Tax Matters - The Top Tax Defenders Blog

Understanding the Limitations of IRS Tax Levies

Wed, 25 Feb 2015 13:00:00 GMT

Under normal circumstances, creditors are limited when it comes to the amount of money they can take from your paycheck after a garnishment order has been issued. However, the IRS is not bound by normal garnishment protocol and thus can garnish your paychecks without a court order and without abiding by standards to which other creditors must adhere.

In fact, because the IRS uses a different set of rules when recouping money that is owed to it, people may be unsure of how much of their earnings will be claimed during a levy. You can prepare yourself financially by understanding the basics of how much the IRS can claim if you are facing a wage levy.

Allowable Take-Home Income

Creditors are normally bound by how much they can claim out of your paycheck by your state's garnishment laws. In most cases, a company can take no more than 15 to 25 percent of your earnings.

However, the IRS does not determine its amount by a percentage, but rather on the amount that you are legally allowed to keep for yourself. It takes into consideration the amount deducted for Social Security, taxes, and other standard deductions. The amount that is left over is then utilized to determine how much it can levy to repay your tax debt.

Number of Dependents

After you pay your standard deductions, the amount that remains is scrutinized for the number of dependents you claim on your paycheck. In fact, the IRS will not use the number of dependents that you claim on your tax returns or even on your W-4 form.

Instead, it will send your employer a form 668-W, which you are required to complete. If your employer does not give you this form, it could be legally liable for your tax debt, along with any penalties incurred for this infraction. The number of dependents that you claim on this form will be used in part to determine the levy amount.

Extenuating Circumstances

Despite you owing back taxes, you could avoid heavy garnishment payments if you are experiencing an extenuating circumstance. For example, if you are:

65 or older
Blind
Receiving income from sources like unemployment or worker's compensation

The IRS may be unable to carry out a levy against you or claim the normal amount that would apply to other delinquent taxpayers. If any of these criteria apply to you, you should retain a tax professional who can help provide the needed proof to stop the levy or protect most of your income.

Garnishment Poverty Guidelines

By law, the IRS must leave you enough income to support your family and meet every day basic necessities like buying groceries and paying your utility bills. If your income is at or below the established poverty guidelines for your household size, the IRS may be unable to claim a sizable portion of your paycheck.

In fact, depending on how low your earnings are, you may not be levied at all, particularly if you already can barely afford to pay your rent or mortgage, pay utility expenses, and buy groceries for your children. If it does take anything at all out of your paycheck, it may be only a small amount that you can afford better than a higher percentage.

When you receive notice of the IRS' intent to levy your income, you may wonder how much it can legally claim each pay period. These levy guidelines can help you prepare yourself and your household accordingly. Even more, they can help you learn if you may qualify for paying a lower amount due to unavoidable circumstances or exceptionally low wages.

Photo | Money | By 401(K) 2012 | Used under a Creative Commons Attribute License 2.0

4 Tips to Appeal an IRS Wage Garnishment

Wed, 18 Feb 2015 13:00:00 GMT

Being in default to the IRS is entirely different than owing money to a credit card company or a hospital. In fact, while most creditors must obtain a court order to garnish your income, the IRS can levy your wages without one.

Because being garnished by the IRS often proves to be a grave and legally complicated matter, you should understand what you can do to appeal the garnishment and remove the levy from your paycheck. After you receive a notice to levy from the IRS, you should take these steps to protect your income.

Appeal within 30 Days of Notice

Acting quickly must be your first priority when you receive a notice to levy from the IRS. Within 30 days, you must contact the IRS by calling the telephone number on the notice and request an appeal. You can request an appeal if:

Your debt to the IRS has already been paid in full
You were notified of the intent to levy during an active bankruptcy filing
Your debt's statute of limitation has expired
An error was made during the tax assessment
You qualify to file for innocent spouse relief
You were previously not given the chance to appeal the debt

If you meet any of these circumstances, you could file for an appeal and have your tax debt reconsidered.

Use the Proper Appeal Form

When you plan to file for an appeal, you must use the proper IRS form to start this process formally. You can find the form 12153 on the IRS website. It must be completed entirely and mailed to the division of the IRS stated on your notice.

It cannot be scanned and emailed, nor faxed to this division. You must mail it within 30 days after you receive the notice to levy.

Contest the Appeal Decision

After the IRS has decided your appeal, you can still avoid being garnished by contesting the decision. As with filing an appeal, you must contest the decision within 30 days' time after it is rendered.

Because contesting it can be a lengthy, complicated, and confusing undertaking, you would do well to hire a tax professional to guide you. The IRS mandates that protocol be followed precisely if you want a favorable outcome. A tax professional can make sure every minute detail of the contest is met and that you are within the guidelines for taking on this matter successfully.

File for Garnishment Exemption

As with a regular wage garnishment, you could file for an exemption in court if you believe that you cannot afford to be garnished by the IRS. When you ask the court for this relief, you must have documentation that supports your argument. The court will want to know details about your finances and household like:

Your total household income
The number of dependents you support
Your rent or mortgage payment amount and other bill amounts you pay each month
Any unique circumstances like being disabled that could affect your ability to provide for your family

If the court finds that you legitimately cannot afford the garnishment, it may order the IRS to release the levy. However, if you plan to ask for an exemption, you may fare better by relying on a tax professional to advise you throughout this legal process.

Just like other creditors, the IRS makes sure that every debt that is owed to it is paid in full. When you receive a notice to garnish your wages, you can avoid the financial hardship that comes with this action by filing for an appeal. Before you file for an appeal, however, you should understand what methods are available to you.

Photo | Lawyers For Injury San Luis Obispo California | by Injury Lawyers San Luis Obispo | Used under a Creative Commons Attribute License 2.0

The Impact of Wage Garnishment on Your Credit Report

Wed, 11 Feb 2015 13:00:00 GMT

Your credit report reflects a wealth of information that reveals much about the way you handle your personal finances. Along with showing positive financial behaviors, your report also highlights any negligence on your part to pay your bills on time.

However, unlike other forms of default reports, wage garnishment takes on a different form in its impact on your report. If you are facing or currently dealing with having your wages garnished, you should understand how this action will impact your credit.

Wage Garnishment Public Record Reporting

Creditors do not report their decision to garnish your wages to the credit agencies. In fact, when you are in such default that your creditors must use garnishment to recoup the debt, they often will report your accounts as defaulted or closed, whichever circumstance applies to your obligation. Creditors themselves do not indicate if an account was collected through garnishment or other repayment forms, however.

In fact, garnishments show up on your credit report through public records. Anytime you are taken to court and an order is issued for garnishing of your wages, this record will be reported to the credit agencies. An entire section of your report is devoted to such public records and is accessible to any bank or lender from whom you are seeking financing. Even more, the report stays on your record for seven years and typically cannot be removed once it is reported.

Once a garnishment public record is on your report, you can expect your credit score to lower anywhere from six to 150 points. This score drop can impact you in several notable ways, including:

Showing up on a background check for a new job
Determining if you can get a new loan for a car or house
Determining what kind of interest rate you will pay on new financing
Appearing on a credit check if you apply for an apartment or rental housing.

Because creditors typically utilize wage garnishment as a last option, you would do well to keep such public records off your credit report and protect your score by taking steps to cure your defaulted accounts.

Curing Defaulted Accounts

You may find that the companies to whom you owe money are happy to work with you in repaying your obligation. Taking you to court and asking a judge for a garnishment order is expensive and time consuming. As such, if you take the first step by contacting these companies and asking for a practical resolution, you may find that you can protect your credit better and avoid having long-lasting public records from making their way to the credit agencies.

You can bring your accounts current by setting up a repayment plan, for example. A repayment plan lets you set up a payment that you can afford without risking your paycheck. Many creditors want you to commit to a viable dollar amount, however, and pay this amount on a regular schedule. They may even ask that you let this amount be automatically withdrawn from your bank account by them.

Student Loan Debt

If you have student loan debt that is in default, this repayment plan can be particularly beneficial, given how substantial this kind of debt often proves to be. When a student loan company garnishes your wages, you could be facing years of involuntary repayments, often in amounts that cripple your budget.

If you learn that your student lender is preparing to garnish your income, you would do well to contact the lender immediately and set up a payment plan that you can afford. This action will protect you from years' worth of garnishment and also let you rebuild your credit score in a more responsible manner.

The actual garnishing of your wages by a creditor may not be reflected in your credit report. However, the court order allowing this action is a matter of public record and will show up for seven years in your report. These records will lower your score substantially and could impact how well you are able to secure financing in the future.

Photo | How to make a baby (out of paper) | By moppet65535 | Used under a Creative Commons Attribute License 2.0

5 Methods to Prevent Wage Garnishment

Wed, 04 Feb 2015 13:00:00 GMT

Wage garnishments can take away vital income that you need to support your family. Because garnishments can last for weeks or months, this legal action taken by your creditors could make your current financial situation worse and also ruin your credit.

However, the state and federal government does provide several options to debtors to escape being garnished. You may use one of these methods to salvage your income and keep needed money in your household budget.

1) Quit Your Job

Of course, when you learn that your creditors have won a garnishment order against you, you always have the option of quitting your job. Unless you have a significant amount of money in your bank account or access to non-garnishable income like Social Security, alimony, or child support, this option likely would be ill advised.

Further, if you think that quitting your job and simply finding another one will resolve the situation, you may be surprised to find that the garnishment order will follow you to your new job as well. As such, while quitting your job is certainly a legal option, you may do well to consider other recourse alternatives.

