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Renting out Your Spare Room to Cover Your Bills May NOT be the Answer!
The current housing crisis means that many homeowners are considering renting their properties as an alternative to selling, or even renting out spare rooms to help meet their mortgage payments. But homeowners desperate for additional income in these tough economic times may find themselves in trouble with the Internal Revenue Service (IRS) when it comes to renting property.
Leasing one’s home (or a portion of it) to meet mortgage obligations can lead to disaster with the Internal Revenue Service (IRS) if any money collected as rent is not reported as income.
The IRS has a series of guidelines that have to be met when it comes to paying taxes on rental income and failing to properly report them. This can lead to complications that include fines, interest, and possible garnishment of wages to collect the unpaid taxes.
Anyone who rents or leases property for more than 14 days is subject to paying taxes to the IRS. Add to the equation the fact...
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Last week, lawyers for actor Wesley Snipes were in federal court in Ocala defending him on charges of tax evasion. The lawyers have argued that Snipes did not receive a fair trial due to jurors who had made up their minds about his guilt prior to deliberating on the verdict in his 2008 tax evasion case. Snipes had originally been charged with failing pay his taxes from 1998 through 2000 on earnings of approximately $38 million. Since the trial, Snipes has been free on bond.
As a general rule, taxpayers cannot go to prison for failing to pay their taxes, unless the IRS finds that they committed tax evasion in the preparation of the income taxes. It is usually only when a taxpayer fails to file their income taxes that they can go to prison for failure to file. Don’t wait until the IRS is knocking on your door!
If you have questions about a tax related issue, please call tax attorney Mary E. King to discuss your situation at (941) 906-7585....
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Penalties and interest add up by the day if you haven’t paid the IRS what you owe them. And they add up big-time if you haven’t filed at all. Every day that you put off taking care of your IRS problem only makes it worse.
Did You File and Not Pay?
If you did, there’s interest being compounded daily on what you owe, which is the quarterly federal short-term tax rate, plus 3%. As of this writing, the IRS is charging 4% per year.
In addition to interest, you’re also being charged a Failure-to-Pay Penalty, which is .5% of the tax owed for each month. There is no maximum for the failure-to-pay penalty. If you’re sent a number of notices from the IRS and you still don’t pay, the penalty increases to 1%.
What You Should Do If You Filed and Didn’t Pay?
The most obvious answer is to pay the debt. The IRS has more power to collect in ‘mean and nasty’ ways than any collection agency you’ll ever deal with. So what if you just can’t come up with the...
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Why the IRS Deals So Harshly With Businesses That Don’t Pay Their Payroll Tax
Not paying payroll tax is something the IRS considers very serious. As an employer, you are responsible for withholding part of your employees’ wages to pay their: Income tax and FICA (Social Security & Medicare) tax.
Since the employees place their trust in you that you are taking this money out of their paycheck and are paying these taxes with their money, they are called "Trust Fund Taxes".
However, if for any reason you fail to pay this money - in the eyes of the IRS you have betrayed the “trust” of the employees and you have taken money that does not belong to you.
Therefore, the IRS can be particularly aggressive with businesses that don’t pay their payroll tax.
If you owe payroll tax, the IRS may exercise their authority to collect by using the Trust Fund Recovery Penalty (TFRP) against you. If it’s determined by the IRS that you are the responsible party for collecting the taxes, and you willfully failed to file them, you will be notified with the plan to assess the...
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Wage Garnishment Can Be Minimized
Taxpayers beware: The Internal Revenue Service (IRS) will claim any back taxes and fines they determine are due to the agency. Sarasota Florida tax attorney, Mary E. King, warns that the IRS will not hesitate to take money from a taxpayer’s paycheck if they determine that they are due money.
Wage garnishments imposed by the IRS can total up to 25 percent of a taxpayer’s earnings for each pay period. In today’s struggling economy, the loss of a quarter of a wage-earner’s salary can have a devastating impact on their budget.
Because tax fines tend to snowball, a taxpayer may end up paying more than they anticipated. The impact that those fines can have on wages garnished from their paychecks can be monumental, which is why contacting a tax attorney early is so important. Using a knowledgeable source will not only help prepare a taxpayer for the pain of wage garnishment, but can also work to make sure that the taxpayer only pays the minimum amount that he has to.
