Prescott Tax and Paralegal, your tax resolution specialist in Prescott, explains your options when you are in tax trouble

A letter from the IRS is rarely a good thing. One of the most dreaded letters to get from the IRS is the CP90 – Final Notice Before Levy. It is a final warning shot to scare you into paying and should not be ignored. If you find yourself on the receiving end of an IRS letter, Prescott Tax and Paralegal, your tax resolution expert in Prescott, wants you to be aware of your options.

After an IRS final notice, you could:

• Pay in full – most people would have already done that if they could have afforded it
• Sign on for an installment agreement on your own - with penalties and interest so excessive it feels like it will continue until you die.
• Ignore them - and wait for terrible consequences like garnished wages and tax liens. Don’t do this, ever.
• Contact your tax resolution professional to see what your resolution options are.

The CP90 intends to intimidate you into calling the IRS so the tax man can take as much as possible from you even if it leaves you in dire financial straits, unable to pay your bills or support your family.

A better option is to work with a certified tax resolution expert that can negotiate on your behalf for better results. A tax expert can pursue resolutions that would be difficult - if not impossible - to negotiate on your own. Here are four options to deal with tax debt.

Offer in Compromise (OIC): An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer's tax liabilities for less than the full amount owed. It can be far more reasonable than an IRS installment agreement, but you have to see if you qualify based on your unique financial situation and specific case.

Installment Agreement (IA) or Partial Payment Installment Agreement (PPIA): These are well-structured installment agreements that can slash penalties by 50%. The IA is an agreement to make monthly payments on what’s owed in full while a PPIA lets you make a monthly payment that does not pay the total owed. You must qualify for a PPIA based upon your financial circumstances. These agreements generally run 6 to 72 months.

Penalty Abatement (PA): This agreement strips away penalties tacked onto your tax balance. Penalties include failure-to-file, failure-to-pay, and failure-to-deposit (for business owners). If you’ve never had a penalty before, a first-time abatement (FTA) penalty waiver may apply. Otherwise, your tax relief consultant can fight for a reasonable cause abatement if any of the following apply:

• Illness, death, or incapacitation of the taxpayer or their immediate family
• Fire, casualty, natural disaster, etc. affecting the taxpayer
• Inability to obtain records and documents
• Currently Not Collectible (CNC)

In cases of extreme financial hardship, your tax rep can argue that you can’t afford to pay anything. With this option, your tax debt goes on the back burner, and you make no monthly payments although penalty and interest keep accruing. The big advantage of CNC is that the 10-year statute of limitations on collection keeps ticking so you might be able to ride it out and pay nothing on the tax debt.

If you’ve received an IRS final notice or threatening letter, don’t ignore it. Instead, contact Prescott Tax and Paralegal to speak with a tax resolution specialist in Prescott to get the IRS off your back for good. To schedule an appointment, call us at 928-778-3113. Learn more about the services we offer at http://www.PrescottTax.com.

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Prescott Tax and Paralegal explains why outsourcing your bookkeeping will help prepare your Prescott business for tax season

As business owners, we tend to think we can do it all ourselves. Bookkeeping is one of those tasks that oftentimes gets dumped on the business owner and unfortunately, may be done wrong. Saving money is the goal, but if the bookkeeping is done incorrectly - or not done at all - it can cost your company a lot more money than it saves. Prescott Tax and Paralegal explains how outsourcing bookkeeping services for your Prescott business can prevent costly errors when tax season arrives.

Are you really utilizing your time and resources wisely?
You are an expert in your business. Taking precious time and resources away from operating and maximizing your business to do bookkeeping can spread you too thin and have a negative impact on your bottom line.

Taxes
Many small businesses get into tax trouble because owners are too busy running their business to do the bookkeeping required for accurate tax preparation. Outsourcing will not only save you unneeded stress, but it also ensures an accurate tax return - often resulting in paying less in income taxes. And no one wants to end up paying penalties and interest to taxing authorities.