2) Set up a Repayment Plan

If you suspect that your creditors may push for a garnishment order of your paycheck, you can avoid this action by contacting your creditors and setting up a repayment plan on your own terms. Most creditors welcome such arrangements and are willing to work with you if you demonstrate a genuine desire to pay off your debt without being garnished.

To set up a repayment plan, most creditors ask that you commit to a certain dollar amount to be paid on a regular interval. You could have payments come out automatically from your bank account every week, every two weeks or every month, depending on your financial limitations.

3) File for an Exemption

If you are unable to set up a repayment plan prior to the garnishment order being issued, you could petition the court for an exemption if you meet certain criteria. When you ask the court for an exemption, the judge will consider factors like:

Your household income
Your family size, particularly the number of dependent children you support
Your rent amount, utilities and other financial obligations that you pay each month

Any other extenuating circumstances like a disability or reasons for your financial hardship.

If the judge finds in your favor, the exemption order will lower the amount that your creditors may take from your paycheck or possibly even stop the garnishment order altogether.

4) Contest the Order in Court

You also could go to civil court and contest the order before the judge. When you contest the order, you have the chance to tell why you should not have to repay the debt or even if the debt truly belongs to you.

Contesting the order could be an option if you are recently divorced, for example, and being sued for a debt incurred by your former spouse. The court may decide that this debt does not belong to you and that you have no legal responsibility to repay it.

5) File for Bankruptcy

You may be able to escape the garnishment order permanently by filing for bankruptcy. Bankruptcy safeguards your income while the case is pending in court, preventing creditors from collecting on the debt owed to them.

After the judge discharges your bankruptcy, you will no longer owe any money to these entities. However, bankruptcy will not dismiss debts like:

Federal or state tax obligations
Delinquent child support
Student loan debt
Owed alimony

If you owe money to credit card companies, auto loan financiers, hospitals or doctors' offices, or other companies that could legally ask for a garnishment, you may protect your income and your assets by filing for bankruptcy.

Wage garnishments can leave you without the income you need to take care of your household and your family. You can prevent this action by your creditors by utilizing one of these legal options.

Photo | Money Wallet | by 401(k) 2012 | Used under a Creative Commons Attribute License 2.0

5 Tips for First-Time Tax Filers

Wed, 28 Jan 2015 13:00:00 GMT

The rule of thumb generally demands that people who earn some sort of income must file taxes each year. However, if you plan on filing taxes for the first time this year, you may be uncertain of how the tax filing process actually works. Before you begin your returns, you would do well to understand some basic details that could work in your favor. These tips can financially and legally protect you during tax time this year.

Know if You are Your Parent's Dependent

In your rush to embrace adulthood, you may have overlooked the fact that your parents legally can claim you as a dependent. If you are under a certain age or you have not made enough money to file your own taxes, your parents can claim you as a dependent if they have contributed to most of your financial and physical upkeep this past year.

Even if you are away at college, you can still be claimed by your parents if they are paying your tuition, paying for your insurance and medical bills, or helping you out in other key financial ways. If your own income falls below the required limit for filing, your parents have the right to claim you on their own taxes.

Get Your Paperwork Organized

If you can file taxes this year, you should make it a point to get organized as soon as possible. You will need your W-2 form or 1099, depending on whether you are an employee or an independent contractor. You will also need to gather documents like:

Medical expenses
Utility expenses if you work from home and want to claim them as business-related costs
Paid student loan interest documentation
State income and food tax if you plan to file for the Homestead tax credit

Having all of these papers organized and ready to go can shorten the amount of time it takes to file your taxes.

Choose Your Filing Method

As a tax filer, you have several options available to you when it comes to filing. You can hire a tax firm to file your taxes for you. You can also do them yourself online using one of the reputable sites now available.

Many people, however, still favor the tried and true method of preparing their taxes by hand. You can go to your local library and find a host of tax forms and booklets that you can fill out and then mail to the IRS. Some people believe that they make fewer mistakes on their taxes by filing them on paper rather than electronically.

Know Your Deductions

If you cannot be claimed as anyone's dependent, you may be able to claim several deductions on your taxes. Money that you have paid into rent, food tax, state tax, and other expenses may be returend to you through a federal or state refund.

If you are a parent, you can also claim the Earned Income Credit if you meet the required criteria. Claiming the EIC requires that you meet the criteria perfectly, however, which is why many parents use professional tax companies to help them take advantage of this deduction.

File in a Timely Manner

The IRS generally starts accepting returns the second or third week of January. You have from that time until April 15 to file your taxes. With that in mind, you should resolve to filing your returns in a timely manner.

If you rush it and file too soon, you could make mistakes and miss out on important deductions. If you file too late, you could face having to pay penalties. Rather than face either scenario, you should make it a point to find spare time in your schedule and file your taxes in a calm, yet timely manner so your return will be accepted the first time.

Filing taxes for the first time may seem like an exciting, yet overwhelming prospect. You can make it easier by keeping these tips in mind this year.

4 Tax Options When a Spouse Owes Back Taxes

Wed, 21 Jan 2015 13:00:00 GMT

In the eyes of the law, a married couple is a single entity who shares income, property, assets, and debt. However, when it comes to filing taxes, the IRS may distinguish between the two people in a marriage if one owes a debt to the government. Instead of using the couple's joint refund to satisfy that outstanding debt, the IRS may be able to issue it to one of the spouses if they utilize the proper strategies when filing their taxes. These tips can help a couple safeguard their return even if one spouse owes back taxes.

Change the Number of Exemptions

One of the easiest ways that a person whose spouse owes an IRS debt can keep the couple's taxes safe would be by changing the number of exemptions claimed on his or her income. Lowering the number would allow the government to withhold more taxes out of the paycheck while raising the number would lower the taxes withheld.

Having more taxes withheld at work may eliminate the possibility of getting a tax refund later. Nonetheless, it would also satisfy the person's tax obligation to the government and also eliminate the chance that this person would owe money to the government because of the other spouse's outstanding debt to the IRS.

Utilize the Innocent Spouse Option

If changing the number of exemptions is not a possibility, people can still try to safeguard their returns by utilizing the innocent spouse option. This option can apply during certain situations, including:

When the tax debt belongs to a single spouse alone and occurred before the couple's marriage
Paying the debt would create financial hardship for the couple
One spouse has filed for divorce because of spousal abuse
One spouse does not speak English as a first language
The court issued a divorce decree that stipulated that one spouse pay the other's outstanding debt

If people plan to utilize the innocent spouse choice, they ideally should use a professional tax service to help them take advantage of this option.

Use the Injured Spouse Option

People who want to protect their refunds can also use the injured spouse option if they meet the outlined criteria. This option helps a tax refund be issued to one spouse rather than to the couple as a whole. As with the innocent spouse option, the injured spouse criteria includes:

Proving that the tax debt occurred prior to the couple's marriage
The debt is owed because of the spouse's outstanding child support, student loan, or spousal support obligation
The couple is entitled to the EIC credit
Paying the debt would likewise be unfair and cause financial hardship.
If they are filing a paper return, it is essential that the couple write “Injured Spouse” at the top of their claim and file the form 8379. If they are unsure of how to utilize this option to their advantage, people should rely on a professional tax firm for help.

File a Separate Return

Many couples try to skirt their spouses' outstanding tax debt by filing separate returns. They choose the married filing separate rather than married filing jointly option when preparing their returns.

However, this option may reduce the amount of the refund that either spouse will receive. They also may not be eligible for certain deductions, including the EIC, if they file married filing separate.

When a person owes a debt to the IRS, this person's spouse may still be able to receive some or all of the couple's expected refund. Before they file their taxes, they should know about these strategies that they can use to safeguard their returns and also receive the refund to which one or both of them are entitled.

How to Avoid Tax Scams During Tax Season

Wed, 14 Jan 2015 13:00:00 GMT

As tax time approaches each year, hackers and identity thieves figure out new ways to steal your identity and your money. Some of these scams can be very sophisticated and fool even the most resolute skeptics, resulting in thousands of people having their identities stolen each year. Before you prepare for this year's tax season, you should know some of the more common schemes still in use today. You can protect yourself by keeping these safe tax preparation strategies in mind.

Safeguard Your Social Security Number and Personal Information

Your main priority should be to protect your Social Security number and private identification information safe at all costs. You should avoid giving it to random people without some sort of concrete proof that they are truly a certified tax professional.

Further, most people carry their Social Security cards in their wallets or purses. This practice is actually ill advised because thieves can take over your identity if you ever lose your wallet or purse or have it stolen from you.

Do Not Give Private Information over the Phone or through Email

Many identity thieves call you pretending to be the IRS or your bank. They ask you for your Social Security number to supposedly verify your account or to check whether or not you are owed a refund or owe more money to the government.

They also use this same tactic by sending out emails. In general, the IRS and your bank will not call or email you asking for this information. These organizations understand the importance of safeguarding people's identities. If you receive a phone call or an email asking for this information, you should refuse to comply and report the call or email to your local law enforcement.

Check Your Credit Report Each Year

Many people forget about the importance of checking their credit reports once a year. You should pull your report and check for signs of discrepancies or identity theft. Some of the details you should examine include:

Addresses that are wrong or that you have never before used in your life
Open charge accounts at stores where you do not shop
Judgments, liens, garnishments, and other collection activities on accounts that do not belong to you
Aliases or other names that you have never before used

If you find any of this information on your credit report, you should contact the credit bureau that issued the report, as well as the police department to file an identity theft report.

