There is a misconception that everyone needs to file their tax returns, no matter how much they earn simply to be accountable. The truth is, according to the tax code, millions of individuals every year do not need to file any tax returns. But with the government's stimulus benefits given to taxpayers, everyone wants to file hoping to get some share of this benefit.

Just who is a nonfiler? According to the IRS, a person who does not earn more than $3,000 from any number of sources does not need to file an annual tax return. This is also the amount you will have to make to be eligible for a stimulus check from the government. But if you earn more than $3,000 per year, you must file your tax returns. The $3,000 number also applies to families, therefore if you and your spouse earned more than $3,000 as a family, then you will need to file a tax return. The IRS has set up a Free File system to assist those nonfilers who intend to file.

The IRS Free File system is basically to enable people who do not earn much money to file their tax returns for free. It is open to over 97 million Americans who made less than $54,000 last year. Hence you do not have to engage companies like H&R Block to file for you, neither do you have to buy expensive online filing software. There are a whole host of companies that will perform your Free File for you. All the information you need about the Free File system is available from the Free File website. Just visit the site and make your selection of the company you would like to perform your Free File for you.

You may want to make your filing in order to take advantage of the stimulus benefit. The Obama Administration put forth this system to help stimulate the economy. Each person earning over $3,000 is eligible to get a $300 check from the government and families can receive up to $600. Are these measures working? That's anybody's guess. It appears to have had some effect on the stock market, but not as much on job creation. These checks are still available from the government, even if you are filing long past the deadline.

This year saw record numbers of nonfilers file their tax returns, many for the very first time. Millions of stimulus checks were sent out and, even though its effect on the economy is uncertain, there is a strong hope that such a system will again be in force in 2010. If it is, the Free File system will still be available for you if you are eligible. So if you are a nonfiler and you want to file, there are free and easy-to-use ways to get your taxes done fast using the Free File system.

The Case of Nonfilers wanting to File is a post from: IRS Tax Problem Solver Blog - IRS Help

An IRS levy is a wage garnishment on your salary that authorizes the IRS to deduct a substantial percentage of your wages to pay your tax debt. This happens as a last resort where the IRS will attempt to recoup the tax you owe them by taking upwards of 70-80 percent of what you make every month. Needless to say, this amount of garnishment leaves you hardly enough to survive.

But the purpose of such a move by the IRS is not to impoverish you; it is to get you to call them so that a more practical solution can be worked out. Most of the time, those who get subjected to IRS levies are recalcitrant taxpayers who have ignored attempts by the IRS to contact them whether by phone, letter or email. Since this is the primary purpose of a tax levy, you need to know how to deal with it.

One way to resolve a tax levy problem is called an Offer in Compromise. However, few people will be granted an Offer in Compromise because in order to qualify, you have to be quite poor and have hardly any assets that can be sold to clear your tax debt. There are, however, a few exceptions. If the tax levy disrupts your ability to provide basic needs of your family such as your mortgage or food, you can get it reduced. The IRS must leave you enough to pay for food and shelter, although that is about it. Other valid expenses that may reduce the tax levy would be essential medicines and child support.

The final type of Offer in Compromise is where your tax debt has been calculated wrongly by the IRS. This might be highly unlikely because the IRS personnel are well trained to determine your exact quantum of tax. Nevertheless, even the IRS makes mistakes once in a while and if you can prove that they did and that the tax burden you have is not really yours, your tax levy can be reduced by the amount of tax that you are not liable for.

In conclusion, IRS levies are designed to get your attention so that you will contact the IRS in hopes of resolving your debt. Your response should be to agree to a payment plan with the IRS. The payment plan will replace the levy and even if you may not be able to keep to the plan, at least it will buy you some time to work out a more permanent solution.

How to Beat an IRS Levy is a post from: IRS Tax Problem Solver Blog - IRS Help

No one enjoys being the subject of an IRS audit. In order to keep on the right side of the IRS, it is important to know how to avoid being subjected to such an audit. So how do you determine what is deemed as a reasonable cause for an IRS audit? The fact is that there are certain things that will cause a red flag more times than not. One too many red flags and you are in hot soup. Here are just a few things that usually constitute reasonable cause for IRS audits.

In most cases, red flags are caused by deductions on your tax returns. Depending on what type of job you hold, you may make any number of tax deductions. It is inaccurate to say that most deductions cause a red flag; only a few do and the key is finding out what those deductions are and how to avoid problems that come by making them. Arguably the most common deduction is for donations to charities or political parties. These are legitimate deductions, subject to their amount relative to your total earnings. If your donations seem oddly out of line with your income, it will certainly raise doubts about its legitimacy. The logic here is that most people don't donate large amounts of money that are disproportionate to the amount of money they earn themselves.

