Tax resolution is the process of developing and implementing a solution to solve a taxpayer’s IRS problem. A taxpayer owes the IRS or the State money and in here, the Internal Revenue Service (IRS) is a U.S. government agency responsible for the collection of taxes and enforcement of tax laws.
How someone is chosen for an audit:
An IRS software program may randomly select the taxpayer and compare the return to other similar returns to detect any anomalies, or the taxpayer in question may be linked to a family member or business partner who is being audited.
One of the most common reasons for an audit is when the taxpayer is taking higher-than-average deductions in relation to his income. This can come from various types of deductions: Charitable contributions, real estate interest or student loans interest.
The IRS has a sense of what’s a fair amount of deductions based on income brackets, Taylor said, and if someone blows past that threshold, it could lead to an audit. If someone earned $120,000 and claimed $50,000 of charitable contributions, they’d smell a rat.
In case of any such matters, a tax resolution firm can help you as it specializes in representing a taxpayer’s interest before the IRS or the State to resolve the debt in the most advantageous way for the taxpayer.
There are a number of different options the taxpayer has at their disposal to resolve their tax matter with the IRS. However, relatively few taxpayers and practitioners are aware of the options for that matter. And in many cases, the taxpayer is not adequately informed by the IRS of all options, let alone which options best suit the taxpayer’s specific situation.
Deductions and Credit to be considered
Congress recently extended for 2017 the availability of certain tax breaks that would have otherwise expired at the end of 2016. In contrast to that, there are few deductions and credits you should consider taking, before you file your taxes.
Using Tax Withholding Calculator
The IRS has launched its new income tax withholding calculator. The calculator is designed to help people determine whether they have the correct amount of money withheld by employers from paychecks, reflecting changes in the new tax law. This is the latest step the tax collection agency is taking to reflect changes stemming from the Tax Cuts and Jobs Act.
You need to check to make sure it reflects the amount of Federal income tax that you have had withheld so far in 2018. For this, have a completed copy of your 2017 (or possibly 2016) tax return handy as the information on that return can help you estimate income and other items for 2018. However, note that the new tax law made significant changes to itemized deductions.
Keep in mind that the withholding calculator results are only as accurate as the information entered. You can use the results from the withholding calculator to determine if you should complete a new Form W-4 and, if so, what information to put on a new Form W-4. There is no need to complete the worksheets that accompany Form W-4 if the calculator is used.
Though the calculator is designed to work for wages, it includes a line that will allow users to input income from self-employment or other nonwage sources.