Do Not Give into Fear

One of the primary ways that identity thieves steal people's information involves invoking fear or panic in their victims. They may call you pretending to be the IRS and say that you owe money to the government. They may also say that if you do not pay the amount of money that you will be arrested or have your assets seized.

If you genuinely owe money to the IRS, this entity will contact you by certified mail or by regular U.S. mail. The IRS does not threaten to arrest people, especially over the phone or by email, nor does it demand payment through these communication methods.

Use Reputable Tax Companies

Before and during tax season, an influx of advertisements appear on Craigslist, your newspaper, or online touting cheap tax preparation services. The ads may promise low prices and even prizes if you choose these services.

However, many of these ads are created by identity thieves. Rather than use a fly-by-night tax prep company, you should utilize the services of a well known tax preparation or tax law firm to file your taxes. Established companies that can prove their credentials are trained to safeguard your identity information and file your taxes professionally.

Identity thieves consider the tax prep season to be ideal for stealing your identity and money. You can keep both safe by using these strategies to protect yourself during tax time each year.

5 Important Facts to Know before Claiming Caregiver Tax Deductions

Wed, 07 Jan 2015 13:00:00 GMT

A growing number of people provide care and assistance for their relatives This support can include paying for a loved one's medical expenses, transportation to and from the doctor's office, covering the costs of prescriptions, or even remodeling this person's home to make it safer and more accessible.

Rather be out that money with no hopes of recouping any of it, people can offset their caregiver expenses by claiming the person whom they support as a dependent. Before they claim this person or any caregiver deductions, they should understand the criteria required for doing so first.

Income Limitations

As with many tax deductions, people who want to claim a loved one as a dependent must first meet some income criteria. The person whom they plan to claim must make less than $3900 a year, excluding any income that he or she gets from Social Security or disability.

Income that can be counted includes interest from bank accounts, pension payments, and dividends from investments. Before adding a person to their taxes, people should make sure that this individual has received less than the stipulated amount of income that particular tax year.

Provider Cost Requirements

Along with income limitations, people also must meet certain criteria before claiming a loved one as a dependent. They must provide at least 50 percent of that person's support and use at least 10 percent of their adjusted gross income to cover this individual's medical expenses.

Some people make the mistake of believing they only have to meet one of those criteria. However, in order to claim any caregiver deductions, they must meet both of these stipulations.

Restrictions on Sharing Deductions

Some people share the financial burden of caring for their loved ones with their siblings. Even so, only one sibling can claim the relative as a dependent.

To avoid conflict, people can determine which sibling provided the greater financial support. They can also take turns claiming the relative each year.

Non-Relative Household and Residency Requirements

Caregivers do not have to be related to the person for whom they care before claiming any caregiver deductions. However, they do have to meet certain household and residency requirements before adding this person as a dependent on their taxes.

By law, either the caregiver must live in the person for whom he or she provides care or the person must live in the caregiver's home for the entire tax year. A non-related person who lives out of the household cannot claim these deductions even if he or she does provide financial support for that individual.

Limits on Claimable Deductions

Caregivers enjoy being able to claim a wide variety of expenses on their taxes. Some of the expenses that they can recoup include:

Medical bills
Long-term care costs
Taxes on inherited IRAs
Prescription costs
Mileage
Dental bills
Interest on their relative's mortgage if they make the payment each month
Home remodeling expenses if the work was done to make the home safer or more accessible.

All of these financial burdens can add up to significant amounts each year. People who act as caregivers to their relatives can have some or all of this money returned to them by taking advantage of these deductions.

With more people taking care of their aging or disabled relatives, it is understandable that many would like to recoup some or all of the money they spend doing so. They can utilize caregiver tax deductions if they or the person for whom they care can meet these outlined criteria. If they are unsure of how or when to claim caregiver deductions, people are encouraged to seek the help of a professional tax law service.

*Image courtesy of Warman Homecare

Which Tax Exempt Forms Should Your Houston Business Accept?

Tue, 30 Dec 2014 13:00:00 GMT

Texas allows many businesses and organizations in the state to enjoy tax exempt status. These entities include churches, schools, charities and other groups that serve the public. Your business is required to recognize the tax exempt status of these organizations and accept their applicable tax forms. As you operate your business in this state, you should recognize and welcome these five common forms used for tax exemption.

AP-204

The AP-204 form will arguably be one of the most common ones presented to your business. It is a broad form that covers most of the organizations that are allowed tax exempt protection in the state. Some of the groups that use this form include:

The federal and state government
Cemetery and burial associations
Nursing home corporations
Farm mutual insurance groups
Cooperative housing organizations
Federal credit unions
Youth athletic organizations
Volunteer fire departments
Recycling groups
Hospital laundry cooperatives
Student scholarship groups
Lodges
Water conservation or rights boards

The form AP-204 may be one that your business encounters most frequently because it is used by these and many other organizations. You are required to accept it and allow these groups the tax exemption to which they are entitled.

AP-205

The form AP-205 gives tax exempt status to charities. A charity can fill out the form and apply this status. Once the exemption is granted, you must by law avoid charging it tax on its purchases at your business.

It should be noted, however, that the law requires a charity to be non-profit and that it provide services like food, clothing, medicine and shelter to the poor, relieve disease, poverty, suffering, or pain or provide psychological counseling for the poor and indigent. Charities that do not provide these services may not be eligible to use form AP-205.

AP-206

Non-profit homeowners' associations are given tax exempt status by using the form AP-206. The association's purpose must be to buy, construction, maintain or manage housing that is used for residential purposes.

The owners of the homes or lots must have at least 51 percent voting input for the association. Associations headed by single persons, banks or corporate entities are not eligible to use this form.

AP-207

The form AP-207 is used to give schools and educational groups tax exempt status at Texas businesses. As with other tax exempt forms, groups that use AP-207 must be non-profit and provide educational services or instruction for students. Public schools, universities and vocational colleges are among those groups that use this form most often.

However, schools and organizations that are privately owned and governed by entities like churches or religious organizations can also apply for tax exempt status with this form. They must provide proof that they provide a copy of their bylaws or constitution to show that they are non-profit, however.

AP-209

Religious groups, churches, temples and other entities that provide worship services or instruction are also allowed tax exempt status with form AP-209. Churches must hold regular services, meet at established locations, have a congregation and worship according to their sect or rites.

Religious groups like convents, monasteries, church youth groups, alter societies and others likewise must provide instruction or services according to their associated church or temple's sect. Religious entities cannot be for-profit to enjoy exemption from paying taxes at your Houston business.

The state of Texas allows many types of organizations and corporations to avoid paying taxes when they make purchases at businesses such as yours. You would do well to know the common tax exempt forms you may encounter and what kinds of groups are allowed to use them when doing business with your company.

* taxes by 401(K) 2012 / CC BY-SA 2.0

What Is Robo-Auditing and How Can You Avoid It?

Fri, 26 Dec 2014 13:00:00 GMT

The IRS is obliged to collect every dollar that is owed to the government. It does this in part by auditing suspicious returns. Auditing used to be a slow process that took months or years to initiate and research. Now, however, it is faster because of robo-auditing. Before you file your next year's taxes, you should learn more about robo-auditing and what impact it can have on your returns and your online activities like shopping or posting on Facebook.

Instant Computer Scanning

The IRS now has the technology to scan a return immediately after it is electronically filed and received. Within moments of filing, a person's return can be electronically scanned for signs of missing information or fraud.

If anything is determined to be amiss, the computer system will flag that return for an audit. This system also reportedly heavily scrutinizes returns on which people have claimed the Earned Income Tax Credit, or EITC.

Online Activity Cross-Referencing

Along with scanning returns for missing or fraudulent information, robo-auditing also cross-references people's online activities with their tax information. The IRS now has the capability of looking at people's posts on Facebook, Twitter and other social media pages to determine if people are telling the truth about their income information.

Likewise, the IRS also has the capability of checking into people's emails, credit card statements, online shopping purchases and other virtual activities. These investigations are used to find cases of tax fraud and force people who try to hide income to pay what they actually owe.

While robo-auditing may be here to stay, people are still critical of it. In fact, it can have serious consequences for people who file legitimate returns. Some of the more common complaints about robo-auditing so far include:

Delayed Tax Refunds: Many people, especially low-income filers, need their tax refunds to pay bills or buy essentials for their families. Robo-auditing can slow down a refund that is owed to a family.
Unfair Auditing: Robo-auditing raises the risk that low and middle-income taxpayers will be audited rather than the wealthy. People who file legitimate returns are being audited more often now because of robo-auditing.
Invasion of Privacy: Perhaps the biggest complaint thus far is the invasion of people's privacy. Many people believe that their online social profiles, email accounts, banking information and credit card transactions should be off limits to the IRS. They feel like their privacy has been compromised.

Overcoming Robo-Auditing

Because it is used to scan all electronically filed returns, people increasingly want to know how to bypass and overcome this technology. They can file taxes and avoid being targeted by robo-auditing by following these suggestions.

File a Paper Return

Because this computerized system scans electronic returns, people can bypass it by sending in paper tax returns. When they mail their taxes into the IRS, people avoid having their information scanned by the robo-auditing system. Instead, an actual person who works at the IRS must review the paperwork for signs of errors or fraud.

The process of mailing in paper returns may take longer. However, it is still a viable way of bypassing this technology.

Post with Caution

Tax evaders often get caught because they brag about their money, possessions, and lifestyle on social media and then file returns that only claim modest incomes. Even if you claim every dollar you make, you should still avoid boasting on Facebook or making false claims about how much money you have. In fact, people increasingly are avoiding robo-auditing by avoiding talking about their jobs, incomes, possessions and anything related to money at all on social media sites.