Ex-IRS agents have revealed that one major reason for getting flagged is making deductions for a large number of dependent children. Although anyone can have a large family, these days it is a rarity. You would be better off not lying about the number of dependants you have just to make some extra deductions.

Another way you may create reasonable cause for IRS audits is by deducting things that don't actually apply to the business you are in. It is quite normal for small scale entrepreneurs to make deductions that are in the grey area, neither absolutely legitimate nor totally disallowed. But the key is not to overdo it. We all want to pay the least amount of taxes possible, but because there are so many things that can present reasonable cause for IRS audits, it is wise not to go to the extreme in your deductions.

Finally, if you have been issued with an audit, deal with it. You will stand a better chance of resolving the issue if you do not make any excuses to try to avoid it.

Understanding Reasonable Cause for IRS Audits is a post from: IRS Tax Problem Solver Blog - IRS Help

Just what is an IRS levy? You would usually be subject to an IRS levy only when all efforts by the IRS to collect taxes from you have failed. Thus, an IRS levy is the last straw when it comes to collecting back taxes. It is a tool that will freeze your assets so that the IRS can remove as much money from your bank accounts as they need to pay off your tax debt. Although it is the final means of retrieving taxes from you, an IRS levy can still be reversed.

The first thing to do would be to contact the IRS and discuss with them a payment plan. Accepting a payment plan will immediately lift the levy on your accounts so that you have access to your checking and savings; but the payment plan will usually take effect immediately. You could just agree to a payment plan so that your levy is reversed, giving you more time to think of what do in the long run.

If a payment plan is not right for you, you should consider applying for an Offer in Compromise. This offer is not granted to most people because in an Offer in Compromise you are allowed to pay less (at times significantly less) than what you owe. There are three main ways to qualify for an offer in compromise. The first way is to show that an IRS levy would impose intolerable hardship upon your family and you would not be able to meet your basic needs such as food, shelter, medicine and child support.

The second way to be eligible for an offer is by proving that you do not have the means to pay off your tax debt by the deadline. In such a case, the best thing to do is to suggest a lump sum payment that is close enough to the total tax debt that you owe. If the IRS is agreeable to the sum that you propose, they will accept your offer and cancel the remainder of your tax debt.

The final way is to prove that your tax bill actually isn't yours. If you show them a genuine mistake in calculation or some form of human error occurred, then you may qualify to have some or even all of your debt removed.

The key here to doing away with an IRS levy is to keep the all channels of communication open so that you are always making headway positively.

What do You Do with an IRS Levy? is a post from: IRS Tax Problem Solver Blog - IRS Help

If you want to fully discharge your tax debt, you must have made your returns on time. However, fully discharging taxes that are from a return that was filed late is not possible. Tardy tax returns is likened to tax evasion; blaming a poor memory is no good, either. This is why it is not possible to obtain a full discharge if your returns are late. However, you may qualify for other forms of help from the IRS.

Late taxes can be partially discharged through an Offer in Compromise. At present, there are three types of compromises your can obtain from the IRS. The first type is where some severe hardship prevents you from paying your taxes in full. Hardship would include things like being laid off, serious illness, death of the breadwinner etc that threatens your ability to pay for basic needs like food, shelter, medicine and child support. Credit card payments or school tuition payments do not count and will not win you any clemency from the government.

The second kind of Offer in Compromise involves an error in calculating your taxes or in the amount that is actually your liability (a part of your taxes belong to someone else). This is the most challenging of the three kinds to prove since you basically have to explain to the IRS that they made an error and that you are better at doing your taxes than they are. If you can show that a particular part of your tax liability is, in fact, someone else's, you may be allowed to pay less than what you owe.

The third type of Offer in Compromise is where you are unable to pay your full taxes. The IRS will evaluate your total assets and how much money you are bringing home every week and determine exactly how much money they can expect to collect from you, minus living expenses. If your nett income is less than your tax debt, you can either pay off your debt in instalments or pay a reduced amount that you can afford. While discharging taxes filed late is out of the question, the IRS will be more than willing to work with you when it comes to reducing your tax burden.

So totally discharging your tax debt is not possible if your tax returns are late. Discharging taxes filed late is banned by the IRS, but if you respond quickly to your notices and talk to them about what you can do, you should be able tor arrive at an equitable solution.

