A couple going over Safe Harbor tax rules

Self-Employed? IRS Safe Harbor Tax Rules Can Help You Avoid Costly Penalties

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The gig economy is here to stay, and more people than ever are earning money through self-employment or contract work. For taxpayers who get a portion or all of their income from self-employment sources, knowing the rules of estimated taxes can save them a big headache—and financial penalties—come tax time.

One of the biggest challenges with this kind of income is that it can be unpredictable. If you’re selling holiday decorations on Etsy, for example, you may make far more income at the end of the year than you do at the beginning. Other people choose to put in hours based on their needs, so in months with high expenses they may work more hours to help offset extra expenditures.

When your income isn’t steady, how can you make accurate quarterly estimated tax payments? Underpaying can cause financial penalties, but overpaying means the government holds on to your hard-earned cash until tax refund season.

With IRS Safe Harbor tax rules, you can make estimated tax payments and avoid penalties despite having a highly variable income stream.

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A couple reading a paycheck stub

How to Stop Wage Garnishment by the IRS

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Life can get hectic, and it seems like when bad things happen, several happen at once. Maybe you were going through a rough patch and forgot to file your tax return. Nothing bad happened when you didn’t file, so the next year you didn’t worry about filing taxes. And the next year. And the next. Then, suddenly, you received a notice from the IRS of their intent to levy.

When the IRS takes a part of your paycheck, aka wage garnishment, it can leave you without enough income to live on. This is especially true if you are in a higher cost-of-living area.

Moreover, because it involves your employer, it is not only embarrassing, but it may even put your job in jeopardy. While it is illegal for an employer to fire you for having your wages garnished for “any one debt,” you may not be protected if you have additional wage garnishments from creditors other than the IRS. Furthermore, some employers see debt and money problems as a red flag that may change how they view their employees.

If you’ve received notice that the Internal Revenue Service intends to garnish your wages, or your wages are already being levied, it’s time to take action. There are several ways you can stop a wage garnishment by the IRS. The help of a tax expert can be invaluable for deciding the best course of action to successfully get your wage garnishment released and start receiving your full paycheck once again.

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A person reviewing tax paperwork with a professional

What Is a Partial Pay Installment Agreement (and Do I Qualify)?

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Many people find themselves in a situation where they owe $10,000 or more in back taxes to the IRS. This can be so overwhelming that they choose to ignore the problem, since they know they cannot pay the IRS such a huge amount. If you’re one of those people, take a deep breath. There may be manageable payment options that you don’t know about yet, and you may even pay less than the full amount that you owe—if you qualify.

With a partial payment installment agreement (PPIA), you make monthly payments to the IRS until the Collection Statute Expiration Date (CSED), at which point the remaining tax debt is forgiven and erased. The catch is that it can be challenging to qualify for this type of agreement, because you must prove to the Internal Revenue Service that you cannot afford to make payments that would satisfy the entire tax debt.

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A woman reviewing and calculating taxes

Tax Evasion Vs. Tax Avoidance: The Difference and Why It Matters

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Although both sound like something the IRS would frown upon, tax evasion and tax avoidance are very different things. Tax avoidance refers to using legitimate methods to lower your tax liability, while tax evasion is reducing your tax liability through deception and other fraudulent actions.

While some taxpayers knowingly initiate tax evasion tactics on their own, others fall for the promise that a questionable third party can reduce their taxes owed. The IRS often catches these tax scheme promoters and sometimes finds their clients guilty of attempting to evade taxes as well.

Understanding the difference between tax avoidance and tax evasion can help keep you out of trouble with the IRS. Keep reading to learn more about the difference between tax evasion and tax avoidance and how an experienced tax attorney may be able to help clear up misunderstandings with the IRS.

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Smiling new homeowner posing by holding out her housekeys in front of her

What You Can Do About a Lien on a House From the Previous Owner?

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Buying a home is massive financial and personal decision. It’s nearly impossible to keep emotions out of the equation—the hope and anticipation when waiting to see if the sellers will accept your offer, and the anxiety during inspection and closing. 

But no matter how many fingers you’ve crossed, there’s always a chance that something will pop up and slow or halt the closing process. The inspection may find something big, or the parties involved may disagree on subsequent negotiations, or the mortgage company may decide not to lend sufficient funds. 