The average taxpayers...
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Here’s a Quick Quiz……What do these people have in common: Chuck Berry, Ron Isley (of the Isley Brothers), Richard Hatch (of “Survivor” fame), Heidi Fleiss, Sophia Loren, Martha Stewart. If you answered: “they’re all celebrities.” Well, that’s partially right. If you guessed: “they’re all celebrities who went to jail on tax evasion charges.” You guessed right!
Do you know when the IRS has the option of sending you to jail? One of the first things that people ask me after I hear what their IRS problems is…“Well…what do you think? Is the IRS going to send me to jail?” That’s an easy question, really. Because the answer only really has two criteria: Did you file your taxes…or did you not file your taxes?
If you've accurately filed your taxes you cannot get sent to jail. If you've accurately filed your taxes, but you just haven't paid the tax, you cannot get sent to jail. Owing the IRS money is not...
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Did you know that you have the power as an individual taxpayer to appeal almost any decision made by the IRS? In fact, you can appeal audit findings, penalties and interest, rejected offers-in-compromise, liens, seizures, garnishments and other collection actions.
When You Cannot Appeal. According to the IRS, “Appeals is not for you if:
- Your only concern is that you cannot afford to pay the amount you owe.
- The correspondence you received from the IRS was a bill and there was no mention of Appeals.” So in these two instances, an appeal would be a premature action to take.
If you are concerned that you cannot afford to pay the tax you owe, there are channels to go through before you would begin the appeal process. For instance, you could work with an attorney and make your case to the IRS that your situation qualifies for one of these tax debt payment methods:
-Non -Collectible Status
-Offer-in-Compromise
-Installment Payment Plan
-Partial Payment Installment Agreement
-Tax Bankruptcy
If an Offer-in-Compromise is the...
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Very few people look at the calendar with wide eyed anticipation of that wonderful day when they must submit all their financial paperwork for the year. As a matter of fact, staring at that particular deadline is responsible for a considerable amount of avoidable stress and unhappiness in the general population. This is probably when to hire a tax attorney if you have need of one's services.
It can be very confusing and frustrating. There are so many boxes to check and spaces to fill out that it can be overwhelming for many people. Scrabbling through shoe boxes full of receipts and invoices, digging through filing cabinets stuffed haphazardly with uncollated paperwork, and trying to keep everything organized on the desk is more than most people are willing to do, legal requirement or not.
Things can get even more delicate and confusing when the federal revenue service gets involved. The Internal Revenue Service in the United States of America is viewed with suspicion and a degree of hatred by many people who have had direct dealings with them. While this opinion may not be one hundred...
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Attorneys or lawyers are among the people who take responsibility in maintaining harmony in the community. They are the ones who take the initiative to let things sail on smoothly. They are expert in managing the court cases filed against their clients. Whatever type of criminal or civil case that the client gets involved in, it is the duty of the attorney to defend him or her.
The tax law draws clearly the government levies which are placed on every economic transaction. They are hence known as taxes. In truth, the tax law is among the sub-disciplines and areas to be concentrated on by the students in the law schools. Florida tax attorneys are certainly the people who have taken the thorough analysis of the tax law.
The tax law nonetheless covers a lot of areas. Among them are the sales tax, income tax, property tax, excise tax, inheritance tax, as well as the corporate tax. Since the tax law is very much emphasized in Florida, it is not to be doubted that the Florida tax attorneys are always in demand. It adds more to their popularity that they...
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I find that most people who don’t deal with their IRS problems until something ugly happens (like tax liens, seizure of property, bank accounts and other devastating IRS extreme measures) have one thing in common…
They’re afraid…afraid that if they approach the IRS to resolve their problem:
-That they’ll go to jail
-That they won’t have the money to pay the IRS
-That the IRS will put them on a payment plan that they can’t afford
-That the IRS will cause them to go bankrupt
This list could go on and on, but you get the point. In other words, people drum up all sorts of ideas about what will happen to them if they DO approach the IRS to fix their problems…and most of the time their fear is based on something that they’ve concocted in their head. In fact, quite the opposite is true. The IRS does do all sorts of nasty things to people who do NOT take action. That’s what all of the extreme measures are for…things like wage garnishment, bank seizures, tax liens, and other things that can completely destroy your financial life…
But these are the things that are reserved...
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