The IRS is well known for pulling strong-arm tactics on those who do not pay their taxes, but to be honest, they do have a softer side for those who have a legitimate reason for being late with their payments. To make it easier for you the taxpayer, as well as the IRS, they have developed programs for you to use, to get your tax payments back on track again, and in their good books again, as it were.
IRS Form 1040X, 2005 revision (Photo credit: Wikipedia)
Installment agreement is an IRS debt relief program aimed at those who owe a large amount of money. Basically, they let you pay off the money in even installments, until the debt is fully paid. Interest will still accumulate on these late payments though, so the bigger the payment you make each month, the better.
Then there is the Penalty Abatement Program which, if you can prove without a doubt, that you have a viable reason for not being in a position to pay your taxes, will have the IRS do away with the penalties to reduce your debt to them.
The Non Collectible Status IRS debt relief program, is for those who are barely existing on their wages and just do not have the money to pay their late taxes. For these people, the taxman will stop taking any action against them, until their circumstances have improved. Again, interest will still accumulate on any money owed to the IRS, so it is a good idea to get it paid off as soon as possible.
Anyone considering using an IRS debt relief program, is can call an Enrolled Agent at IRS Tax Relief who will guide them through the whole process of getting their tax payments back on track again.
As an old Chinese proverb goes, “the journey of a thousand miles starts by a single step” What does this Chinese proverb mean? That today is the best day to start saving for your retirement if you have not started doing so already. Unfortunately, saving for retirement has always been a very sore subject for most people all over the world, but it is a true fact that married couples need to treat it with the seriousness and magnitude that it deserves.
Of you are planning to retire by the time you reach the age of 65, it means that your retirement kitty should have enough funds to replace your income for a minimum period of 12 years. How do you ensure that you get enough money to take care of you and ensure you lead a comfortable life throughout your sunset years? Here are some of the five ways you can avoid destroying your retirement kitty.
Max out the match employer contributions on your 401K plan
The first way you can avoid blowing up your retirement kitty is to take advantage of the 401k plan if it is offered by your employer. Ensure you make it a top most priority to max out the matched employer contributions. Needless to mention, this is basically free money that goes towards your retirement kitty. One thing you should keep in mind is that any money contributed to the 401K plan is often tax deductible. As such, you should talk to a financial advisor to know more about what you stand to gain, or lose with your 401K investment plan.
Complement your 401K plan with an IRA Account
Having an IRA account has so many great advantages, both tax benefits and otherwise, that you can take advantage of and enjoy. How it works is that once you reach the age of 591/2, you can withdraw all the money you had been contributing without any penalty as long as you have had active contributions for at least 5 years. To avoid blowing up your retirement contributions, ensure you wait until maturity in order to withdraw the contributions.
Even if you had all the money in the world, if you do not know how to budget and plan your finances accordingly, you are likely to blow up your retirement in a very short period of time. in order to achieve your retirement savings objectives, you will need to live slightly below your means, and then within your means once you get your retirement fund.
Diversify your investment portfolio of your retirement fund
One way you can make the retirement fund work for you is to diversify your retirement portfolio. How? Remember that during an economic slump, retirement accounts tend to take on very high hits, meaning withdrawing from the kitty at such a time could mean significant losses. Having a well diversified retirement investment portfolio will mean that you will get the best of all worlds.
Work for as long as you can
Just because it is said that you should retire at 65 doesn’t mean you should. As long as you are in good overall health and have the energy to continue working for several more years, you can continue working for as long as possible until you can no longer take it anymore. This way, you will avoid plunging onto your retirement kitty very fast as the extended work years would mean some more sources of income apart from your retirement kitty.
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There is only one week left before the tax season comes to an end for 2012.
Every year at this time, people tend to ask the same types of questions. Let us examine some of the more common issues that people wonder about at this time of year.
Most people are very concerned about whether or not they will get a tax refund. Even though you know the refund is your own money, you tend to be happy when you get a refund and you are likely to feel upset if you have to write a check to the government.
Last year, Americans received $318 billion dollars of tax refunds from the IRS. This year, the number may be even larger. Last year, the average refund that was received was close to three thousand dollars. Getting a tax refund like that can be very exciting, especially if you have been a bit short of money recently.
What do many tax payers do with their annual tax refunds? Nearly one third of people spend the entire amount. About fifty percent of people receiving a refund put it in the bank or use it to pay off some of their debts.
There are some people who like to pay their taxes when they submit submit their tax return at the end of the tax season. They do not want the government to receive their money any sooner than necessary.
If you prefer getting a refund of your taxes when the tax season has ended, you can ask to have the amount of taxes you pay to be increased throughout the year.
Slightly more than one percent of the tax returns that are submitted in the tax season will be audited.
Retirement planning can be difficult, but that shouldn’t stop you from getting started. However, you do have to be careful. After all, there are many mistakes people make with their retirement planning. Whether it’s starting too late or not regularly reassessing your portfolio, things can go wrong. Here are just a few retirement planning mistakes you don’t want to make.
Starting Too Late
People don’t usually start thinking about retirement until their 30s or 40s. However, you are missing out on thousands of dollars by not starting your portfolio as soon as possible. It doesn’t matter if you can’t invest a lot of money, you still need to get started. Even if you’re only able to invest $1,000 a year for the first 5 years, that’s still $5,000 plus any gain you earn through your investments.