Be Honest

The best way to avoid an audit is to be honest and consistent with your information. If you have nothing to hide, an audit should not worry you. Being honest when you file taxes can help you overcome robo-auditing, regardless of how you file.

The IRS takes its duty of catching tax fraud seriously. You can avoid an audit and bypass robo-audit technology by understanding how it can impact your returns and online activities.

*Robot by andreavallejos / CC BY-ND 2.0

Happy Holidays

Thu, 25 Dec 2014 13:00:00 GMT

Top Tax Defenders Is Wishing You a Wonderful Holiday Season!

*Pedro Lozano / CC BY 2.0

Do You Need to File Taxes When You Are Living Abroad?

Tue, 23 Dec 2014 13:00:00 GMT

Paying taxes each year is an obligation that many Americans accept as a regular part of life. As the New Year starts, they begin to file their returns and pay what they owe to the government. This obligation also extends to Americans who work and live overseas. They can avoid falling behind on their taxes and being fined or jailed for tax evasion by understanding how and when to file returns while living abroad.

The Basics of Filing Taxes while Living Overseas

The rules for filing and paying taxes for Americans living and working overseas are similar to those that apply for individuals living back home. If they receive income from a job, self-employment, investments, pensions and other common income sources, they must file a return and declare that money. They will either then owe the IRS money or get a refund, depending on how many dependents they claimed, what kind of exemptions they put on their returns, and other criteria.

However, some of the filing rules for overseas Americans are bit more flexible, particularly when it comes to the deadline for which returns must be received. Some of the key differences are:

The filing deadline is extended two months until June 15, as opposed to April 15 for domestic taxpayers.
People living abroad can get an extension until October 15 for unique circumstances, such as serving in the military.
If they are paid in foreign currency, they must convert their incomes to American dollars when filing. They can use an online calculator found on the IRS website for this purpose.

Aside from these notable differences in filing, people living overseas are still expected to prepare and submit their returns using one of the available methods. If they cannot afford to hire a CPA or choose to do their own taxes instead, they can submit their taxes by:

Mailing in paper returns to the IRS, using their mailing address found on the IRS website
Using FreeFile, a service found on the IRS website that lets people file their taxes electronically at no charge
Filing online using one of the available tax preparation services offered by major companies

Like domestic taxpayers, overseas Americans can call, write or email the IRS if they have questions or concerns while preparing their taxes.

Challenges to Paying Taxes while Living Abroad

While paying taxes is an obligation that overseas Americans legally must obey, they also may experience difficulties in doing so. In fact, living overseas can be expensive. Many countries tax foreign workers even if they are not citizens or use any of the social services for which the taxes pay.

Countries that have socialized health care, for example, often tax 30 to 40 percent of Americans' wages who live in those places. Despite paying out such huge amounts to their host countries, these people still must pay taxes to the American government.

This obligation can leave Americans with very little money on which to live. Advocacy groups for Americans abroad seek to lessen this burden and help these individuals keep more of their incomes. Until the law is changed, however, the IRS will continue to expect these individuals to file and pay their taxes as required.

Living overseas is an ambition that many Americans have. They may not realize, however, that they will still be expected to pay taxes on their foreign incomes. They can prepare their returns and avoid being fined or penalized by knowing how and when to file their returns. Even if they already pay taxes to their host countries, Americans living overseas still have the obligation to pay yearly taxes to the IRS.

*London Town by August Brill / CC BY 2.0

How Are End of the Year Bonuses Taxed?

Fri, 19 Dec 2014 13:00:00 GMT

If you are employed by a company that gives annual bonuses, you may look forward to receiving this extra money in your paycheck at the end of the year. While you enjoy the money, however, you also might consider if and how it will be taxed. In fact, the IRS considers end of the year bonuses to be payroll and imposes taxes on them. Your employer has the option of taxing yours in one of two ways.

Percentage Tax Method

Your employer might prefer the simplest method of taxing your bonus. The easiest way thus far is the percentage method, which basically is taxing the amount a certain percent and then deducting that amount from the bonus.

The IRS currently stipulates employers who use this guideline should tax bonuses at 25 percent. For example, if your bonus is $1000 at the end of the year, it will have a 25 percent tax levied against it, or $250. Once this amount is deducted, you will be left with $750.

Employers prefer this method because it is relatively easy to figure out and can be taken out directly from your payment. It does not require extensive bookkeeping that the other taxation method requires.

Aggregate Method

The aggregate method involves adding your bonus to your most recent paycheck. Once the amount is added, your employer must then figure out the appropriate withholding amount based on the current IRS tables.

Based on this information, your employer must then deduct the same amount that was taken out of your paycheck from your current payment amount, as well as deduct the indicated IRS amount from your bonus. Employers typically do not like this method because:

It is more difficult to carry out
It requires more bookkeeping expertise
It takes out a higher rate than the percentage method

Some employers give their employees the option of how they would like their bonuses taxed. Because this amount will be counted as part of your income when you file taxes, you may want to ask if you can request either method, particularly if you do not want your tax refund to be affected.

Goods or Services Based Bonuses

If your employer awards bonuses in the form of goods or services, you will still be taxed for this additional compensation. The IRS mandates that if these bonuses go over a certain dollar amount that they be taxed at the same rate and in the same manner as other cash bonuses.

For example, if your boss gives you a trip to Hawaii as a reward, you will be expected to pay the taxes on that trip and include the cost of the journey in your tax return. As with a cash award, your boss has the option of deducting 25 percent in taxes or using the aggregate method to withhold the required amount.

However, rewards that cost less than this amount are not necessarily subject to taxation. If your boss wants to spare you having to pay more taxes, he or she may give you tokens like:

A plaque or certificate
Gift cards
A fruit basket
A monogrammed tee shirt or sweatshirt with the company's logo

While these rewards may seem less appealing than cash, they also could show your boss's appreciation and also help you avoid having to pay taxes on them.

The IRS requires that all payroll and bonuses be declared and taxed at the end of the year. By law, your employer must tax your end of the year bonus. Your company has a couple of options for taxing it. It can use the percentage or aggregate amount. You may also have the option of choosing which one you prefer.

*Money by Tax Credits / CC BY 2.0

Houston Charities: Make a Donation Today

Tue, 16 Dec 2014 13:00:00 GMT

Charities rely on people for donations. Donations comprise many charities' main source of money and allow these organizations to support their causes. If you want to donate to charities in Houston, you may wonder which ones are among the best in the city and what specific causes they support. These organizations are well reviewed by others and support issues like animal welfare, environmental conservation and human services.

Animal Cause Organizations

If you love animals and want to advocate for them, you may donate to a charity that shares this passion. Many organizations in Houston focus on taking care of animals. You can donate money and supplies to charities like:

Spay-Neuter Assistance Program, or SNAP - SNAP helps low-income pet owners pay for spaying or neutering their pets. People with limited financial means often cannot pay for these services at a vet's office. Pets that are not spayed or neutered often go on to have unwanted litters, which must then either be destroyed or taken to a shelter. Shelters use a lot of their resources taking care of unwanted pups and kittens. SNAP seeks to control the unwanted pet population in Houston.

Houston Dog Park Association - If you have a dog in your family, you may want to take it to run and play somewhere other than your home. When you donate to the Houston Dog Park Association, you contribute to building and maintaining an exercise and play area just for dogs and their owners.

These charities have received positive reviews from others who have donated time and money to them.

Environmental Awareness Charities

Preserving the earth's resources is important. If you want to contribute to this cause, you can donate to Houston charities that educate the public and work with landowners to save the environment. These organizations include:

Bayou Land Conservancy - Bayou Land Conservancy works with private landowners to preserve creeks, rivers and wildlife in Houston's bayous. To date, this group has preserved over 8600 acres. It also sponsors public educational programs to raise awareness.

Houston Audubon Society - The Houston Audubon Society educates the public about Houston's native bird populations. The group also teaches people how to recognize different bird species and how to bird watch without endangering these creatures.

People who donate to these groups report being satisfied with how the money and supplies are utilized.

Human Services Charitable Groups

If you want to help others who are at risk in society, you may donate to these Houston human services charities. The organizations protect and advocate for vulnerable people in society include:

Catholic Charities of the Archdiocese of Galveston-Houston - This group serves over 77,000 individuals each year and promotes the formation of healthy families, the protection of senior citizens, and the assistance of immigrants and refugees. This group also supports day cares, after-school programs, pregnancy crisis centers and other entities that help people in need.

Houston Rescue Restore Coalition Review - This charity educates the public about human trafficking and slavery in the Houston area. It also assists victims of these crimes and helps law enforcement identify traffickers and slave traders in the area.

When you want to help people in the area who are poor, without resources to take care of themselves, victims of crimes or struggling to find work or go to school, you can donate money to these organizations that assist people in need.

You want to know that the money and resources you donate to charity will be put to good use. You can support causes important to you by knowing what Houston charities have good reputations and which ones support the same causes as you.

*Charity recycling by Howard Lake / CC BY 2.0

7 Audit Red Flags for Your Small Business

Fri, 12 Dec 2014 13:00:00 GMT

Just as you take care when you file your personal income taxes, you should take the same precaution when filing taxes for your small business. In fact, the IRS pays small business returns the same amount of attention to make sure business owners receive the proper credits and refunds to which they are entitled.

However, some details are more likely to gilabve this agency pause and cause your returns to be more closely scrutinized. Before you submit your returns for your company, you should understand what these red flags are and how they can lead to your small business being audited.