What to Do to Discharge Late Filed Taxes is a post from: IRS Tax Problem Solver Blog - IRS Help

Did you know the government has the authority to freeze your bank accounts under certain circumstances? If you owe the IRS for a prolonged period of time despite their best efforts to retrieve what is their due, they may slap you with a tax levy. But the government can only freeze your money for 21 days and the freeze only applies to the money that is in your account at the time the levy is issued. Any deposits thereafter are not frozen. It would take a second levy to freeze deposits made after the initial levy. Here are a few things you can do to avoid ever having a levy put on your accounts.

Essentially, you need to take responsibility for your tax debt by responding promptly to all IRS correspondences. Give the IRS a clear picture of your financial situation and as far as possible, make a token payment even if it is $20. Showing some form of cooperation and good faith in this way goes a long way to avoid a tax levy.

In addition to explaining your financial problems to the IRS, if you can demonstrate a financial hardship, a levy will not be put on your accounts. For instance, if you are a business owner and you need money for your payroll, that is classified as a financial hardship. A serious illness, emergency medical treatment or an unexpected tragedy also qualifies you to avoid a tax levy. Complete the required form straight away and treat all agents you talk to with respect and chances are good you will avoid that dreaded tax levy.

It is also advisable to agree to a payment plan even if you may not be able to keep to it. This will buy you some time while you sort out a more workable solution. Most people would rather be on a payment plan than to have their accounts completely frozen. If you can demonstrate financial hardship, you can get a payment plan that fits within your tight budget. But time is of the essence here. You should make your plans early and not at the last minute just when a tax levy is about to be issued.

The best way to preclude a tax levy is to pay up your tax debt. Of course, for most people this move would have been made if it was at all possible. But some people simply refuse to pay because of some grouse with the IRS and end up with a levy. If this situation describes you, it is best not to refuse paying. The better thing to do is pay up your tax debt if you can afford it and take up your case against the IRS through other channels if you feel you really have been wrongly assessed.

Tax Levy? No Problem is a post from: IRS Tax Problem Solver Blog - IRS Help

Prolonged refusal to pay your taxes will result in an IRS bank levy. This is a legal act in which the IRS freezes your bank accounts and deducts what you owe them from your bank balances. This is usually done only as a last resort after all other avenues have been fruitless. There are a few ways to get out of an IRS levy or bank account freeze, but you need to act fast.

The most common way to prevent a bank levy is to agree to a payment plan. Even if you cannot afford the payment plan required by the IRS, agreeing to it will do two things: It will buy you time and it will unfreeze your account. It does not matter if you can only afford the first few instalments, you should go along with the plan anyway. Perhaps within a short period of time your situation may change and you will have the means to pay off your tax debt sooner than you think.

Another way to avoid a bank levy is to apply for an Offer in Compromise. There are basically three types of Offers in Compromise so you will have to determine which one you fall under. The first is where it is impossible to pay your total tax debt because you do not have the means to do so before the deadline. The IRS will look at the total debt that you owe and determine how much they can reasonably expect you to pay and take that as full settlement. They determine this magic number by looking at how much income you have, how much you own in the way of assets and how much time until your payment deadline is here. Under certain circumstances, it is possible to get away with a substantial discount on your tax debt.

The second type of Offer in Compromise is where you can show that a bank levy will bring severe hardship on your family such that you are not able to meet basic needs. But it is important to know what the definition of 'basic needs' is. Credit card payments, maintaining your credit rating and your children's private school tuition are not considered 'basic needs' according to the IRS. Only things like life-saving medical bills or making child support payments would be considered basic needs.

The third type of Offer is where there is a mistake in the computation of the amount of tax you owe. This may be an error in calculation or where you are not solely liable for the entire tax debt. In these cases, you are allowed to pay a lower figure that reflects your correct amount of tax liability.

As you can see, the IRS levy and bank account freeze situation is extremely serious but it is important to remember why it is being done. It is to make you call the IRS immediately to have your situation resolved. Otherwise, you might lose all your savings when a bank levy is imposed on you.

All about Tax, IRS Levy and your Bank Account status is a post from: IRS Tax Problem Solver Blog - IRS Help

Do you know there is more than one type of audit? A correspondence audit is one that is done entirely through correspondence and not in person.This is the easiest type of audit to go through. A correspondence audit is done by corresponding either through the phone or by mail.

A correspondence audit starts in the form of a notice from the IRS that they require some evidence to substantiate a tax deduction. Usually, the wording of the notice is very plain and non-threatening. If you have proof of your deduction, such as a relevant receipt, just send it to the IRS. Case closed. However, if you are in fear that a more substantial audit could be around the corner or if you are unsure of what to send back to the IRS, you have several options open to you.

