Tax Help

Issue Number: Tax Tip 2022-103
Companies who promise to eliminate tax debt sometimes leave taxpayers high and dry
As the old saying goes: When something sounds too good to be true, it probably is. Taxpayers with outstanding tax bills might be tempted by businesses who advertise and offer to help them reduce their tax debt. These businesses, often called Offer in Compromise mills, make huge claims about reducing unpaid taxes for pennies on the dollar. Unfortunately, these companies sometimes don’t deliver and charge large fees.
An Offer in Compromise with the IRS can help some taxpayers who can’t pay their tax bill.

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. The offer program gives eligible taxpayers a path toward paying off their debt when they otherwise couldn’t or would face financial hardship.
The OIC mills that are dishonest take advantage of taxpayers’ lack of knowledge to make a quick buck.

These OIC mills urge people to hire their company to file an OIC application, even though the taxpayer won't qualify. They often charge big fees to prepare applications that they know the IRS will deny. This unfair practice wastes taxpayers’ time and money.
Taxpayers who do qualify for an OIC can get the same deal working directly with the IRS, without the extra fees.
The OIC mills that are dishonest are a problem all year long, but they step up their advertising after the filing season ends, when taxpayers are trying to resolve their tax issues.
Here’s what taxpayers considering an OIC should know:
• Individual taxpayers can use the IRS's Offer in Compromise Pre-Qualifier tool to see if they're eligible.
• When a taxpayer is ready to apply, they can watch an OIC video playlist that will lead them through the steps and forms to calculate an appropriate offer based on their assets, income, expenses and future earning potential.
• Taxpayers must make an offer based on their true ability to pay.
• Applying does not guarantee that the IRS will accept the taxpayer’s offer.
Finding reputable tax help

People who want help from a reputable tax profession can review Choosing a Tax Professional page on IRS.gov to find information about tax preparer credentials and qualifications. They can then use IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find a preparer by type of credential or qualification.

More information:
Offer in Compromise
Offer in Compromise Pre-Qualifier Tool
Offer in Compromise - IRS Video Portal
Form 656, Offer in Compromise

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Companies who promise to eliminate tax debt sometimes leave taxpayers high and dry | Internal Revenue Service Tax Tip 2022-103, July 7, 2022 — As the old saying goes: When something sounds too good to be true, it probably is. Taxpayers with outstanding tax bills might be tempted by businesses who advertise and offer to help them reduce their tax debt.

Well, it's that time of year... TAX TIME!!!

We are following the same procedure as last year. You can submit your information via email ([email protected]), regular mail or drop it off in our secured, locked box behind the office. You will be notified that your information was received within 48 hours. When it is complete, a telephone conference will be arranged to review your return.

THIS IS WHAT YOU NEED TO SUBMIT:

* Valid contact information- email and phone number
* A copy of your Driver's License
* W-2 forms
* 1099 forms if you completed contract work and earned more than $600
* Investment Income: interest income Form 1099-INT, dividend income Form 1099-DIV, proceeds from sale of stock or bond, Form 1099-B
* Income from state tax refunds from prior year
* Business income
* Unemployment income
* Rental property income
* Social Security benefits Form SSA-1099
* Pension Distributions Form 1099-R
* IRS Letter 6419- Child Tax Credit Payments
* IRS Letter 6475- EIP Stimulus payment. This was sent to people who received the third check last March.

ADJUSTMENTS:
* IRA contributions
* Student loan interest
* Medical Expenses
* Mortgage Interest
* Property Taxes
* Education Costs
* Childcare Costs
* Charitable Contributions
* Business expenses
* Alimony paid
* Educator expenses
* Stimulus check information
* Health insurance: Did you have coverage none, part or all of the year?

We hope this is helpful!
Please feel free to visit our website www.taxhelpnj.com or call us (856.881.2500) with any additional questions.

Thank you for doing business with us!

Tax Help NJ | Glassboro | Accounting & Bookkeeping Tax Help NJ is the premier accounting firm in South Jersey. We specialize in income tax preparation for individuals and business, accounting, and bookkeeping.

Wishing everyone a very Happy and Healthy New Year! Thank you for your business!!!

Happy Hump Day!!!

Today's Tax PSA:

Tax benefits of making a business accessible to workers and customers with disabilities:

Businesses that make structural adaptations or other accommodations for employees or customers with disabilities may be eligible for tax credits and deductions.

Here’s an overview of the tax incentives designed to encourage employers to hire qualified people with disabilities and to off-set some of the costs of providing accommodations:

Disabled access credit:
The disabled access credit is a non-refundable credit for small businesses that have expenses for providing access to persons with disabilities. An eligible small business is one that earned $1 million or less or had no more than 30 full-time employees in the previous year. The business can claim the credit each year they incur access expenditures.

