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Wise Ways Denver-Area Residents Can Spend Their Tax Return

May 22, 2019

Whether you’ve filed your 2018 income tax return with the friendly team of professionals here at Advanced Tax Solutions or not, it’s time to think about diligent ways to spend that return. Some  among us utilize this extra cash on a splurge —a vacation, a new car or appliance, or to update our wardrobe. While spending can be fun, it’s also important to remember about the more responsible ways you can utilize your tax return for a more profitable and prosperous present and future. 

The refund is actually your money, and that money could be used throughout the year to lower debt, save for an emergency or invest for the future. Some people utilize their return as a strategy to minimize their weekly withholdings, so that they earn more each week instead of seeing a large tax return at the end of the year. If you’re not sure whether this change is right for you, talk to the certified professional accountants here at Advanced Tax Solutions —or you pursue one of these refund-investing methods that could help you out throughout 2019. 

If you are one of the millions of Americans who have high-interest debt hanging over your head, you could utilize your tax return could to make a considerable dent in that debt. With interest compounding on you every month, getting rid of this burden could mean freeing up your future cash flow with big one time payments thanks to your tax return. 

One particular element of personal finances that can be cleaned up with a robust income tax return is credit card debt, which is a a large burden for millions of Americans nationwide — one that can have a negative impact on your credit history. The national average APR is around 17%, but some credit cards may charge even more if you carry a balance you carry month to month. If your refund doesn’t cover the entire outstanding balance on your high-interest debt, making a dent in the principal amount could still put you in a better position to cover the rest throughout the rest of the calendar year.

Many Americans don’t have enough to cover expenses in the event of an emergency. Your tax refund could be a solid foundation to start your new emergency fund with. Emergency funds are terrific ways to spare your weekly income when it comes to unexpected auto repairs, sudden unemployment, medical bills or travel expenses. 

Most financial experts recommended that you have two to three months worth of your normal expenses in your emergency fund, but if this year’s tax return is more than you expected, you might want to consider saving more. 

If you have ever been tempted to use your existing emergency fund on a new piece or technology, a vacation, or any other “treat-yourself” expenditure —you may want to consider a targeted savings account as an option for your tax refund.

Both targeted savings accounts and emergency funds are two of ne of the best things you can do with your money is make it work for you. Investing your tax refund is one way to try and grow that money over time. 

While a tax refund alone might not be enough to buy that dream property you’ve been looking at, it could help you make improvements to your current home that you’ve already made significant payments on. Home improvements can increase the overall value of a home, which will make it more valuable when you do decide to sell —and more enjoyable to live in in the time being. Have a home repair you’ve been putting off for far too long? Maximizing your enjoyment in the home is a worthy investment for your tax refund.

Investing in yourself is another terrific way to spend a tax return income. By learning a new skill, or become better at something you already do, you can make yourself more skillful both at your current position or in the eyes of future employers. Spending your tax refund on a class or program to improve yourself is another way to invest in both your personal and financial your future.

Still haven’t filed your return? Or search for the right Denver-area tax professional to submit your return in lieu of an extension? At Advanced Tax Solutions, our team of tax professionals takes tremendous pride in the accuracy and transparency we offer when we work with you to file your income tax return. Whether you’re filing for your business or your small family, our dedication to professionalism is all in effort to all-but-reduce errors that will not just delay your 2018 tax return, but potentially cost you time and money in the future. Contact Advanced Tax Solutions today to put an end to the stress and headaches that tax time has caused you, and get your return filed right. It’s the best way to make the right decision about how to invest your return.
 

Steps you can take to prepare for next year’s taxes

May 15, 2019

Denver tax season is coming to a close, and next year’s taxes are probably the furthest thing from your mind. Many of our tax clients from the Denver, Aurora, Littleton and surrounding areas wait until weeks before their taxes are due to even think about the upcoming tax year. But there are always things you can start doing ahead of time to make next year’s tax season quick, easy and efficient.