Budgeting
A professional bookkeeping firm like Prescott Tax and Paralegal will be able to help you budget properly and find areas where perhaps you are spending too much money.

Experience & Expertise
One of the main benefits to outsourcing your bookkeeping to us is the benefit of many years of expertise and knowledge. Improving financial performance is and should be a goal to all businesses, and outsourcing gives you an edge to help you reach that goal.

Contact Us
Compliance with tax laws is a must, and outsourcing to a professional bookkeeping service is in your best interest. The experts at Prescott Tax and Paralegal can help by handling your bookkeeping needs, preparing tax returns and financial reports for your Prescott small business. To set up an appointment, give us a call at 928-778-3113. Learn more about all the services we offer at http://www.PrescottTax.com.

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Prescott Tax and Paralegal, your bookkeeping experts in Prescott, share why small businesses are likely to attract audits

Those dreaded audits! Why do small businesses seem to attract audits by the IRS? Prescott’s accounting experts at Prescott Tax and Paralegal, understand why small businesses are likely to attract audits and what you can do to help prevent them.

Fear not
There should be no unreasonable fear. In reality, an audit is simply a “second look” by the IRS on a business’ tax return. In an audit, the auditor compares the return to the business’ books, ensuring there are no errors or discrepancies. Many audits are completely random. As a compliance check, the IRS selects a certain number of returns every year.

Missteps to avoid
While most audits are completely random, there are some things you can do that increase the chances the IRS will pull your return aside for a closer look. Here are some missteps you can readily avoid:

• High meals and entertainment expenses. Here is where it can get kind of tricky. Meal expenses are legitimate business deductions, but you need to be able to prove that the expenses are ordinary and necessary. Don’t let fear of an audit stop you from deducting these expenses, but make sure you keep good records. detailing every expense: include the names of the people or group in attendance and the business relevance of the meal, or travel expense. Entertainment expenses are no longer deductible.
• Home office deductions. Home office deductions are legitimate tax deductions, but your home office must be used “exclusively and regularly” for business. Your home office needs to be a designated area in your home for your work, not just a kitchen counter or table in the bedroom. Also, be honest about the square footage when you do your calculations for your tax return.
• Vehicle expenses. Unless your vehicle is owned by your business, don’t claim that 100% of your automobile expenses are for business use. In most cases, you are better off recording and claiming your mileage at the standard mileage rate the IRS publishes each year instead of claiming your actual automobile expenses. It is important to keep detailed mileage records as required by the IRS.
• Not keeping receipts. If you do not have the receipt to prove the expense, the expense will be disallowed by the IRS.

Your accounting experts at Prescott Tax and Paralegal understand why small businesses are likely to attract audits and what you can do to help prevent them. Prescott Tax & Paralegal is here to help. To set up an appointment, give us a call at 928-778-3113. Learn more about all the services we offer at http://www.PrescottTax.com.

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Prescott Tax & Paralegal explains what tax services they provide in Prescott.

Prescott Tax & Paralegal loves to assist clients with their tax preparation needs.  It is never too early to start receiving counseling on your particular tax situation.  They offer options that can help you minimize tax liabilities and boost your cash flow.  Prescott Tax & Paralegal explain the different tax services they can provide you:
   

•    Personal Tax Preparation

•    Additional Schedules

•    Business Tax Preparation

•    IRS Representation

•    File prior returns

•    Help you avoid Health Insurance penalties.


Arlene Rheinfelder, with Prescott Tax & Paralegal is an “Enrolled Agent.” (EA) This is the highest credential the IRS awards.  An EA is more advanced than a Registered Tax Return Preparer.  She can represent taxpayers before the Internal Revenue Service.  Enrolled Agents are often considered America’s “Tax Experts!”