Barrier removal tax deduction:
The architectural barrier removal tax deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of people with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized.

Businesses claim this deduction by listing it as a separate expense on their income tax return. Also, businesses may use the disabled tax credit and the architectural/transportation tax deduction together in the same tax year if the expenses meet the requirements of both sections. To use both, the deduction is equal to the difference between the total expenses and the amount of the credit claimed.

Work opportunity tax credit:
The work opportunity tax credit is available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. This includes people with disabilities and veterans. The maximum amount of tax credit for employees who worked 400 or more hours of service is:
• $2,400 or 40% of up to $6,000 of first year wages, for qualifying individuals.
• $9,600 or 40% of up to $24,000 of first year wages for certain qualified veterans.
A 25% rate applies to wages for individuals who work at least 120 hours but less than 400 hours for the employer.

Stay tuned for more helpful tips...!

The year is almost over! As you think about Christmas, here's some other things to ponder:

Don’t overlook 2021 required withdrawals from your retirement accounts. Here’s what to know:

• In general, if you were making required withdrawals before 2020 (when they were waived), you should resume them this year.
• If you reached (or will reach) age 70½ after 2019, you can wait until age 72 to start taking required distributions. Yellow Dog Productions | Getty Images
Amid the hustle and bustle of the holiday season, don’t forget about required minimum distributions from your retirement accounts.

After being waived for 2020, those RMDs — amounts you must take each year from most retirement accounts once you reach a certain age — are again in force for 2021.

That’s sandwiched between the RMD age changing to 72 from 70½ as of last year and new IRS life expectancy tables — which are used to calculate those withdrawals — going into effect next year.
RMDs apply to 401(k) plans — both traditional and the Roth version — and similar workplace plans, as well as most individual retirement accounts. Roth IRAs have no required withdrawals until after the account owner’s death.

If you had hit age 70½ before 2020, RMDs kicked in at that point. If you reached (or will reach) that age in 2020 or later, you get more time: Those withdrawals are required to start at age 72.
In other words, “Anyone born July 1, 1949, or later can wait until they’re 72,” said Ed Slott, CPA and founder of Ed Slott and Company.
The amount you must withdraw each year is generally determined by dividing the balance of each qualifying account by a “life expectancy factor” as defined by the IRS.

For example, if you’re 75, that number would be 22.9, according to the IRS. Divide your account balance — say it’s $100,000 — by that factor and your RMD would be about $4,366. So if your balance is $500,000, your RMD would be five times that, or roughly $21,830.
You can delay your first RMD until as late as April 1 of the year following the one in which you reach the RMD age. In all subsequent years, you must take the required amount by Dec. 31. If you don’t make those RMDs, you could face a 50% penalty.
However, if you’re working and contributing to a retirement plan sponsored by your employer (and don’t own more than 5% of the company), RMDs do not apply to that particular account until you retire.

Those waived 2020 RMDs:

Generally speaking, if you already were taking RMDs before 2020 — i.e., you had already reached age 70½ — you would simply resume those distributions this year, using the current life expectancy tables, your age and your account balance at the end of 2020, Slott said.
“Some may be surprised and find their RMD is bigger,” Slott said. “Their balance on Dec. 31, 2020, may have been much higher [from stock market gains], so their RMD is higher.”
If you turned 70½ in the first half of 2019 and planned to take advantage of the April 1, 2020, deadline for taking out the RMD — and did not do it due to the federal waiver — this will be your first year of taking RMDs, Slott said. It must be taken by Dec. 31.
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“They caught a break by procrastinating,” Slott said. “Their first two RMDs were waived, so this will be their first year of taking it.”
If you turn 72 this year, you have until April 1, 2022, of course, to take your 2021 RMD. Be aware, however, that delaying it would not mean it can be subject to the updated life expectancy tables that take effect next year, Slott said. Your 2022 RMD would use the new measurements.
“You’d have two tables to use: the current table for the 2021 RMD and the new one for the 2022 RMD,” Slott said.
Be aware that you must calculate the RMD for each retirement account subject to the withdrawal rules.
For inherited IRAs, 401(k) plans or other qualified retirement accounts, the balance must be entirely withdrawn within 10 years if the owner died after 2019, unless the beneficiary is the spouse or other qualifying individual. The 2019 Secure Act eliminated the ability of many beneficiaries to stretch out distributions across their own lifetime if the original account owner died on Jan. 1, 2020, or later.

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