Let’s start with some general maintenance. The first thing you should do is check on your current paycheck withholdings. The 2018 tax changes have most likely affected your paycheck by giving you more take home pay now, but this might mean you aren’t paying enough in taxes. Take a look at your paycheck to see if you should adjust your withholdings, and if you should take time to complete a new form W-4 and Employee’s Withholding Certificate. If you do not check your paycheck now, you might be setting yourself up for a shock when you realize you owe the IRS money and won’t be getting a refund.

Something else that you should consider is what you will do financially if you don’t get a refund. With hundreds of families counting on refunds every year, it’s never too early to start budgeting and preparing for a lesser refund, or greater refund if you have made the adjustments needed! Counting on tax refunds to pay necessary expenses is never a good idea, and if you find yourself doing that year after year reach out to your financial planner - they are here to help.

If you are planning on freelancing during the year, get a system in place now. If you are looking into grocery delivery, a ride sharing service, or something similar - get a mileage tracker going now so that you can claim it on your taxes. Take a few hours out of each month to make sure everything is recorded, so that once it comes time to file your taxes you can pull everything at once. When it comes to your wages, start putting away 30 percent of your wages (if you can) to prepare for what you might owe the IRS. While 30 percent might seem like a lot, we recommend saving more so that you are fully prepared for your tax bill when April comes around.

If you are self-employed, the same advice applies. Set up a system early in the year to track any deductible expenses. Typically, if you are self-employed you can claim travel expenses, office expenses, and additional business-related expenses. However, you must have the documentation to back up any expenses you are attempting to claim. This is why setting up a tracking system is extremely important. What’s more, is if you are self-employed you might have to pay estimated taxes quarterly. These deadline are roughly the 15th of April, June, September, and January of the next tax year. If you have any questions regarding quarterly taxes, or what you should be planning for, feel free to reach out to our Advanced Tax Solutions team. 

Set a lunch-time appointment sometime in the next few months with your tax preparer. This is your chance to get their help on adjusting your withholdings, and your chance to get all of your necessary questions answered prior to starting the tax season. Meeting with your tax preparer would also allow you to ask questions about your retirement accounts - something we strongly recommend doing each year. The IRS limits on taxable IRS contributions can change from year to year, and while it might not always change it’s important to take a look at that each year.

Do you make charitable donations each year? If so, the beginning of each year is the perfect time to start planning when you will make your charitable donations and how much they will be. By making a plan, you are far more likely to give as planned and have the documentation needed to claim charitable giving on your taxes. 

Perhaps the easiest thing for you to do throughout the year is to collect tax documents and other important documents as you have them throughout the year and collect them in a centralized place as your employer(s) begin sending them your way. Below is the basic personal information you will need when preparing your taxes, be sure to have this information on standby:

  • Bank account information for direct deposit if you’d like your refund deposited in your account
  • Last year’s tax return for comparison
  • Dates of birth for all dependents, and social security numbers

Now you’ll also need to keep track of your income documents throughout the year such as any jury duty documents, gambling winnings, medical expenses, education expenses, alimony received, and scholarship awards. All of this information should be claimed on your taxes. Also, when it comes time to file your taxes you will need additional documents such as:
  • W-2 forms
  • 1099 forms
  • Any income/expenses from rental properties 

Also be sure to keep an eye on your mail for the following documents. You will need these when filing your taxes: 
  • 1098 forms
  • Records of IRA contributions made throughout the year 
  • Medical Savings Account (MSA) contributions

Good news? You have plenty of time to prepare for filing next year’s taxes. However, we do recommend getting a plan in place earlier than expected. Reach out to your local tax representatives and get on their schedule for tax preparation assistance. This can provide you with an opportunity to ask some of the questions you will need to know the answer to ahead of tax season. Preparing for next year’s taxes ahead of time can save you massive amounts of time down the road. 

Always remember that you can reach out to our Advanced Tax Solutions for additional information or to have your tax questions answered. We are here to help you get started on the path to success when it comes to your taxes. If you have any additional questions or requests, even unrelated to tax preparation we are always here to help. 
 

Tax season is over...now what?