1) Repeatedly Reporting Losses

Every business experiences a loss at some point. However, when you report losses year after year, you invite the attention of the IRS to your returns. In fact, reporting losses for more than two years out of the last five could cause the IRS to re-label your business as a hobby rather than a valid entrepreneurial enterprise.

If you legitimately experience chronic losses, you should provide plenty of documentation to back up your claim and also provide some sort of proof that you are running a valid company. It would work in your interest to show that you have an active marketing plan in place and are using other business tools like advertising to prove that your business is more than a hobby for you.

2) Making Late Payments and Filing Late Returns

The IRS expects you to file your returns and make tax payments on time. If you are chronically late in doing either, you are raising the risk of your small business being audited.

In fact, late returns and payments could be interpreted as a sign that your business is suffering, involved in fraud or a cover for some other questionable enterprise. When your goal is to run a legitimate business, you can avoid the ire of the IRS by filing your returns on time and by making tax payments without delay.

3) Paying High Salaries to Employees or Shareholders

If your company has employees who are also shareholders, you are more likely to be audited if you report paying these individuals higher than normal salaries. The IRS will want an explanation for why these people are paid more in comparison to other people on your payroll. If they legitimately have earned their salaries, you would do well to provide thorough documentation to show that you are not engaging in fraud or questionable business ethics.

4) Claiming Personal Expenses as Business Expenses

Some business owners think to recoup personal expenses by listing them as related to business on their returns. When you report high cell phone bills, meal expenses, travel costs, and other deductions, you elevate the risk that you will be audited.

The IRS will want to know that those expenses legitimately belong to your small business and are not yours alone to bear. You must prove that you incurred these costs during the course of running your own business and provide receipts to back up your claims.

5) Shifting Income to Avoid Taxes

Paying taxes on your small business can be expensive. Even so, this cost does not give you leeway to shift your business income to non-taxable entities like charities to avoid paying this obligation.

In fact, if it appears that you are shifting your income for the purpose of evading taxes, you will most likely be audited. Rather than go through an audit, you should avoid moving your income to non-taxable organizations and instead pay the government what you rightfully owe.

6) Running a Cash-Based Business

Many types of businesses are based primarily on cash transactions. Hair stylists, waiters, car washes and others often take in more cash than they do credit card receipts.

However, these kinds of businesses are also more likely to be audited simply because cash transactions raise the risk of fraud. The IRS may argue that you could hide some of your income or be unable to prove that the money you reported is actually the amount you took in last year. You can dispel some of this doubt by keeping immaculate records and by giving your customers receipts for each and every transaction that comes into your business.

7) Claiming Vehicle Usage as Entirely Business Related

As with personal expenses as business related, you also give the IRS pause when you list a company vehicle as being used entirely for business. Even if it is truly used for business use only, you may have a difficult time proving this.

The easier solution may be to avoid making this claim on your small business return. If you insist on claiming a vehicle as one used solely for your company, you should provide gas receipts and other documentation to back up this information.

Small business owners like you are often put through the same examination as private taxpayers when you submit your company's returns. You can avoid an audit and get your returns to be submitted successfully by knowing the common red flags that may otherwise convince the IRS to audit your small business.

*Image courtesy of Tiananmen Square

Top 8 Reasons the IRS Will Audit You

Tue, 09 Dec 2014 13:00:00 GMT

An IRS tax audit stands out as one of those events in life that people typically want to avoid. No one wants to sit through a meeting with this government agency and be told that they owe more money in taxes. However, you may be making mistakes when you file taxes that will inevitably lead to the IRS singling out your return for scrutiny. When you want to avoid running afoul of the government, you should realize the top tax return details that typically lead to an audit.

1) Errors and Omitted Information

It may be true that mistakes happen in life every now and again. However, filing your taxes should be one of those times when you play close attention to details. If you make a mathematical error, it will more than likely be noticed by the IRS, leading to your return being audited.

Before you submit your return either by mail or electronically, you should make sure that you have included all of the required information. You should also make sure all of your numbers add up and that you have not made a simple mistake that could lead to a costly audit later.

2) Not Reporting Income

Some people think to boost their refunds by not reporting all of their income. However, the IRS receives the same 1099s and W-2s as you. It knows how much income you made last year and expects you to report it accurately.

If you leave out wages, self-employment income, bonuses and other monetary information, you contribute to your own audit risk. When you want to avoid being audited, you should be truthful and report all of your income on your return.

3) Charitable Donations

Every taxpayer is encouraged to donate to charities and report these donations on their taxes. However, if you report unusual donations amounts that do not match the amount of income you make, you could put your return at risk of being audited.

Rather than embellish your charitable donations, you should report the accurate amount that you actually gave to your favorite charities. If you did make such a large contribution, however, you should keep a receipt and submit proof of the donation along with your return.

4) Excessive Business Expenses

Along with unusual charitable donations, the IRS will scrutinize business expenses that do not seem to make sense. You should report your business expenses on your return. However, you should make sure that they make sense and that they are accurate.

Making even a small mistake on this detail could cause the IRS to audit you. As with donations, if you do in fact have such large expenses, you should provide receipts to prove your case.

5) Home Office Claim

People who run their businesses out of their homes are allowed to claim a home office on their returns. However, meeting the criteria for this claim can be extremely difficult and more often than not leads to an audit.

It can be a challenge for you to prove that the primary use of one room in your home is used for business purposes. This inclusion on your return more than likely will lead to an audit to make sure that you are genuinely entitled to this claim.

6) Round Numbers

Just as you should not make mathematical errors on your returns, you also should not round up your numbers. Rounded numbers and perfectly even sums make your return seem suspicious.

The IRS expects to see odd numbers and decimal points. When you want to avoid an audit, you should report the numbers as they actually are and avoid rounding up or estimating your totals.

7) Wrong Filing Status

Choosing the right filing status is important to avoiding an audit. This choice can be difficult for married couples, especially if one spouse does not work. If you are confused about what status to claim, you should consult with a tax professional.

Likewise, changing your status abruptly can signal to the IRS that perhaps something is amiss with your return. For example, if you are recently divorced and plan to file as a single or head of household rather than married filing jointly, you may invite the scrutiny of your return.

8) Earned Income Credit

For many low-income families, the Earned Income Credit, or EIC, is a boon when they file their taxes each year. They essentially get credit for their children on their tax returns and receive refunds that can often be quite substantial.

Even so, the EIC can cause the IRS to audit people who claim this credit. Because of the amount of money paid out in EIC refunds, the government must know that only those who genuinely qualify receive it. An audit helps protect this tax credit and its intended purpose.

Being audited often is not a welcomed experience. You can keep your returns audit-free by knowing what details typically cause the IRS to give returns a second look and audit the people who filed them.

*Image courtesy of Point!

How to File for Financial Hardship

Fri, 05 Dec 2014 13:00:00 GMT

When making ends meet throughout the month is a challenge, it may not be possible for you to add another burden to your budget. However, when the IRS sends you a letter and requests regular payments for your outstanding tax debt, you cannot legally and financially afford to ignore this IRS collection attempt.

Rather than avoid sending in payments or taking away from your household bills to pay the IRS the amount it requests, you may be able to file for financial hardship and gain a temporary reprieve from this obligation. When you want to file for financial hardship, you should understand the process that the IRS requires from people like you who owe the government a tax debt.

Fill out the Necessary IRS Form

You can begin the process of filing for financial hardship by filling out the appropriate forms. The IRS forms you will need to complete can be found on the IRS website. If you are filing for a personal obligation, you will be required to complete and send in IRS Form 433-A. If you are making this request for a business tax debt, you will need to complete IRS Form 433-B.

The information requested on this form is relatively straightforward. You must provide details regarding your identity, finances and household makeup. Among the personal identity details needed, you must provide:

Your Social Security number and those of others in your home
Names of your dependents
Your phone number and address
What kind of house you live in, like a single-family home, apartment, or manufactured home, among others

Along with providing details about you, your family, and your home, you must also give information regarding your employment. The IRS will request through this form details like:

Your employer's name
Your employer's address and phone number
Copies of your paycheck stubs
Length of your employment
Your title or duties at work

This employment information will give the IRS a basis on which to base its decision on whether or not you qualify for a financial hardship reprieve. However, to make as informed decision as possible, the government will also ask that you include details like the name of your bank, what kind of bank accounts you have, what other income you have at your disposal (including alimony, child support, pensions and other monthly income), what legal proceedings you are involved in right now, and what expenses you pay each month. In fact, the IRS will request copies of your monthly bills for:

Utilities
Mortgage or rent
Medical bills
Transportation costs
Food
Personal expenses

You can mail in copies of all of these monthly obligations with your IRS form or submit them to your IRS agent if you have one assigned to your case. All of this information could help the IRS determine that you cannot satisfactorily pay on your tax debt each month and that in doing so, you and your family would experience undue financial hardships.

Provide Your Last Return

This process cannot proceed without a copy of your last tax return. As you submit this other paperwork, you should also provide the government with a copy of your last return. Ideally, it should from the previous tax year, as you may be ineligible for this reprieve if you have missing returns. It is recommended that you provide copies rather than the originals so that you have those on hand if needed in the future.

Hire a Professional Tax Adviser

The IRS does not grant reprieves because of financial hardship often. In fact, it can be very difficult to persuade the agency that you cannot pay on your debt because of your restricted financial means. As such, the IRS often advises people in your situation to hire a tax professional to guide you through this process.

