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Danbury Tax Law Blog

Back taxes are tax debt

Numerous individuals in Connecticut and elsewhere have tax debt. It happens. Sometimes, paying the IRS is difficult when one is struggling financially. People pay what they can, but if they do not pay in full, they are said to owe back taxes. It is tax debt that the government can still try to collect.

How long can the IRS pursue back taxes? Believe it or not, the IRS can go after a person for a decade's worth of back taxes. If one does not come to terms with tax collectors, the IRS may collect by:

  • Wage garnishment
  • Intercepting tax refunds
  • Imposing fines and penalties

Estate taxes and the law change

Connecticut residents may be left wondering what the new tax law will mean for them. In truth, it may help some but not others. It may be a good thing, or it may be a burden. Everyone's individual situation is different. One area that may be helped by it, though, is estate taxes.

What does the law change? The biggest change seen is the limit increase on those estates that are now taxable. According to the old law, federal taxes had to be paid on estates valuing over $5.6 million. According to the new law, federal taxes now only apply to estates valuing over $11.2 million -- or double that for married couples.

Tax liens and credit reporting

Connecticut residents who fail to pay their taxes may face some serious consequences. Tax liens, for example, may be initiated, which means the state or federal government can take control of one's property. Tax liens will also be listed on one's credit report, which can cause a number of long-term financial issues. ?

A tax lien is not something the government can just do. It generally comes with a warning well before it happens. This gives a person the opportunity to work something out with the IRS. If an individual ignores the warnings or fails to come up with agreeable payment terms with the IRS, a tax lien will likely be filed against his or her property. The government can either hold the property until one pays taxes, or the government can sell the property in order to collect the funds owed.

4 types of business records the IRS may request during an audit

As an entrepreneur or otherwise self-employed worker, you may have had to deal with many issues that individuals employed by others may not have had to handle. Many of these aspects may relate to financial areas of your job, as you have likely had to ensure that you obtain payments and address tax considerations as necessary. Because you are on your own, you may worry about how possible mistakes could impact your business and personal state of affairs.

Keeping thorough financial records and filing your tax returns properly could help you keep your affairs in order. However, you may still find yourself the subject of an Internal Revenue Service tax audit. When you receive notice of the audit, you could feel a sense of panic. Luckily, you can prepare for the process and obtain assistance if you wish.

Is jail time ordered in all tax crimes cases?

People sometimes fail to pay their taxes. It happens. Sometimes, it is an honest mistake, and other times it is a deliberate act. Can Connecticut residents accused of tax crimes -- such as failing to pay -- expect jail time?

No two tax crimes cases are created equal. Their are individual circumstances that must be considered. As such, jail time is not expected in every case. In fact, most people can and do avoid jail, as the IRS knows incarceration will not help their ability to pay their tax debts.

New federal income tax brackets set for 2018

Many lawmakers in Washington D.C. are celebrating after passing a new tax law that will take effect in 2018. What does this new law mean for Connecticut residents? How exactly did the federal income tax brackets change?

Filing income taxes has been complicated and confusing for numerous individuals for many years. Mistakes are often made simply because of how difficult the laws have been to understand. Lawmakers pushed for tax reform to make it easier for tax-paying individuals to file quickly and error-free. This new law may not have made things easier to understand or eliminate any of the tax brackets, but it did make changes that will affect how much some individuals have to pay every year.

Working with IRS to pay off tax debt

Connecticut residents who are one or more years behind on paying their taxes may find themselves in quite the bind. With Uncle Sam calling and wanting money now, but not enough money in the bank, figuring out how to handle the situation can be challenging. Thankfully, the IRS is not totally unreasonable and may offer an affordable way for one to pay off tax debt.

Before making any sort of deal with the Internal Revenue Service, it is wise to get a confirmation of the amount owed. There may be an issue, and no one wants to be on the hook for taxes they do not really owe. After getting the number, it is then important to determine if the money is to go to the federal government or the state.

Connecticut tax crimes: filing bogus returns doesn't pay

When tax season rolls around, it can be tempting to be a little dishonest in the hopes of avoiding paying an arm and a leg in taxes. However, lying on tax returns or filing bogus returns are tax crimes. Those in Connecticut and elsewhere who are caught doing either of these things could face some serious penalties.

Recently, in another state, a judge ruled in a case involving the tax returns of a couple and their business. They are said to have under-reported their income, filed false sales tax returns and filed bogus joint returns for years. Investigators say, as a result of these actions, the couple embezzled over $170,000 in sales tax alone. They also did not report over $2 million in earnings.

Are you sure you shouldn't be paying payroll taxes?

As a business owner here in Connecticut, you may have people working for you. How you classify them determines whether you owe payroll taxes. If you improperly classify an employee as a contractor and fail to make payroll tax payments, you could end up on the IRS's radar. 

Therefore, it would be in your best interest to understand the difference between an employee and a contractor. Making that determination often rests in the 20-factor analysis created by the IRS to determine whether a worker is an employee.

Federal Tax liens Q and A

No one loves taxes. Sometimes, they are a financial burden that some simply cannot afford to pay. Failing to pay can have serious consequences, however. In a previous post, this column addressed the purpose of tax liens -- a punishment for not paying taxes. This week, this column will answer some common questions that Connecticut residents may have about federal tax liens.

Question number one: How can I rid myself of a tax lien? There are four ways to remove a lien. One may pay all tax debt in full, seek a discharge of property, apply for a certificate of subordination or apply for a lien withdrawal. An experienced tax attorney can provide detailed information about each one of these options.

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