May 9, 2019

Tax season is coming to a close, and you might be wondering what records should you keep and which you should destroy. Many of our clients from the Denver, Aurora, Littleton and surrounding areas have questions about what tax documents they should keep, and for how long. We’ve put together the following Denver tax guidelines to help you, and our clients, determine what they should and shouldn’t keep when it comes to tax documentation. 

Why You Should Keep Tax Documents
You want to keep tax documents in case you are audited by the Internal Revenue Service (IRS) - failure to produce documents in the event of an audit can cause pretty major issues for you and your financial state. If you are looking to purchase property anytime soon you might also need to produce tax returns from previous years to give the lender an idea of your financial standing. If you are looking to send your children to college, you might also need to use your previous year’s tax returns on the Free Application for Federal Student Aid (FAFSA).  

What You Should Keep 
It’s important to keep all documents related to filing your tax return. This would include W2s, 1099s, mileage tracking documents, receipts, and additional paperwork that was used when determining your deductions and tax claims. If you are unsure whether you should keep the document or not, check with your creditors and insurance agencies. 

If you made any significant home improvements - keep these records as well. Home improvements can raise the value of your home, and you might be able to write some improvements off on your tax return. Investment records, as well as real estate records, should also be kept.

If you decide to store these documents electronically, make sure they are stored on a hard drive that is password protected. Anytime you open these documents, make sure you do so on your own personal computer and when you are connected to your personal secured wifi. It’s also beneficial to avoid storing important financial documents on a computer that is consistently connected to wifi - it gives hackers a greater chance of breaking into your documents. 

How Long Should You Keep These Documents
You should plan to keep tax documents for three years after your filing year. Three years is the statute of limitations for the IRS. The three year statute of limitations is the time you have to claim any refunds owed to you, and the time the IRS has to collect any debt from you. 

However, there is a caveat to the three year rule. Always keep tax documentation related to retirement accounts for at least seven years, and any tax documentation related to property needs to be kept up until the third year after you’ve sold the property. If you’re filing a claim for a worthless securities or bad debt deductions, save records for seven years. 

There are some tax professionals who advocate for keeping your tax documents forever. This can be because if the IRS doesn’t think you filed a return for any given year, you will need to provide proof that you did. However, this can cause a major problem if you aren’t able to file taxes in a safe/secure location. When filing hard copies of tax documents at home, we recommend storing them in a fireproof safe - keeping them safe from thieves and protected in case of an emergency.

What You Should Toss
There are a few documents you might have been saving that you don’t necessarily need to save for a long period of time. You are completely safe to dispose of ATM receipts, bank deposit statements, credit card statements, and other financial records. If you’d like to keep these for your own personal reasons that is completely okay - just know you won’t need them for taxes.

You can toss any utility bill records (unless you claim your office as a home office), paycheck stubs (once compared with your W2), and credit card statements unless you used them for tax purposes. Unless you used receipts for filing your tax return, you are also welcome to throw away your box of receipts at the end of the year. 

How You Should Dispose of the Documents
When disposing of the hard copies of documents we strongly recommend using a shredder. Throwing your documents into a trash can is definitely not the safest way of doing so and gives people the opportunity to steal your data. Anything with a social security number, birth date, or account number automatically falls within the shredding category. If you’d like to be extremely careful when it comes to disposing of your documents, you can even shred documents in two different waste baskets. You can purchase shredders that cross shred, making the documents almost impossible to re-piece together.

If you have a lot of documents to dispose of and don’t have ready access to a shredder, talk with your tax preparer or bank. Often times these are valuable resources you can turn to when in need of help or when you need additional assistance with these minor tasks. Just be careful when disposing of tax documents, particularly if you store all documents within the same place. You don’t want to accidently shred birth certificates, marriage certificates, house deeds, life insurance policies, or wills. These documents aren’t easily replaced, if at all, and are needed in making most major purchases.

Determining what documents to save when filing taxes can be tricky, but it doesn’t have to be. The guidelines we have provided aren’t necessarily the only things you should consider, but they are a good starting point. If you are unsure of what documents you should save, or if you have any additional questions please reach out to our Advanced Tax Solutions team today. We are here to help you determine what tax documents you should be saving and how to best store them. If you have any additional questions or requests, even unrelated to tax document disposal or storage, we are always here to help. 