Firstly, you should contact the IRS for clarification on what exactly is the situation with you taxes and what type of document they require. On the other hand, if you are hesitant to admit to the IRS that you do not have the evidence they require, then you may need to consult a professional like a tax attorney.

Usually, an IRS correspondence audit is a straightforward matter. All you need to do is furnish the particular proof of payment the IRS is looking for. It is when this kind of audit gets dragged out for months and months with multiple letters flying back and forth that people get nervous. If your tax situation gets that complicated, then it's best to engage a tax attorney. IRS laws can be very confusing and you are at a distinct disadvantage without the advice of a tax professional like an attorney. There is no shame in asking for help when your financial future is at stake.

A correspondence audit need not get beyond merely a letter or phone call but if for some reason it does, you will be asked to meet an IRS agent personally. Alternatively, the agent may pay you a visit at home or at your business place. There is no need to panic if this happens, but it is a good idea to speak with a tax attorney to see what your options are and what the worst case scenario is. The best advice is to be honest about your situation and fulfill all requirements the IRS has for you.

Getting on Top of a Correspondence Audit is a post from: IRS Tax Problem Solver Blog - IRS Help

Can the IRS garnish your wages? You bet they can. Under the tax code, the IRS is authorized to take this drastic measure and your employer is obligated to comply. It is officially called a tax levy. A tax levy is one of the ways the IRS collects back taxes from you. It is often done as a last resort method by the IRS because calls and repeated letters have gone without answer. If you are in such a situation, it's best to respond to the IRS' attempts to get you to pay your back taxes to avoid the dreaded tax levy. So here is what you need to know about garnish, wages, IRS audits and more.

You should realize how devastating a wage garnishment can be. The IRS can take 75% or more of your salary, leaving you with hardly anything to survive with. Some people believe that the IRS must leave you enough to pay for your housing and food, while others claim they barely have $200 a week after deduction, which would hardly pay for rent or a mortgage.

The point of a wage garnishment is actually to grab your attention and force you to communicate with the IRS. They know that many taxpayers simply refuse to speak to them and this might be the only way to get their attention. The moment you get in touch with the IRS about the garnishment on your wages then you can begin to resolve your tax problem with them.

When you contact the IRS, usually the first proposal they will make to you would be a payment plan. Many people take this first option simply because it allows them to have their full wages back and it gives them time to think about what to do from that point on. An alternative to a payment plan is to make an Offer in Compromise. An Offer in Compromise is granted to those who really cannot afford to pay off the full amount of their tax debt due to personal hardships like high medical bills, loss of job etc. Also if you can show that some part of your tax debt is actually someone else's liability, you may qualify for an Offer in Compromise. It is advisable to talk to a tax professional like an attorney about garnish, wages, IRS audits and more to get advice about what to do.

Can the IRS Garnish Wages? is a post from: IRS Tax Problem Solver Blog - IRS Help

If you have ever been issued a tax lien, you would know how dreadfully stressful it can be. In most cases, a lien is a last resort used by the federal government to obtain money that is legally theirs. If you want to know how to get yourself out of a tax lien, follow these tips. They will also help you avoid a tax lien in future.

Firstly, you can propose a payment plan. The reason why some people are reluctant to do this is that they feel the amount of money being asked for by the IRS is unfair. But it is foolish to go into a stand-off with the IRS. There are other completely legal ways to go about reducing what you owe.

The most straightforward thing to do is offer a simple payment plan. Make a reasonable proposal and it will likely be accepted by the IRS because they want to collect their money as soon as possible. Dealing with the IRS successfully is all about showing good will and the right attitude. If you convince them that you are taking your responsibilities seriously and show the IRS that you understand the gravity of the situation, you won't be left saying, "Help! My Tax Lien Is More than I Can Afford!"

One very common reason people get slapped with a tax lien is that they misrepresented the figures in their tax returns, got audited and were found out and subsequently were given due penalty. If you got audited and caught, now is the time to stop lying and start being honest. The IRS understands that just about everybody lies on their taxes, at least once in a while, but if you want the IRS to be sympathetic to your cause, you need to be truthful and polite. Be nice to the people you talk to on the phone. Respond to IRS letters right away. Act in good faith and it will make a difference.

The most popular thing to do is make an Offer in Compromise where you offer to settle your tax debt with a lower amount that you can afford to pay. The IRS is a lot like a credit card company; they would rather get some money from you than none at all. So to get out of your tax lien, make the IRS an Offer in Compromise. If it is not acceptable by the IRS, they will most likely give you a counter offer and this can be the basis for coming to a mutually acceptable agreement with the IRS.

What if I Cannot Afford to Pay my Tax Lien? is a post from: IRS Tax Problem Solver Blog - IRS Help