Indeed, this process requires utmost care to details to ensure that your argument is presented successfully to the government. When you hire a tax professional, you can be guided through this process and told what documentation to provide in order to bolster your case.

You may not be sure how many paychecks stubs the IRS needs, for example, to prove that you do not make enough money to make payments on a regular basis. Your tax professional can give you counsel about what documentation could help the IRS render a decision in your favor.

Many people are not aware that the IRS is willing to grant reprieves based on their financial circumstances. When you cannot pay your tax debt and want to pursue this avenue of relief, you may wonder what you need to do to see the process through successfully. You can file for financial hardship and possibly be granted a reprieve from this obligation, even if temporarily, by following these steps and by hiring a tax professional to guide you through the process.

*Image courtesy of stopnlook

7 Things to Know about the IRS Collections Process

Tue, 02 Dec 2014 13:00:00 GMT

Like other creditors, the IRS has the right to collect on debts that are owed to it. People may not know, however, the precise method that the government uses to ensure that every tax dollar is paid to it in entirety. In reality, the collection process utilized by the IRS does not differ much than that used by other creditors like credit card companies and hospitals. Even so, delinquent taxpayers can benefit by knowing some of the more notable components of this collection process and how it could impact their debt to the IRS.

1) Priority

The first piece of information that delinquent taxpayers should realize is that the IRS makes it a priority to collect on every debt owed to it. While it may be generous with the time allowed for paying these amounts, this agency still pays close attention to those who make an effort to pay what they owe and those who shirk this obligation.

For those who ignore the letters from the IRS or simply refuse to pay what they owe, the IRS eventually will take steps to cure these accounts. People who believe that their debts will vanish or somehow be forgiven should realize that this organization makes every effort to prioritize its collection efforts against delinquent taxpayers.

2) Garnishment and Levies

Like other creditors, the IRS sometimes utilizes garnishments and levies to collect what is owed to it. It has the option of garnishing wages and seizing assets without a court order, making this risk a very real possibility for taxpayers who simply refuse to acknowledge their outstanding obligation.

When it proceeds with garnishing someone's paycheck or putting a lien on a bank account, the IRS often will not release this hold until the debt has been paid in full. For those who owe substantial amounts, this hold could remain in effect for years, making it difficult for them to pay their bills or live normally with such restricted finances. People who want to avoid this action should communicate with the IRS and seek another resolution to settle their tax debt.

3) Filing Compliancy

When people want to avoid being garnished or having their assets frozen, they may consider petitioning for an installment agreement or an offer in compromise. To take advantage of these options, however, they must be compliant with their tax filings.

If they have returns that must yet be filed or have not filed for the current year, for example, people who owe the government money may not be eligible to ask for an installment payment agreement or an offer in compromise. Even more, if they cannot yet take steps to become compliant, they may still face the risk of being garnished or having liens attached to their assets.

4) Length of Debt

While some forms of debt may be written off by creditors, an IRS debt can remain in effect for years. People who hope that their outstanding taxes will be forgiven or written off by the government are often disappointed to learn that this debt can follow them for years until it is addressed fully. Because of the priority that the IRS places on collecting debts, these individuals also can face years of collection attempts until they pay off their delinquencies.

5) Time Limitations

At some point, however, even the IRS runs out of time in collecting debts owed to the government. Indeed, it cannot collect on outstanding amounts that are 10 years past due. If people owe taxes from a decade or more ago, they may be in the clear, given the restrictions placed on this agency for collecting owed taxes. This fact can help people decide what action they want to take to resolve their longstanding debts or if they even have to legally address it at this point.

6) Right to Dispute

The IRS also must allow people the right to dispute the amount of taxes they owe to the government. If they can prove that they owe a lesser amount or simply have questions about how they can owe so much, people have the right to request a meeting with this agency. They do not have to accept the amount listed in communications from the IRS and can instead dispute the sum that they actually owe.

7) Right to Professional Tax Counsel

Taxpayers also have the right to retain counsel if they are unsure of how to represent and advocate for themselves through the debt collection process. Rather than risk their financial stability and assets, people can hire a tax adviser to negotiate on their behalf and speak for them with the IRS. People are typically informed of this right when they receive letters from the government regarding their tax debt.

The collection process utilized by the IRS may appear to be similar to that used by other creditors. Even so, people should understand the finer aspects of the IRS collection process and learn how it can impact their ability to repay their debt to the government.

*Image courtesy of Steve

The Pros and Cons of An IRS Offer in Compromise

Fri, 28 Nov 2014 13:00:00 GMT

Owing a debt to the IRS can cast a stressful shadow over much of your life. Even as you try to continue with your normal routines, you are always aware that this debt must be paid at some point. When you simply cannot afford the entire amount owed, you may wonder if any financial remedy can help you resolve this obligation. While an offer in compromise could be an option for you to consider, you should be aware of the advantages and disadvantages of this possible remedy to your outstanding IRS debt.

Debt Reduction and More Affordable Payments

An offer in compromise gives you the opportunity to lower your debt and have a better chance of paying it off without sacrificing your assets or your earnings. When you utilize this approach, you could negotiate your obligation to a more affordable amount, one that you could pay off in entirety with one payment or one that you could easily make payments on each month.

In fact, making payments on your obligation each month could help you avoid having your wages garnished or your assets, such as your bank account, seized by the IRS. When you make an offer in compromise, you could protect your income and also keep control over your bank account, as long as you continue to make payments on the new lowered debt amount.

End of Collection Activities

Keeping control over your bank account and your earnings can be vital if you are already experiencing financial hardship. Living paycheck to paycheck and not having a lot of money in your bank account typically means that you need every last dollar to support yourself and your family.

If your debt to the IRS has led to your earnings being garnished and your assets being seized, an offer in compromise could end these IRS collection activities. Once the offer has been accepted, the lien on your paycheck and your assets should be lifted. You can enjoy being free of the financial stress that comes with being garnished by the IRS.

Resolution to a Longstanding Obligation

In truth, your outstanding debt to the government may have taken years to come to fruition. In fact, you may have known about this amount for years, yet have had little means to deal with it effectively. When you utilize an offer in compromise, you can bring to an end an issue that has followed you for several years and one that has had a significant impact on your life. With the offer accepted, you can pay off your debt and move forward, knowing that you no longer owe the government any money.

As advantageous as an offer in compromise can be in resolving your immediate IRS tax obligation, it also could be detrimental if your case falls under certain criteria. Before you make move to settle your debt, you should understand some of the more common disadvantages with this remedy.

Stringent Qualification Criteria

In reality, it can be difficult for many taxpayers to meet the income and asset guidelines needed to make an effective offer to compromise. Indeed, this solution is best suited for people who are low-income taxpayers and those who have very few assets that the IRS can claim.

Even more, when you want to utilize this solution, you also have to submit to a thorough scrutiny of your finances and possessions. If you are deemed to make too much money or have too many assets that could be liquidated to pay your debt, your offer to compromise may be rejected, leaving you to find another remedy to your tax obligation.

Waiving of Tax Benefits and Credit

If you are one of the millions of taxpayers who benefit each year from tax credits, you may have to surrender your right to them the following tax season when you make an offer in compromise. The IRS will allow you to lower the amount that you owe the government; however, you will have to forfeit your ability to claim certain credits on your income tax returns the following year. If you count on these credits to boost your tax refund, your offer in compromise could lower the amount of your refund significantly.

Public Record

Offers in compromise are a matter of public record. Anyone can find out that you settled your tax debt in this manner if you utilize this remedy. If, for whatever reason, you prefer to keep your financial transactions private, you forfeit this privilege when you make an offer in compromise on your tax obligation. Once your offer is accepted by IRS, it will be put on public record.

An offer in compromise can offer you several advantages when it comes to resolving the delinquent taxes you owe to the government. As beneficial as this solution is, you should also realize the disadvantages before you decide whether or not this solution is suited for your particular case.

*Image courtesy of questions

Critical Guidelines for Successfully Preparing for a Field Audit

Tue, 25 Nov 2014 13:00:00 GMT

When you are notified about an impending IRS audit, your first thoughts should center on how you can prepare for this process and have it play out in your favor. Just as you would prepare to defend yourself in court, you should likewise give your audit the same level of attention and care.

Well before your scheduled appointment with the IRS, you would do well to take precautions that will be needed to substantiate your tax returns. You can prepare for a field audit by following these important guidelines in the days and weeks prior to this meeting.

Gather Necessary Document

The first step you should take is to gather any and all documents that could relate to the audit. Having plenty of written documentation to back up your returns can be vital as you explain why you filed in the manner that you did. Examples of vital documentation to gather prior to the audit include:

Tax returns from this year and those prior
Financial statements for the year for which you are being audited
Depreciation schedules
Payroll tax documents and data

The IRS will more than likely expect you to have this paperwork on hand before the audit begins. You can ensure that the entire process will go smoother if you have it ready to submit without being asked for it.

Hire a Tax Adviser

An audit calls for you to retain professional counsel who can advise and advocate for you. In fact, if you are unfamiliar with current tax laws or do not know what to expect throughout the auditing process, you would be well advised to hire an adviser to go along with you. This counsel will ensure that you only answer questions that are relevant to your case and that you understand what is expected of you throughout the meeting.

Know Your Rights

In fact, before you meet with the IRS, you should use the time to research your rights and find out what protections you are entitled to before, during and after the meeting. This research should begin with the letter that the agency sends you to alert you to your audit. The letter may provide you with a clear guideline of what you can do to prepare for this process.