 

What you need to know about amending your tax return

May 1, 2019

You’ve realized you’ve made a mistake on your tax return, but what do you do now? An amended tax return is your chance to correct any mistakes you might have made, and you aren’t in trouble if you have to do so! Many of our clients from the Denver, Aurora, Littleton and surrounding areas express concerns about filing an amended tax return, but with the proper guidance it can be a painless process that might result in bigger benefits for you! 

Do I have to complete an amended tax return? 
There are some mistakes that the IRS will correct for you, these might include minor math mistakes or missing information from a W2. In this case, the IRS will correct the mistake you’ve made or send you a letter requesting for more information. However, if you realize the mistake you’ve made will affect your tax obligation you do need to complete an amended tax return. 

Examples of this include: 
You’ve filed your taxes under an incorrect filing status
Forgetting dependents
Forgetting tax credits/deductions
Receiving additional tax documents after you’ve filed 

Just because you file an amended tax return doesn’t mean you’ll get audited by the IRS. This is a common misconception, and in fact if you file your amended tax return correctly you should be completely fine. Attaching the supporting documents (we will cover this in a bit) will also help keep you from getting audited after you file your amended return.

When should I file? 
The answer depends on how your mistake will affect your refund and tax obligation. If you are going to be getting a larger refund after you correct your mistake - wait to file your amended return until you receive the initial refund. If you are going to owe the government money, or it will shrink your refund, you’ll want to file the return as soon as possible! You have 2-3 years to file an amended tax return, after three years the IRS will typically not allow you to file an amended return.

Remember, you can’t e-file an amended return, so that might affect your timeline if you are looking to get this handled sooner rather than later. While popular softwares can help you complete the paperwork, you’ll still need to print out the return and mail it in. You are always welcome to contact our Advanced Tax Solutions team today to help with an amended tax return.

Why should I file? 
There are a few things you need to consider when thinking about your amended tax return. You should always amend your tax return if you know a considerable mistake has been made. If your tax return mistakes result in you owing the IRS, and they catch it first, you might have to pay additional interest on the tax due. It’s important to also know that the interest will accrue as the IRS takes time to find your mistake, so it could be more than you anticipate. But that could be the least of your problems. If the IRS determines you purposely made a mistake, they could file a tax evasion case against you. 

If you amend your return and end up owing the IRS more than initially thought, you might have to pay some penalties. How much you owe is calculated by how much is owed, and how long it has been since you filed the original tax return. To learn more about what you owe and what actions the IRS can take against you, contact our tax professionals at Advanced Tax Solutions.

What are my steps? 
First you’ll need to gather all tax documents, including your the original tax return you are looking to amend. If you need help determining what documents you will need contact us, we are here to help! When filing an amended tax return, you’ll need to file with a 1040X, or an Amended U.S. Individual Income Tax Return form. If you’ve used a software to fill out your initial taxes, most of the time you won’t have to fill in any original information just an explanation of the mistake you’ve made. 

Remember to add any documents you have used in preparing your amended tax return. For example, if you forgot a W2 on the original tax return, be sure to make a copy of the W2 and include it when you mail your amended tax return. No matter if you’ve used software, or our services, we can help you file your amended tax return quickly and correctly.

When you are ready to submit your amended tax return, gather all supporting documentation and attach them with your amended tax return before placing it in the mail. Be sure that you only include copies of your supporting documentation - do not include originals! We also recommend making a second copy of your amended return to keep for your records prior to mailing it to the IRS. 

When am I able to check on it? 
It can take up to three weeks before you are able to check the status of your amended return on the IRS website. Once your amended return is listed, it can take an additional 16 weeks to fully process and receive a resolution. Stay patient, and don’t worry! You’ve taken the correct step in remedying your mistakes. 

If you are filing an amended tax return from a different tax season, chances are you will be in it for the long haul. Traditionally, the older the amendment the longer it will take to process and you could be looking at waiting the full 16 weeks to receive a resolution.

