Tax Law Blog | IRS Tax Attorneys

As April was winding down, the number of e-filers was going up.

More than 90 million tax returns were filed electronically through April 24, according to the IRS. As has been the trend over the last few years, more individuals in 2009 opted to electronically file their returns on their own.

In fact, that segment of filers hit a record this year. For the first time, says the tax agency, more than 30 million individual income tax returns were filed from home computers. That’s a 19 percent jump over last year.

As the math indicates, that means around 60 million taxpayers turned to tax pros to complete and then e-file their returns. That figure is essentially the same as last filing season.

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If you are going to prepare your tax returns yourself, be sure to use a reliable and easy-to-use software program. You can find an overview of prior year software. You should plan on spending about 2 to 3 hours per tax return you need to file.

An experienced tax professional, on the other hand, can help you deal with the IRS. The best way to find a tax pro is to ask your friends, and find a professional with significant experience in preparing back taxes. Good reasons to hire a tax pro: if you need advice on how to handle incomplete tax documentation, or an advocate who will negotiate with the IRS on your behalf.

Either way, you’ll be doing plenty of work yourself, such as tracking down missing information.

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For assessment of additional taxes, the statute of limitation runs generally three years from the date you file your return. If you’re looking for an additional refund, the limitations period is generally the later of three years from the date you filed the original return or two years from the date you paid the tax. So for your 2006 return (filed in 2007), the three-year rule expires in 2010. For the return you file in 2008, the statute of limitations expires in 2011.

There are some exceptions:

• If you don’t report all your income and the unreported amount is more than 25% of the gross income actually shown on your return, the limitations period is six years.

• If you’ve claimed a loss from a worthless security, the limitations period is extended to seven years.

• If you file a fraudulent return or don’t file at all, the limitations period never begins to run. The IRS can, in fact, get you at any time.

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For any IRS matters you need help with visit the National Tax Firm Link.

If you’re married, you can always file “Married Filing Separately.” That normally results in your paying more in taxes. But in some situations, it can be to your advantage.

For example, if one spouse has substantial medical or miscellaneous deductions, those deductions are subject to the 7.5% and 2% floors respectively. That is, only medical expenses over 7.5% of adjusted gross income and miscellaneous deductions over 2% of adjusted gross income are deductible. If I had $10,000 in income and my spouse had $90,000 in income, the first $7,500 in medical expenses and the first $2,000 in miscellaneous expenses aren’t allowed.

But if I filed as “Married Filing Separately,” the disallowance would only apply to the first $750 in medical expenses and the first $200 in miscellaneous itemized expenses. The potential availability of $8,550 ($7,500 plus $2,000, less the sum of $750 and $200) in additional deductions could offset the bracket and other limitations of filing separately.

Do it both ways, and see which gives you the lowest total tax. You can change your filing status annually.

I should add a caveat on this filing myth. If you’re married, you normally can’t file as single or head of household. But let’s say you’re married but separated, and you have a child. There’s a special rule that will let you file as a head of household.

You can qualify as an “abandoned spouse” if your spouse didn’t live with you for the last six months of the year and you have a child living with you who qualifies as your dependent. If so, you can file as head of household rather than jointly or married filing separately.

Run the numbers and see which produces the lowest tax bill.

Our tax code is complicated and changes with painful regularity. Many of the old rules are remembered and distorted into myths. Don’t get caught in the trap of using the wrong rules. That can cost you big!

If you need a Chicago Tax Lawyer visit Horowitz & Weinstein.

If you haven’t yet filed a tax return to get your stimulus payment, you still have time to do so. But you must file by Oct. 15 to get your payment this year. And if you’ve already filed to get your payment but have a question or issue, it might be addressed here.
Find the Answer

Still looking for your rebate even though you’ve already filed a tax return? Or wonder why it’s smaller than you were expecting? You may find the answer to your question in our:

Top five questions people are asking

Frequently asked questions about eligibility, payment amounts, payment delivery and more

If You’ve Already Filed a Tax Return

You may have already filed but still have outstanding issues. Find out more if you:

• Haven’t gotten your economic stimulus payment,
• Received one for a different amount than you were expecting,
• Amended your tax return,
• Changed your address, or
• Are in the military, have a spouse or children with ITINs instead of valid SSNs and received a reduced or no stimulus payment

If you still have questions, try:

Our online tool that tells you if your payment has been scheduled for delivery the upcoming week, Where’s My Stimulus Payment?

The Rebate Hotline at 1-866-234-2942

You may not have filed your federal income tax return for this year or previous years. Regardless of your reason for not filing, file your tax return as soon as possible.

If your return was not filed by the due date (including extensions), you may be subject to the failure to file penalty, unless you have reasonable cause for your failure to file. If you did not pay your tax in full by the due date for the return (not including extensions of time to file), you also may be subject to the failure to pay penalty, unless you have reasonable cause for your failure to pay. Additionally, interest is charged on taxes not paid by the due date, even if yo have an extension of time to file. Interest is also charged on penalties.

Contact Sheppard Tax for help fighting IRS penalties.

According to some estimates, about three percent of taxpayers do not file tax returns at all. In the case of U.S. Federal income taxes, civil penalties for willful failure to timely file returns and willful failure to timely pay taxes are based on the amount of tax due; thus, if no tax is owed, no penalties are due.

The civil penalty for willful failure to timely file a return is generally equal to 5.0% of the amount of tax “required to be shown on the return per month, up to a maximum of 25%.[36] By contrast, the civil penalty for willful failure to timely pay the tax actually “shown on the return” is generally equal to 0.5% of such tax due per month, up to a maximum of 25%.[37] The two penalties are computed together in a relatively complex algorithm, and computing the actual penalties due is somewhat challenging.

In cases where a taxpayer does not have enough money to pay the entire tax bill, the IRS can work out a payment plan with taxpayers.

For years for which no return has been filed, there is no statute of limitations on civil actions — that is, on how long the IRS can seek taxpayers and demand payment of taxes owed.[38]

For each year a taxpayer willfully fails to timely file an income tax return, the taxpayer can be sentenced to one year in prison.[39] In general, there is a six-year statute of limitations for with respect to Federal tax crimes.
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If you have failed to file a tax return and need tax representation contact The Sheppard Law Offices. They can help you resolve your tax problems in all 50 states.