off your taxes.

If you are facing the issue of back taxes or unfilled taxes, you should look out for best available tax relief options so that amount of penalties and interest can be reduced. Even if you are late in filing taxes, you should file them. It’s better to file them a year late than filing them not at all. You might need to pay late charges however; penalties and interest would not accumulate any further. If you fail to file taxes at all then aggressive tax collection will come your way and the tax collection agency is authorized to garnish your wages and put lien on you property, car and bank accounts.

In case, you have not paid taxes from last three years it’s advisable that you should hire a certified tax resolution specialist or an expert tax attorney as they are the only people who can help you in tackling the legal questions of IRS attorneys. Moreover, you will save time, money and panic condition by knowing the work ethics of the IRS and ways to resolve the back taxes issues. Sometimes it happens that IRS files taxes in case, you don’t file them in time and substitute the returns in the interest of the government. Most of the taxpayers don’t know about this. On papers, you might have paid taxes for a particular financial year however, one you actually receive the notice from IRS to pay the taxes it would have accumulated large penalties and heavy interest.

Always try to settle your taxes using “Offer in Compromise” or OIC. If you get qualified for OIC settlement, you are more likely to save thousands of dollars that you would need to pay in back taxes. This is the time when you need an expert tax attorney to negotiate with the IRS to reduce the back taxes amount by winning the settlements. In case, you don’t qualify for OIC, you can try for other tax relief options such as “currently not collectible.”

IRS Tax Audit – How to Stay Away From It

admin — Tue, 06 Jul 2010 14:09:09 +0000

Tax audited is one of the scariest terms that you will ever come across in your whole life. Once start browsing through the internet to know the tips and tricks to prepare your taxes in a way that you don’t get into the situation where you IRS is ready to audit your tax filings. Now it is up to you how you use them while preparing your taxes. First of all, you should know about the recent changes in the tax law. It will allow you to stay away from the errors that you might make while preparing taxes under the influence of old tax law. You should also be aware of the Discriminate Index Function (DIF). This is a computer program used by the IRS to flag tax returns.

The program compares your deductions with all other tax filings that fall into the same tax bracket. DIF makes life of IRS agents easy by giving a computer generated score to every tax return. The score gives a probability about the questionable items that are there on your return. There are normal standards; if your filing deviates from those standards and the questionable items are very high in numbers then you are more likely to get letter for audit. One of the most common things that can bring red flag on your filing is tax deductions and tax credits. You should only file tax deductions and credits that you are entitled to.

In case, you are trying to reduce your taxable income by availing tax deductions and tax relief that you are not entitled to. You are more likely to find a red flag against your name. For questionable items you would need to send the explanation and/or documentation to prove that your filing and deductions were genuine. Best thing to avoid tax audit is that you should report all your income. This greatly reduces the chances to get under the highlight of the IRS computer programs. If you are thinking that IRS won’t come to know about your income; don’t underestimate the biggest tax collection agency in the country. IRS would come to know about your exact income form the information that is filed by the employers.

You might have filed itemized deductions. If they are very high in number as compared to your income it will not only captured by the DIF but IRS agents would also come to know about it. For instance, you have declared an income of $30000 however, claiming to pay $10000 in charity which is practically not reasonable at all. This will give a reason to the IRS agents to take a closer look of your tax return. There are businessmen who think their filing would not trigger the IRS. To some extent, it is true because people who are self employed and running office from their home they can reduce the taxable with home office deduction. However, it is very tricky and it might cost you your business; if IRS get to know that you are trying to play with the IRS.

Looking to File an Income Tax Extension

admin — Fri, 02 Jul 2010 06:57:49 +0000

Tax extension is one of the easier ways to prepare your taxes and stay away from errors while filing your returns. There are several reasons why you should file for an extension if you are not ready with your taxes. With the extension you get time to plan and prepare your taxes. You can also make use of tax relief options that have introduced in the current year with the tax extension. However, there are some myths are attached to the tax extension as well which might interpret some wrong information to taxpayers who were planning to file tax extension. One of the most known myths about the tax extension is that it increases the chances of getting audited. Since this is just a myth this is not correct rather according to the statistics, in the list of taxpayers to be audited, the number of people who have filed their tax returns with an extension was not as high as the number of taxpayers who filed their taxes in time.