We would love to discuss your tax situation with you further.  Have a question?  Prescott Tax & Paralegal is ready to help.  Call us at 928-778-3313 or visit us online at http://www.PrescottTax.com. 

This article is for informational purposes and not intended as legal advice.  If you need legal advice, you should contact an attorney.

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The Role of the Document Preparer

The Role of the Document Preparer

By Arlene Rheinfelder, Prescott Tax & Paralegal

Certified Legal Document Preparer and Enrolled Agent

Recently I had a conversation with a local attorney who was surprised at the variety of work a certified legal document preparer can complete without attorney supervision.  Most people refer to document preparers as paralegals.  The certification for a document preparer is under the direction of the Arizona Supreme Court’s Board of Document Preparers. To become certified, a person must pass an examination and meet experience and/or education requirements.  Document preparers also must complete 10 hours of continuing legal education annually.

Certified legal document preparers or CLDPs are prohibited from providing legal advice. That is the role of an attorney. As one judge explained to me, legal advice is similar to a doctor’s advice. The doctor can tell you what you should do to treat a specific illness.  Likewise an attorney can recommend what a person should do in a specific legal situation.  If you want to be told what to do, you should contact an attorney, not a document preparer.

If you already know what you want to do and simply need help preparing the necessary paperwork, a CLDP may be a good choice.  A CLDP can also explain procedure. For example, a person decides to obtain a divorce, but does not know how to prepare the paperwork, how to file it, or how to serve it.  A CLDP can prepare the paperwork, file the paperwork with the court, have the documents served, and explain generally the process of obtaining a divorce.

Likewise a CLDP can prepare evictions, civil suits, probate, guardianships, limited liability company paperwork, real estate deeds, estate planning documents, and any legal document in any legal matter in which the CLDP is competent.

A CLDP can also provide general factual information pertaining to legal rights, procedures, or options available to a person.  Many times people simply need information and education on procedures, including courtroom procedures, and court rules.

What types of things can’t a CLDP do?  CLDPs cannot provide legal advice, opinions or recommendations. They cannot go to court and speak on your behalf, or assist a client in the courtroom.  If you need these types of services, you are better served by an attorney.

Have a question? Prescott Tax & Paralegal is ready to help.  Call us at 928-778-3313 or visit us online at http://www.PrescottTax.com. 

This article is for informational purposes and not intended as legal advice.  If you need legal advice, you should contact an attorney. 

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Income Tax Refund – Spend or Save?

By Arlene Rheinfelder, Prescott Tax & Paralegal

Certified Legal Document Preparer and Enrolled Agent

In 2015 the IRS issued an estimated $125 BILLION dollars in income tax refunds. The average refund was $3,120 in 2015.  Everywhere I look, I see sales people clamoring to get a piece of your income tax refund.  They will all hate me in just a moment.

I want to paint a picture of something incredibly fabulous that you could do with your refund.  If you take $2500 from your refund, and put it in a CD at Capital One for 5 years, you could earn a whopping 2.3% interest.  At the end of 5 years, you would have $2,801.  If you did that with your refund each year for 5 years, at the end of that 5 years you would have $16,190.

Or you could be really daring, and invest in a mutual fund that gets an 8% annualized return. If you only invested the initial $2500, you would have $3,673 at the end of 5 years---almost 1 and ½ times your initial investment.  If you took $2500 from your refund each year for 5 years and invested it in a mutual fund with an 8% return, you would have $19,513 at the end of 5 years!  Have I captured your “interest” yet?

Of course, there is some risk with investing in a mutual fund because the stock market may go up or down.  Unlike a CD, the 8% return on a mutual fund is not guaranteed.  Another option is to use an indexed annuity with no downside risk. This type of annuity goes up when the market index goes up and you get a fixed percentage of the market gain. In exchange for giving up a piece of the upside gain, your investment will not go down if the market goes down. It is a wise idea to consult with a good financial planner when making investment decisions.  We are happy to provide you with a recommendation for a financial planner.