If you are unsure if you have to file an amended tax return, please contact our Advanced Tax Solutions team today. We are here to help you determine if you need to file an amended tax return, and to help you successfully navigate the amended tax return process. If you have any additional questions or requests, even unrelated to the amended tax return process we are always here to help. 
 

How long does an offer in compromise take?

By Todd Whalen - April 24, 2019

How long does it take to get an Offer in Compromise accepted?
When it comes to the IRS offer in compromise processing time, the time frame can vary. Your IRS Offer in Compromise could possibly be accepted by the IRS in as little as four weeks but will likely take from 6 to 8 months. Once the IRS determines you have met all the qualifying criteria and your request can be processed, which usually takes 3 to 6 weeks, your OIC is delivered to an IRS Offer in Compromise Examiner. The Examiner will determine what your Reasonable Collection Potential (RCP) is by analyzing the supporting documents your tax resolution service sent in and auditing your assets to determine their worth. Your proposed repayment amount will either be accepted or rejected by the Examiner. You should have an answer within 6 to 8 months if your OIC is accepted. If your OIC is rejected, you can appeal the rejection to the IRS Office of Appeals. Taking this action will likely extend the entire IRS Offer in Compromise processing time to approximately 14 to 24 months.

What is an IRS Offer in Compromise?
An IRS Offer in Compromise is a program offered by the Internal Revenue Service that allows qualified tax paying individuals with an unpaid tax debt in the U.S. to negotiate a settlement amount that is less than the total dollar amount owed to the IRS to clear the debt.

Many American taxpayers are faced with a tax debt they are not prepared for, not equipped to pay in full, and unsure what to do about it. If you find yourself in this situation, there’s no need to panic. Too many people are unaware of the IRS program that makes it easier to pay a tax debt. It’s called an IRS Offer in Compromise, and there are professional OIC tax services which are well versed in how this IRS debt repayment program works. They can handle all the necessary details for you so that you can rest easy knowing your tax debt responsibility is taken care of the right way.

How does an Offer in Compromise Work?
In short, if you lack the ability to pay your tax debt in full, you can work out a compromise to pay less than the full amount owed by applying for the IRS Offer in Compromise program. Once you have filed all required tax returns, the IRS has determined that you meet all the qualifying criteria, and you have been deemed eligible for this program, you may need to make an initial payment. The IRS will apply all payments submitted to reduce the taxes owed. Check out the IRS website’s instructional page at https://www.irs.gov/payments/offer-in-compromise for a detailed explanation of all the facets of the program.

How much will the IRS settle my debt for?
The IRS has an Offer in Compromise Pre-Qualifier tool on their IRS.gov website which offers an estimate of an acceptable offer amount. Taxpayers can go through the steps outlined to find out if they meet the basic qualifying requirements. The IRS makes a final decision on whether to accept the offer based on the submitted application.

Where can I go for help with an IRS Offer in Compromise?
There are tax resolution services that can help you with the mechanics of submitting an Offer in Compromise. These OIC tax services utilize tax attorneys, Certified Public Accountants, and other tax professionals who understand the Offer in Compromise guidelines, rules of submission, and acceptable practices. They can provide you with professional tax relief by negotiating on your behalf to reduce your tax debt with the IRS.

Where can I get reputable OIC tax services?
Advanced Tax Solutions is here to offer you the perfect solution to your tax preparation and IRS Tax Problems. If you live in the Denver area, feel free to stop by our local office and meet with one of our experienced tax professionals. Meeting with our licensed tax professionals can help you find answers and give you peace of mind. We offer every new client an initial consultation at no charge.

If you have questions about an IRS Offer in Compromise or other tax questions or issues, give us a call at (303) 753-6040 or use our convenient online contact form to get the tax help you need today from a qualified tax resolution service. We understand the fear, frustration, and financial ruin an IRS tax problem can cause.  Advanced Tax Solutions is equipped to solve your IRS problem. We have helped thousands of clients just like you; why not be our next great story?