Not Investing Enough
You need to invest as much as possible. The exact amount you can invest will depend on which type of methods you use. For example, if you have a traditional IRA, you will only be able to invest $5,000 a year. However, you should do everything possible to meet that amount. Not only does this cut down on the amount of taxes you have to pay, but that money will really add up over the years.
Using Only One Method
There are a number of retirement funding options and you have the ability to take advantage of more than one. For example, if you have a 401(k) through your employer, you can also get an IRA. Other options include real estate investing, bank bonds, and precious metals. A diverse portfolio will help ensure your retirement dreams come true.
Taking Loans From Your Retirement Account
It’s true that you can take loans from your 401(k) and IRA. However, that’s not always the best idea, especially if you don’t plan to pay yourself back. You should only touch this money in the worst emergencies or if you plan to pay yourself back, which will require paying interest to yourself.
Not Regularly Reassessing Your Portfolio
Things change. That’s why you must reassess your portfolio from time to time. You want to make sure that your stocks are still doing well and you may even need to switch from high risk to low risk stocks as you get closer to retirement.
Retirement planning can be difficult at times and there are a number of mistakes people make. However, it’s important that you take the leap so that you can retire in comfort rather than working throughout your golden years.
About the Author: Celeste Perman is currently a retirement planning advisor who hopes to one day transition into full-time trading through Suretrader or some other investment group. She plans on starting some courses on investment and business in the next month.
Ohio Governor John Kasich, a republican, is proposing changes to how the state regulate and taxes the oil and natural-gas drilling industry. He is seeking a balance between regulations that protect the environment without stifling investments and new jobs. To campaign this move, he states this as a goal of “leading the nation with a comprehensive energy strategy.”
Ohio is among some of the states that are balancing with the costs verses benefits of hydraulic fracturing. This procedure, also known as fracking, aids the drilling process by injecting water, sand, and chemicals underground at high pressure. There is much contention between environmental groups and the industry as to the safety of this method.
Kasich’s plans include “cradle to grave” disclosure of fracking wells. This would give transparence to the types of chemical, volumes, and concentration utilized during the entire lifetime of the well. In addition, standards would be updated on well construction, new regulations for natural-gas gathering lines, and finally higher tax rates for the drillers.
Drillers would pay a severance tax as high as 4 percent having an anticipated projected generation $1 billion by 2016 aiding in the reduction of income taxes paid by individuals and small businesses. Oil and gas companies face an upfront fee of $25,000 per well to local governments to offset impacts from drilling, and then get the money back over time, according to the governor’s office.
Legislative approval is still required for about half of this plan, to include Governor Kasich, Ohio Taxes proposal. The goal is have approval come as quickly as possible so that the rest can be completed through administrative rules, allowing all new regulations to be in place before year-end.
While you may have been doing taxes on your own in the beginning, a growing business usually needs an accountant. Unfortunately, not all accountants are the same. While some may know a lot about your type of business, others may not. Then there’s the fact that some accountants may be too busy to work with you one on one. If you’re starting to feel overwhelmed, don’t. Here are a few tips on how to choose a tax accountant for your business.
Find an Accountant That Understands Your Business
There are many different fields of work out there and different accountants will understand different businesses. It’s important that you find an accountant that understands your business or you could risk missing several tax deductions. For example, if you’re a freelance writer, you can deduct things that others can’t, such as books bought for research. An accountant that doesn’t work with writers would try to tell you that this deduction isn’t legal. That’s why you must find an accountant that knows your line of work.
Choose an Accountant That Has Time for You
Accounting isn’t as easy as some accountants would lead you to believe. It takes several hours to complete difficult business forms. If your accountant doesn’t have time to meet with you one on one to discuss your taxes before and after preparing them, you should look for another accountant.
Opt for an Accountant with Experience
There are a number of classes that turn out tax preparers in a matter of weeks. However, when you’re dealing with complicated tax issues, you want to choose someone that has years of experience. Not having enough experience can result in you being audited or paying more than you were supposed to.
Select an Accountant That Uses the Latest Technology
Believe it or not, there are still a number of accountants that do taxes by hand. While there isn’t anything wrong with this method, it will take longer to receive your return. Opt for an accountant that uses the latest technology so that you receive your return quickly and know that the IRS has received your return.
Consider the Accountant’s Qualifications
There are a number of qualifications that an accountant can have. The best accountants will have a CPA along with other certifications, such as ABV (Accredited in Business Valuation). A CMA can prepare your taxes and has passed many exams, but they lack the education that a CPA has.
Seek Out an Accountant That Can Offer More Than Tax Returns
Obviously, tax returns are important, but a business has more accounting needs. You may need to pay estimated taxes or need help keeping financial statements. Either way, there’s a good chance you’ll need your accountant throughout the year rather than just on April 15.
A good business accountant is necessary for not only getting the best return on your taxes, but preparing financial statements. Take your time and choose an accountant that is right for your business.
About the Author: Patria Bigger is a tax advisor who enjoys working with small business owners. During tax season she offers free tax support to her family members and friends but she also recommends anyone who needs help seek the advice of a qualified accountant.