Another benefit to saving or investing your refund may be that you can get a tax credit if your income is low enough, you are not covered by an employer retirement plan, and you contribute the refund to an IRA. 

This year instead of spending your refund, think about consulting with a financial planner and making an investment in your future. Sure, spend 10% of that refund if you must, but think about what you can accomplish by saving that money.

If you continued to invest $2500 annually at 8% annual return for 20 years, you would have $135,210 from your investment of $50,000.  If you were able to get 15% annually, you would have a whopping $335,442! On the other hand, if you spend your entire income tax refund, quite simply, it is gone.

Have a question? Email it to: arlene@PrescottTax.com

Prescott Tax & Paralegal, the office of Arlene Rheinfelder, AZCLDP is located at 141 S. McCormick, Suite 206, Prescott, AZ 86303.  Contact us at 928-778-3313 or visit online at http://www.PrescottTax.com.

This article is for informational purposes and not intended as legal advice.  If you need legal advice, you should contact an attorney. 

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Prescott Tax and Paralegal discusses what to do if you find you owe the IRS money.

Sometimes people have the unfortunate experience of owing the IRS taxes.  Prescott Tax and Paralegal would like to help inform you of your choices.  If you found out that you owe income taxes, there are two steps that you should take:

1 . Increase the amount withheld by your employer.  For example, if you were withholding at Single and 2 exemptions, change it to Single and 1 exemption if you owed only a little. If you owed a lot, then change it to Single and 0. How do you do this? Fill out a new Form W4 and give it to your employer.

• Self Employed?  You need to make estimated tax payments.  Divide the total amount of tax (Form 1040, Line 63) by 4. The result is the amount that you need to pay each quarter to the IRS. You will mail the check with Form ES.

2. Pay the amount that you owe the IRS. The IRS allows you to set up a payment plan. However, there is a fee for this service ($225 for a standard plan, and $107 for a direct debit plan) The IRS will charge you a .5% penalty for each month the original tax debt is not paid even though you have a payment plan. Additionally, you will be charged about 3% interest on the unpaid debt.

• Sometimes a better option is to pay the tax owed with a 0 percent rate credit card. This eliminates the continually accruing penalties and interest that the IRS charges.

Call us today if you have any further questions. Prescott Tax and Paralegal are ready to assist you with all of your tax filing needs.  Call us at 928-778-3113 or visit http://www.PrescottTax.com for more information.

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Paralegal Services and Income Tax Preparation by Prescott Tax and Paralegal

Looking for quality tax and paralegal services in Prescott? Introducing Prescott Tax and Paralegal. We are committed to making sure that your documents are prepared with great attention to detail.  We strive to meet your individual needs.  Customer satisfaction is our goal!

Arlene and her staff work hard to eliminate any stress or concerns you may have by offering high quality expertise and professionalism for all your tax and paralegal needs.

We offer our clients the following services:

• Preparation of legal documents for any legal matter
• Procedural information for our clients
• Assistance in filing documents with the appropriate agency
• Attorney referrals when needed
• Preparation of tax returns and representation before the IRS

We understand family law or estate planning issues can leave you feeling overwhelmed. We strive to offer the legal document assistance you are looking for while making these important decisions.
When it comes to tax planning and preparation, our goal is to help our clients easily navigate the many choices that they will need to make. We offer options that minimize tax liabilities and maximize cash flow. We work hard to boost your financial opportunities.

We would like to help with all your tax preparation and legal document preparation needs. Knowledgeable and experienced, our goal is that our clients will be completely satisfied with our performance and that they will value us as much as we value them. Contact Prescott Tax and Paralegal today! Call 928-778-3113 or visit our website at http://www.PrescottTax.com.

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Please Note: We are NOT attorneys and do NOT provide legal advice. Your information is confidential, but we do not have attorney-client privilege. If you need legal advice, you will be referred to an attorney.