Most of the people think that IRS agents need to audit a certain number of filings. It is true but the reality is that they try to fill their quotas as soon as possible and there is only a small percentage that left to pick up from the tax returns that have been filed with extension. So you don’t need to worry about the tax audit while filing an extension to file your taxes. If you have not filed tax extension before and seek out some advice from your friends and relative, you are more likely to come across another myth which is: if you don’t have a genuine reason, IRS will not give you an extension to file your taxes. Getting tax extension is not at all tough provided you have filled the form for extension correctly. You will automatically get six months extension, if IRS doesn’t find any incorrect information in your form. Moreover, you don’t need t give IRS any reason as in why you need to file an extension. This is the reasons, why several businesses and individuals file for extensions every year.

There are taxpayers who think that filing would be more complicated after an extension and hiring a tax expert is mandatory. The filing would remain almost same you just need to know about the forms that are required to file your taxes with an extension. You can get this information for the IRS site or your accountant can help you in this regard. Moreover, your accountant can help you in this regard. If you get an extension till October, it doesn’t mean that if you are ready with your filing you’d need to wait till October. You can file your taxes even before that extended deadline of October 15th. Tax extension has become so common that individuals and businesses are making use of it so frequently that some of the state government have started giving automatic extensions.

Have You Received Notice for Tax Collection from IRS

admin — Wed, 30 Jun 2010 13:21:56 +0000

Back taxes – a situation which is being faced by large number of taxpayers especially after the financial crisis in 2008! IRS has sent millions of notices in regards to back taxes. Some of taxpayers responded to them to check if they can get an extension in paying their taxes or tried to sort the things out with the IRS in professional manner. However, few taxpayers, knowingly or unintentionally ignore the correspondences and calls from IRS and now have tax collection notice in their hands. If you are among these taxpayers, you need to search for the IRS tax help immediately.

Most of the taxpayers who have received this collection notice will get panic. However, it is not going to help you at all. Therefore, you should look out for IRS help rather than cribbing, sulking and making situation worst. If you have received collection notice it means you need to handle this situation in legal manner. Therefore, you should refrain from calling IRS on your own. First of all, you should search for an expert CPA, Certified Tax resolution Specialist or tax attorney. It will ensure you that IRS notice will be responded effectively and professionally. You must have heard about several instances of brutality of IRS in collecting back taxes. So, don’t even think of battling with the IRS without professional assistance.

If you are not hiring a tax professional and abstaining from communicating with the IRS, you are more likely to face tax lien and wage garnishment. IRS is authorized to put lien on your property, car, motorbike and other valuable assets. Even if there is delay in paying taxes from your side, you tax attorney will assist you in communicating with the IRS and get rid of any tax lien and wage garnishment if there are any. Moreover, he/she will figure the things out to get IRS debt relief on the amount of your back taxes. Your tax attorney or certified tax resolution specialist will arrange a temporary halt on all the liens and garnishments and buy time to prepare your case to represent in front of the IRS.

To remove the back tax lien on your bank account or on your property, your tax attorney will file an IRS collection appeal. Main motive of the appeal is to settle back taxes disputes between the taxpayers and the IRS. Even though IRS has got the tag of brutal collection agency, they have some limitations in collecting back taxes for some of the taxpayers. If didn’t pay the taxes because of genuine reasons such as long illness, divorce, death in family or any other extreme circumstances, IRS would put you into the currently not collectible file. If your tax attorney gets success that you have genuine reason for not paying taxes in time, IRS is more likely to offer you a payment plan. Your accountant will calculate how much money you actually owe and tax attorney will negotiate for the payment plan with the IRS.