Another big potential dealbreaker is finding a property lien on the home. This can easily stop a deal dead in its tracks. However, if you’re not willing to give up on your dream home, and you’re committed to resolving the lien, you have options. For tax liens, you may need the help of a tax professional, and one option is to hire a tax attorney, who will have more in-depth knowledge and skills for resolving property tax liens. 

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A black woman going through her mail outside of her mailbox

How Many Notices Does the IRS Send Before a Levy?

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Have you received an IRS notice telling you of their intent to levy your property? The IRS has many different ways to collect from you if you owe them a tax debt. A tax levy is just one of those ways—but it is one of the most serious. 

Because of the severity of a levy, the IRS will send 5 notices to an individual before seizing the money in the taxpayer’s bank account. After 4 notices, they can seize your state income tax refund without further warning. Once you receive the final notice of intent to levy, you have the right to appeal their decision, but it is better to address the problem before it gets to this point.  

If you have received notice of intent to levy (or notice of a federal tax lien), it’s important that you do not ignore the IRS. The consequences of a lien or levy can be very serious—and may affect your livelihood. They can seize assets like your wages and bank accounts, and they can put a lien on your house (which can make it nearly impossible to sell). For businesses, they can seize or freeze all business accounts, making it very difficult to keep operating. 

A lien or a levy is a very stressful challenge to face, and if you need help you can contact a tax attorney like S.H. Block. Check out the end of this article to schedule your free consultation to discuss your bank levy or wage garnishment options. 

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An IRS officer knocking on the door of a homeowner for a visit

How to Handle an IRS Revenue Officer Home Visit (or Office Visit)

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As part of the Inflation Reduction Act of 2022, the Internal Revenue Service (IRS) has received a big increase in funding—which has also led to a major hiring spree. Just over half of the $80 billion in new funding was allocated towards “enforcement.”

While the IRS falls short around $600 billion in collection every year, and the increased funding is allocated towards recouping those tax liabilities, some have criticized this spending bill for its potential to unfairly affect low-income taxpayers.

Regardless of the politics, our office is already seeing the effects of the increase in employees. The S.H. Block team is witnessing the ramp up of collection efforts, with an increase in unannounced revenue officer visits. Many of these officers are newly trained and are not necessarily following the same protocols that we’re accustomed to.

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A woman reviewing her paperwork for income taxes

Do I Have to Pay Taxes on a Lawsuit Settlement?

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If you’ve been involved in a lawsuit or settlement and have been awarded a sum of money, you might think that money is yours to spend, free and clear. You’ve paid back the entitled parties, your lawyer got his or her cut, and now you’re ready to buy yourself something nice!

Unfortunately, the IRS is also waiting for their portion of your settlement. You might not even realize that you owe taxes on your lawsuit settlement until you receive a 1099 at tax time. Depending on the type of lawsuit and the types of damages awarded, a portion or potentially all of your settlement funds could be taxed as income.

If you’ve been awarded funds from a legal settlement, it would be smart to use a portion of that money to pay an experienced accountant for tax preparation services to make sure that your settlement is taxed correctly. Your accountant can make sure that your tax return is properly prepared; and if you are unable to pay your tax bill, they can help you with payment options. Read more

A person consulting with a tax resolution specialist

What Exactly Can a Certified Tax Resolution Specialist Do for You?

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Many people fall behind on their taxes, start to receive notices from the IRS, and/or find themselves in a troublesome situation with the Internal Revenue Service. If you find yourself in this unfortunate situation, you may receive advice about seeking out a certified tax resolution specialist. What does this mean? How can they help?

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A couple looking at a property with a realtor

How to Find Out if a Property Has a Lien on It

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Whether you are in the market to buy a new house, or you are thinking about listing your own home for sale, you don’t want any surprises. Finding out if a property has a lien on it before the sales process gets started will save you a lot of headaches.

A lien is issued against a home title when a creditor has a financial stake in the property. This happens because of unpaid debt, which can be related to a mortgage, tax debt, unpaid contractor’s bills, and more.

Often, if a lien is found on a property during the buying process, the real estate deal falls through and the sale doesn’t happen. Most lenders will not approve a loan for a property that has a lien against its title. However, if you want to know how to secure a home loan when dealing with a tax lien, there are ways around the lien.

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