You can also use the Internet to research your rights and what steps you can take to protect yourself. One of these steps should be to hire a lawyer or tax professional to assist you during the audit.

Consider Asking for a Delay

The IRS will show up to the meeting fully prepared to question you and examine your returns. You are entitled to the same level of preparedness. If you feel like you are not ready or you need more time to gather the documents or counsel you need, you should request a delay for your audit.

You may be granted a few more weeks or months to prepare better for this process. You should request the delay in writing and make sure that you keep proof of the request in case the auditor assigned to your case does not have the same information and assumes that you purposely avoided the original meeting.

Prepare to Appeal

Even before the original audit takes place, you should be prepared to file an appeal if or when you receive a decision with which you disagree. In fact, you should realize that you are entitled to due process throughout the auditing procedure.

Knowing how you can file an appeal and when you should do so can help you go into the first audit with the confidence you need to have it work to your favor, either now or in the future. If you want to appeal, however, it can be vital for you to have a tax professional guide you through that process. You can prepare for a successful appeal by having this professional on retainer at the time of the original meeting.

Preparing for an audit begins weeks and months in advance. These guidelines can help you substantiate your claims and possibly avoid having to pay more in fines or taxes.

*Image courtesy of Files

6 Simple Steps to Avoid an IRS Audit

Fri, 21 Nov 2014 13:00:00 GMT

As tax time approaches, your attention inevitably may turn to your risk of being audited. In fact, as a small business owner you could have reason to worry when you consider the small, yet still formidable number of small businesses chosen by the IRS for this dubious recognition each year.

While you arguably have little control over whether your returns get chosen or not, you may wonder how you can minimize the likelihood of your company being selected for auditing. You may possibly avoid a worrisome IRS audit when you utilize these honest approaches to filing your small business' tax returns.

1) File Electronically

E-filing can reduce your chances of being audited. When you file electronically, you have fewer chances of making mistakes on your business returns because the questions you must answer are provided in sequential order by the program you use.

You are less likely to skip a question or put in information in the wrong field. These reduced mistakes allow your returns to be accepted smoothly and helps them avoid being flagged for auditing.

2) Check Your Numbers

Regardless of how you file, you should check your numbers to make sure they coincide with what is provided on your 1099s or other tax documents. In fact, the IRS receives the same documents as you do. If you leave out information, your return could be flagged as suspicious.

Before you hit submit or seal the envelope to mail your return, you should go through the numbers at least once, if not more to make sure they are in line with what is reported on your statements. Making sure that everything is reported accurately will help you avoid an audit.

3) Report Deductions Truthfully

As a business owner, you understand how deductions can help you recoup some of the income you lost during the prior year. However, many business owners take advantage of this opportunity and make false claims in a bid to bulk up their returns. It is these false claims that causes the IRS to regard such returns with suspicion and more likely to audit those owners.

With that, it will work to your favor substantially if you report your deductions honestly. Rather than lie and report a huge charitable donation, you should be honest and report the actual amount, if you donated anything at all to a charity that year.

Likewise, if for some reason you do have a larger than usual deduction to claim, you can avoid being audited by having proof on hand to back up your information. Submitting proof that this expense did indeed occur for your business will substantiate your return and help you avoid the suspicion of the IRS.

4) Explain Unusual Activity

Along with substantiating unusual deductions, you should also provide explanations for other contradictions on your returns. If your information from this year is glaringly different than what you reported last year, you could be flagged for an audit. To help avoid this possibility, you should provide explanations for:

Name changes
Fluctuations in reported income
New dependents, such as a new baby or adopted child
Business losses
Higher than normal donations

While none of these details technically are grounds for suspicion, their presence could cause the IRS to take a second look at your return. You can ensure that your return is accepted by providing written explanation of these changes.

5) Keep Records

If you are an independent contractor or accept a lot of cash transactions like tips or bonuses, you raise the likelihood that you will be audited. This type of employment stands out as being high risk for fraud because it can be very easy to avoid reporting cash payments. Cash transactions can also be difficult to document and prove.

Nonetheless, you can strengthen your returns by keeping immaculate records of your independent business and any payments you receive. If a customer pays you in cash, you should give him or her a receipt if possible. If you are a waitress or hair stylist, you should abide by your state's laws for reporting cash tips. Taking these honest approaches can help you avoid being audited.

6) File Later Rather Than Sooner

For many people, the tax season is a boon that gives them a hefty return that they can use to pay bills, buy consumer goods like TVs or cell phones or add money to their savings accounts. In fact, people who need the cash the most often file their taxes as early as possible after the IRS begins accepting returns.

While many people who are hard up for money this time of year are honest on their returns, others have figured out how to bulk up their returns by reporting false information. With that, the IRS is more likely to audit those people who file early rather than those who wait until closer to the April 15 deadline. If you want to improve your chances of not being audited, you should wait until after the filing rush in January and February is over to submit your small business returns.

Honesty is indeed the best policy when it comes to lowering your risk of an IRS audit. These strategies can help you file returns that are accepted easily without being flagged for auditing.

*Image courtesy of Becky Wetherington

Avoid Delinquent Payroll Tax Penalties and Punishments

Tue, 18 Nov 2014 13:00:00 GMT

When you operate a nonprofit business, you enjoy tax protections that are not available to for-profit business owners. While these tax breaks allow you to serve the community and provide services that help those in need, you still have the obligation to deduct and remit payroll taxes to the government. In fact, if you fail to meet this obligation, the IRS could levy significant penalties and punishments against everyone involved in the day-to-day financial operations of your company. Rather than allow your board, managers and even your volunteers be targeted in such a way, you can use these strategies to protect your staff and avoid owing the IRS delinquent payroll taxes.

Retain a Payroll Service

Arguably, one of these primary ways that you can avoid owing the IRS delinquent taxes would be to hire a payroll service for your nonprofit business. When you retain a payroll company, you can be assured that your employees' earnings will have the appropriate amount of deductions for FICA, Social Security, Medicare and other taxes withheld.

Even more, the payroll service can help you remit these taxes to the government each year, allowing you to take care of this obligation without error or delay. With this service, you avoid the ire of the IRS and can likewise protect you, the board, volunteers and other staff from undue scrutiny.

Find Solutions to Your Tax Debts

If you do owe the IRS payroll taxes from previous years, you should do everything in your power to remit those taxes immediately or find a way to settle this obligation without having your assets or those of your staff targeted. In fact, just as it does with private citizens, the IRS offers a variety of ways to settle delinquent taxes.

For example, you could offer to compromise and pay a lesser amount. You could also ask for an extension or request a payment agreement. In some cases, it may be better for your nonprofit to file for bankruptcy. These solutions could protect your assets and also help your volunteers, board members and other managerial staff avoid being fined or punished for your business' tax obligation.

Invest in Indemnity Insurance

When it comes to collecting delinquent payroll taxes, the IRS does not care if you are to blame or if someone else at your company actually is at fault for this oversight. Even more, the agency can legally hold everyone responsible at the company who has influence over the finances or has the ability to write and endorse checks in the business' name.

With that, you can protect your staff and your board members by investing in insurance with indemnity clauses that will assume responsibility for this infraction. In fact, your directors and officers should likewise have this insurance made available to them so that people under their direction can avoid having their houses, earnings, cars and other assets seized for an error that ultimately lies at the feet of you and your directors.

Define Staff Responsibilities Clearly

As witnessed in several recent cases regarding delinquent payroll taxes, clearly defined responsibilities in a company's by-laws can help employees and volunteers avoid being punished for something that was not their fault. You should clearly define who is in charge of the taxes and the money at your company and help others in your employ avoid being targeted by the IRS if or when you owe delinquent taxes.

Make Sure Taxes Are Paid

This suggestion sounds extremely basic; however, it is one that many business owners would do well to remember. In fact, you may be tempted to pass off this obligation to a financial officer or manager at your business. You may also assume that your payroll company will do this without you having to make sure the taxes are actually remitted on time.

In the end, you are the sole person responsible for your business and its payroll taxes, however. Even if you have the best payroll company at your service and the most competent CFO in your employ, you should still make sure that your payroll taxes are sent in on time and without errors. Once you verify it for yourself, you can rest assured that you are a responsible and proactive business owner who wants to keep a good relationship with the IRS.

When your business is not-for-profit, you are given tax breaks that let you serve your target audience better. However, these exemptions do not dismiss you from having to deduct payroll taxes from your employees' salaries. Because the IRS expects you to remit your payroll taxes on time, it is critical that you know what strategies to use to avoid being in default of this obligation. These reminders can also protect your volunteers, staff, board members, and others at your company from having to pay penalties to the IRS.

*Image courtesy of Filing Pile

Play It Smart: Strategies to Beat a Small Business IRS Audit

Fri, 14 Nov 2014 13:00:00 GMT

When you take into consideration the relatively small percentage of businesses audited by the IRS each year, you may think that you are particularly unlucky when the IRS singles out your small business for this purpose. While going through an audit understandably can be nerve wracking and downright inconvenient, you still have a number of resources available to you to make this process smoother and less worrisome. If or when the IRS zeroes in your small business returns, you can use these strategies to beat an audit.

1) Hire Professional Tax Advisers

Before you begin any preparations for your upcoming audit, you should first hire a tax firm to help you through this process. When you have tax professionals by your side, you can understand the audit better and know what your rights are before the process begins.

Once you are in front of the IRS auditor, you can also be guided through the examination and know for what information this organization is searching. Your tax advisers can explain the questions if needed and help you answer in a way that is beneficial to your situation. They can also negotiate for you and help you avoid paying more into taxes or penalties because of mistakes or oversights on your returns.