Online Tax Preparation – Know the Advantages!

admin — Tue, 29 Jun 2010 06:20:48 +0000

Tax preparation is one of the most important tasks of the year of everyone’s life. If you are still collecting tax forms and other tax related documentation physically and wasting time by traveling from one office to the other, you are not using the boons of technology. Moreover, spoiling your precious time that you could have used to look after your business or concentrate on your job. In today’s world, internet is becoming the lifeline for survival in this fast paced world and now you can prepare your taxes online as well. You don’t need to go haywire to know the recent updates in the tax law and what all IRS relief and tax credit options you are entitled to. By preparing taxes online, you would get rid of complexities of calculation and computation of ever confusing taxes.

There are software companies that are regularly introducing new features in the tax software packages to make taxpayers’ life easy. Software companies develop the state of the art tax software with the help of expert taxation and accounting experts. Their main focus is to make the process of tax preparation hassle free and easy. While looking for tax preparation sites on the internet you will come across numerous sites claiming to provide maximum deduction so that you don’t need to pay hefty amount in taxes. Most of the time, you get tax provisions for both state as well as federal taxes.

You can go for free or paid membership to prepare your taxes online. In paid plans, you get some extra services. Few sites offer professional assistance to paid members else you can always read through the instructions and prepare your taxes. You would instructions and ways to prepare your taxes in detail. Best part of preparing taxes online is that you can keep yourself in-sync with current tax news and prepare your taxes accordingly. Filing taxes online greatly reduces the chances of committing errors which in turn keep you away from the IRS and tax audits.

There are numerous benefits of filing preparing taxes online. You just need to put your information in the system and the in-built system will calculate the taxes and payable amount. With the help of tax software, you don’t need to go through the endless complication of taxes and the addition and subtraction from exemption, deduction and tax credits. You can accomplish the task of preparing taxes at the ease of your home as per your convenience. You can also compare your current filing with your previous years’ tax filings.

If you don’t wish to hire an accountant or CPA, preparing and filing taxes online is the best choice. These days even professionals are using same software to assist their clients. In case, you are already using a accounting software, you don’t need to shuffle between the tax software and accounting software as most of the tax software packages are compatible with accounting software. If your filing does not contain any complexities then you can prepare your taxes on your own.

Tax Strategies to Save Money

admin — Thu, 24 Jun 2010 06:53:49 +0000

Tax strategies – one thing that cannot be abstained from anyone’s life! However, every taxpayer will not follow the same tax strategies as tax law varies from one state to the other and from business to business. But the motto remains the same: to reduce the tax amount and save as much money as possible. Tax harvesting is one of the most important tax strategies. You might be investing in plans that are not worth enough at the time you purchased them. However, you can take advantage of those losses to offset at the end of the year. In case, you don’t have any gains to offset, you can take loss up to a particular amount against your income and if you have more losses than this then you can take them up next year.

Retirement plans are one of the oldest strategies to save money from taxes. At your job you must have taken some retirement plan in which you might have access to 401 (K). If you really want to reduce your tax liabilities, you should raise your contributions towards your retirement plan. In case, you are not completely aware of all these contributions you must get in touch with someone who has knowledge and experience in this regard. You can also get information online in order to raise your contribution towards your retirement plan. Once start contributing more, you might need to set your budget again however, it will pay off while you prepare your taxes. You can deduct the money you have invested towards your retirement plan and at the retirement plan you will have more money than you have actually planned.

Are you self-employed? Then you have more flexibility then the one who is into a regular job and getting fixed salary. In some of the plans, you can start contributing in the month of December as well for the next year. You must get in touch with some professional or financial advisor to find out which plan would work for you in best possible way. You should make yourself aware of the tax credits that would allow you to save lot of money. One of the tax credits that have been availed by lot of taxpayers is expenses you are bearing for your children’s education. You should start paying for kids’ education so that you can save money form taxes. Charity is another thing that would help you in getting great amount of tax relief. You must start contributing towards some of the non-profit organization and be a part of the noble cause. By donating money in charity you are not only helping the needy people but also making your way easy to save money from taxes.