Indeed, most people want to pay only what they are legally required to pay in taxes as a matter of law. But consequences of using frivolous arguments in tax returns to avoid paying taxes should not be ignored. In addition to owing on past due taxes, one faces stiff penalties and interest. Nevertheless, according to an accountingtoday.com report, the IRS is having particular difficulty recognizing when such arguments are being offered.
The Internal Revenue Service will likely continue to crackdown on alleged failures to report offshore income and foreign assets. Any taxpayer with over $10,000 invested in foreign bank accounts could be a target for the IRS. Tax penalties for noncompliance are significant. Not only can the IRS take 50 percent of any value of the account, the agency may also assess fines, penalties and possible criminal charges.
It is important to remember that cancellation of a debt does not mean that your financial worries will come to an end. Any Michigan taxpayer who has part or all of their debt cancelled may nevertheless need to report this amount as income. When lenders cancel $600 or more of your debt, you should then receive a Form 1099-C providing the amount of the debt cancellation.
The IRS has recently tightened its rules concerning offers in compromise for dealing with tax debt. The new rules will go into effect on March 27, 2017. Under these changes, the IRS can now return any Offer in Compromise application after a taxpayer fails to file all required tax return information.
The last thing any retiree would like to see happen is to have their plans interrupted due to tax difficulties. Yet with the complex rules regarding calculating income, minimum withdrawals from retirement accounts, and deducting various expenses, mistakes made in filing tax returns are common for elderly individuals.
While reporting income on our tax forms is relatively straightforward under certain situations, it's often complex in other instances. We use W-2 forms for reporting income from our employer, and a variety of 1099 forms for reporting other forms of income such as royalties, interest and dividends. This is easy to understand. However, we also sometimes are obligated to report income that does not involve cash such as the constructive receipt of income.
It goes without saying that Michigan taxpayers want to avoid criminal tax consequences. Such charges require immediate attention because the penalties can impact your finances, career and reputation. The penalties for tax crimes include fines, asset forfeiture and possible prison time. A conviction could mean the loss of a professional license and difficulty in obtaining employment concerning certain types of occupations.
Couples often divorce or separate to escape issues that arise during the marriage. Unfortunately, tax liability can still follow an individual around even after the separation takes place.