2) Prove Your Business's Existence

If you have claimed losses for several years in a row, the IRS may be inclined to call your business a hobby instead of a legitimate enterprise. If this agency says that you are engaging in a hobby rather than running a business, you could lose tax benefits that are only available to small business owners.

Rather than accept your business being relabeled as a hobby, you should use the audit as a chance to prove your business' relevance, if not existence. You can do this by showing records of profitable years, as well as any advertising or marketing plans that you use in your daily operations. Being able to prove that your losses are temporary and not typical can help you beat this attempt to downgrade your company.

3) Claim Missing Deductions

An audit can also be a prime time for you to claim any missing tax deductions on your returns. Claiming expenses like a home office or travel mileage can help make more sense out of your returns and also allow the IRS to give you a pass on this year's audit. Once these expenses are added, your returns could have numbers that make better sense and seem to be more in line with running a business.

4) Be Brief

Getting caught up in the nervous excitement of the audit could compel you to give up unnecessary details about your small business. When you are being audited, you should be brief in your answers and only give the pertinent information that is being sought at the moment. Rambling on or divulging unnecessary details could give the agent more pause to delve deeper into your records.

While you are being brief, you should also remember to be polite. It may be natural for you to resort to using a curt tone or being snide while answering. However, your brevity should be paired with politeness when you are answering questions. Your pleasant answers could be better received than those given in a hostile voice.

5) Stick to the Relevant Year

Likewise, you should keep your answers to this year's return only and avoid talking about previous years. Even if your previous years' returns were perfect and immaculately prepared, you should still focus on the year for which you are being audited when answering questions.

In fact, the IRS may have no interest in your returns from previous years. If you start discussing those returns, you could confuse the agent and delay the amount of time it takes to resolve your audit.

6) Do Not Lie

Being brief should not be misinterpreted as permission to lie, however. In fact, you should be as honest as possible and answer questions clearly and accurately as what you can remember when it comes to your returns.

If you get caught lying to the IRS, you could face charges like perjury or tampering with evidence. Rather than face criminal charges in court, along with additional penalties and taxes, you should be honest and avoid telling falsehoods about your small business.

7) Appeal

Once the IRS agent has rendered a decision in your audit, you do not have to accept it willingly. In fact, you can appeal the audit decision and ask for a review of your case.

If you decide to appeal, you should go into this process as prepared as possible. Having documentation on hand to prove your returns and hiring legal counsel should be a part of getting ready for an official appeal of your audit.

You have plenty of resources available to you as you face an IRS audit. These strategies can help you beat an audit and avoid penalties and additional taxes that must be paid to the government.

*Image courtesy of Philip Taylor

6 Tax Return Details that Raise Your Small Business Audit Risk

Tue, 11 Nov 2014 13:00:00 GMT

You may pride yourself on being able to run a small business that provides quality services and products. For all of your success, however, you may be unaware that your tax returns could prompt the IRS to audit your company. In fact, many small business owners like you want to do everything in their power to avoid being audited. You can lower your own risk and continue to enjoy all of the success of running your own business by understanding some of the primary details that the IRS looks for when choosing whom to audit each year.

1) Missing Forms or Unreported Income

When you file taxes for your business, it is crucial that you fill out every required form and claim every applicable dollar if you want to avoid an audit. In many cases, the IRS is just as aware as you are about your income. Failing to file important details like your payroll taxes or your personal earnings puts you and your business in jeopardy of being audited.

Moreover, some small business owners falsely believe that the IRS will not notice if their lifestyles do not match the amount of income they report each year. If you are living lavishly, yet only claim a modest income, the IRS is more likely to audit you.

2) Claiming Personal Expenses as Business Related

The government likewise could audit you if you repeatedly claim personal expenses as belonging to your business. Including hair salon expenses, cell phone bills, and other costs that are normally associated with personal use on your business' returns puts you and your company in a suspicious light.

If these expenses can genuinely be linked back to your company, however, you should save the receipts to bolster your claims. Saving the receipts to prove your expenses can help you avoid being penalized and having to repay that money to the IRS.

3) Claiming a Home Office on Your Return

The IRS definitely allows people who operate their companies out of their homes to claim a home office on their returns. However, the criteria for doing so is notoriously narrow and in fact continue to change each year. With that, claiming a home office on your return could cause this organization to audit you.

If you plan to claim a home office on your tax return, it is highly recommended that you keep solid documentation and that you utilize professional tax services to file your taxes. A professional tax service can help you avoid unwanted attention and possibly an audit of your returns.

4) Repeatedly Claiming Losses

Every small business owner has an off year every once in a while, which is why the IRS lets owners claim losses and recoup some of that money. However, if you repeatedly claim losses year after year, you are going to draw the ire and suspicion of this agency.

In fact, if you claim losses three out of five years, the IRS may look at your small business as a hobby instead of a viable company. If it deems your company to be a hobby, you cannot enjoy any of the other tax perks that go along with running a small business. Rather than put yourself and your company at risk of being audited, you should use caution when claiming losses on your return.

5) Higher than Expected Deductions

Unusually high deductions also are liable to catch the eye of the IRS. If you report donating a lot of money to charity, yet seem to lack that kind of money to use for such a purpose, this agency may audit you to substantiate that report.

While donating to charity is certainly a worthwhile effort when you run your own small business, you should be honest when claiming such a deduction. Deductions remain one of the primary details that the IRS examines when determining whether or not to audit people each year.

6) Underpayments

Perhaps the most common infraction that leads to people being audited involves underpaying what they actually owe to the government. Paying taxes can indeed be a bit of a hardship, especially if your small business had a lackluster year. Even so, it is crucial that you pay exactly what you owe and not a cent under that amount.

If you underpay your taxes, the IRS could audit you to determine if you purposely withheld that money or if you accidentally left it out because of a mistake or oversight. Proving that you accidentally forgot to pay the right amount of taxes can be difficult, leaving you open to the risk of collection and garnishment. Rather than face collection activities, garnishment, or even fraud charges, you should make a concerted effort to pay the correct amount of money each year and avoid underpaying what you rightfully owe.

The IRS audits small business owners just as it audits private citizens. You can avoid such scrutiny by avoiding these common practices that draw the suspicion of this agency.

*Image courtesy of Simon Cunningham

Proactive Steps to Take When the IRS Contacts Your Small Business

Fri, 07 Nov 2014 13:00:00 GMT

When much of your livelihood is wrapped up in your small business, you may dread ever being contacted by the IRS about missing returns or a tax debt. Nonetheless, the IRS will contact your business if you do in fact owe the government money. Your first instinct may be to ignore these communication attempts in a bid to protect your business. However, doing so only will make the matter worse and even put you in a more suspicious light. Rather than draw the ire of this agency, you can remain proactive and use these strategies to resolve your tax delinquency.

Maintain Contact

Taking this first step and keeping in contact with the IRS shows that you are aware of your obligation and want to address it head on rather than ignore it altogether. You can send letters, emails or call the toll-free customer service line to keep the agency informed about your financial circumstances, your plans to pay the debt and any circumstances that could delay your payment.

You should keep a record of these communications and include the date and the subject that each one discussed. This record could be useful if you ever must appear at a hearing with the IRS to negotiate your tax debt.

Provide Current Financial Information

It is important that the government knows about your business's finances, especially if the amount of money that comes in each month fluctuates greatly. You should provide current financial information to the IRS so that the agent assigned to your case understands why you can or cannot pay on your tax debt. This information can come in the form of bank deposit statements, profit and loss statements and accounts receivable records.

Request a Payment Plan or a Reduction

If you cannot pay the entire amount in whole, you should ask to be set up on an installment payment plan. This request should be in writing and include the ideal amount that you can pay regularly, as well as the date on which you can send that payment.

You could also ask for a discount of your tax debt. If you know that it will be some time before you can pay the amount in entirety, it would not be unreasonable to ask for a certain percentage to be deducted from that sum. In some cases, your agent may work with you and reduce the debt to make it more affordable for you.

File an Offer to Compromise

Similar to asking for a reduction, you can also file an offer to compromise. This offer acknowledges that you cannot pay the entire amount, but would still like to make amends by offering a smaller, yet still significant payment on this obligation. Again, this request should be in writing. If you are facing extraordinary circumstances like a serious illness or dire financial duress, you could be granted this offer to compromise.

File for Bankruptcy

Bankruptcy is usually a last resort to get away from the stress and pressure of an IRS debt. You may have heard before that taxes cannot be dismissed in a bankruptcy. Even if that is true to a degree, owed taxes, especially small business taxes, can be reorganized and included in a repayment plan under a Chapter 13 filing. You would still suffer the credit ramifications from filing for bankruptcy; however, it would give you the chance to pay off your tax debt if you have no other way of meeting this obligation.

Hire a Tax Attorney

Negotiating with the IRS does in fact take quite a bit of effort and concentration. If you would rather focus on running your small business instead of dealing with this agency, you should hire a tax attorney to represent you.

Your attorney can act as a communication liaison and advocate to resolve this obligation. Your lawyer can also request that you be set up on payment plan, file for an extension on your behalf, and make an offer to compromise. You will be kept informed on the proceedings and still be able to run your business, all the while knowing that your lawyer is advocating for your best interests.

The success and future of your small business can be in jeopardy when you owe the IRS money. When you want to take care of this debt head on, you can be proactive and remain in charge of this resolution process by taking these important steps after your small business has been contacted by this government agency.

*Image courtesy of Number 10