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  • Garnishment

    Legal process whereas a creditor (the IRS in this case) has obtained judgment on a debt (IRS back taxes or other debt) may obtain full or partial payment by seizure of a portion of a debtor's (taxpayer in this case) assets such as wages, bank account, etc.

  • Glossary

    Tax Related Terms and Glossary
    1040A, U.S. Individual Income Tax Return - Form 1040A, U.S. Individual Income Tax Return, simplified 1040A tax form.
     
    1099-DIV - A required statement from your broker or a company whose stock you own that summarizes your dividends.
     
    1099-INT - The statement you receive from payers of interest income that summarizes your interest income for the year.
     
    401(k) plan - A portion of your earnings is deducted and placed in a qualified retirement plan.
     
    A Close Look At Federal Taxes - This article on federal taxes will cover basics about federal taxes from history of taxation in the United States, the institution in charge of the taxation process to the methods presently used to calculate the taxes to be paid by individuals and institutions across America.
     
    A View at Federal Income Tax - This article on federal income tax looks at the definition of the term, the rates that are applied to federal income tax, the situations which call for tax deductions, the people who are expected to pay the taxes and the two methods that are applied calculation of taxes.
     
    Accessing State Tax Forms - State tax forms can be obtained every year at the beginning of every April through online advertisements. Information of how to fill these forms is also available through the same channel. They come in a PDF format and can be used by self employed individuals as well as owners of LCC.
     
    Basics of U.S Tax System Explained - Till the period of World War II, the income taxes were paid as an approximate amount at the end of every year. At present, the people of America are paying about forty percent of their income as tax, which was only about six percent few years back.
     
    Business Payroll Taxes - Your If you have any employees, by IRS you are required to withhold payroll taxes from their paychecks.
     
    Casualty - A casualty occurs when property is damaged as a result of a disaster such as a hurricane, fire, car accident or similar event.
     
    Claiming your Tax Refund - The following article seeks to give familiarity to the processes and regularities that are concerned with tax refunds. Matters relating to tax are always complex for the general mass to understand; therefore, such an imminent piece is very helpful.
     
    Earnings Withholding Order - An Earnings Withholding Order is a continuing levy on a percentage of an individual's earnings.
     
    Economic Development Areas EDAs - These areas are: Enterprise Zones (EZs), Local Agency Military Base Recovery Areas (LAMBRAs) Targeted Tax Areas (TTAs).
     
    Evolution of Taxes in U.S - The taxation system of U.S has been subject to various changes in the past that were a response to the taxation scenario present in the country and all over the world.
     
    Filing your Home Taxes - Filing your home taxes is a very vital domestic exercise that everyone who wants to lead an organized and well structured financial endeavor should consider.
     
    Financial Hardship - If you cannot pay the full amount due with your income tax return, you can ask to make monthly installment payments.
     
    Form 1040, U.S. Individual Income Tax Return - Form 1040, U.S. Individual Income Tax Return. If any federal income tax withheld is shown on these forms, include the tax withheld on Form 1040, line 62.
     
    Form 1040EZ, U.S. Individual Income Tax Return - Form 1040EZ, U.S. Individual Income Tax Return
     
    How Can One Get a Mortgage? - Since the mortgage rates have fallen down suddenly early this year, the swiftness of finance applications has definitely shown indications of intensification.
     
    How Does An Income Tax Form Look Like? - This article is to give information how individuals who are liable to pay taxes can make discloses of their earnings for purposes of reconciling of taxes against any exemptions, by the Internal Revenue Service.
     
    How Tax Deductions Are Made - It is certain that you need to understand how a fraction of the amount you were contracted for if you earn a direct income, or profits from your business goes to the authorities in the form of taxes, and this article tries to bring out how these deductions are done.
     
    How To Do Your Taxes - Find out how to do your taxes and if you are using an online service find out what to look for.
     
    Importance Of Filling 1040ez - This article is about 1040ez which enables the taxpayer file in the returns at the end of the month. The 1040EZ is a simplified form used by the IRS for income taxpayers that do not require the complexity of the full 1040 tax form.
     
    Installment agreement - If you cannot pay your taxes in full, you may request to make monthly installment payments.
     
    Obama extends tax relief to working families - Tax Relief President Obama announced a five-fold, tax-cut plan and vowed to simplify the monstrous tax code that baffles most Americans.
     
    Property tax lien - Property tax is based upon your property’s assessed value and your property taxes is the current tax rate.
     
    Regressive tax - A tax that tends to take a larger percentage of the incomes of lower income citizens than it takes from the incomes of higher income citizens.
     
    Tax Relief: Tax Deduction and eligibility for deductible taxable income - Tax deduction represents expenses incurred by the tax payer and is sometimes referred to as tax deductible expenses.
     
    Tax shelters still exist and can save you money - Tax shelters have been described by the unsophisticated as gimmicks or loopholes.
     
    Temporary Absence - - Even if you qualifying person was temporarily absent from your home, you are considered to have occupied the same household.
     
    Wash sales - Simultaneous or near-simultaneous purchases and sales of the same property.
     
    What Tax Relief Is - A definition and an illustration of what Tax Relief is. It gives several examples of tax relief laws allowed by the IRS, tax rates and the purposes of these tax reliefs.
     
    Who is an innocent spouse and how can I get relief of tax? - Generally, when a joint tax return is filed, each spouse is equally liable for all the tax, penalties, and interest for the particular joint tax year.
     
    Audit
    An investigation conducted by the IRS to discover whether an individual has filed his tax return correctly. An audit can either be conducted through a face to face meeting or a letter asking for further information. The IRS audits returns that look suspicious, including tax returns that claim a high number of deductions, unreported income or home office deductions.
     
    Back Taxes
    Taxes not completely paid when they are due. Back taxes can be assessed by federal, state or local taxing agencies. A taxpayer can be assessed back taxes by not paying taxes when they are due, failing to report all income on a return, taking too many deductions or failing to return a tax return all together. Back taxes are subject to fines and fees.
     
    Bank Levy
    The IRS can issue a levy against a taxpayer’s bank account if the taxpayer refuses to pay back taxes. The bank levy will collect all of the funds in the taxpayer’s bank account, up to the amount owed, and send it to the IRS. Before the IRS can issue a bank levy, they must send out a Final Notice of Levy. They can then issue a levy within 30 days after sending out the final notice. When a levy is issued, the taxpayer’s bank must freeze all of his accounts for 21 days. On the 21st day, the bank must send all frozen assets to the IRS.
     
    Bankruptcy
    An individual declaring bankruptcy is protected from creditors seeking his assets. However, the IRS can generally get past any protection that bankruptcy offers. Therefore, a person can file for bankruptcy and still owe the IRS money.
     
    Collection Information Statement
    A statement that tells the IRS what a person’s income, assets and expenses are. The IRS uses the information collected from the statement to determine how much of a person’s tax debt to collect.
     
    Currently Non-Collectible Status
    This status protects taxpayers who are not financially able to pay their taxes. If the IRS accepts a taxpayer’s request to enter currently non-collectible status, they will keep him in this status until his finances improve. When a taxpayer’s account is in currently non-collectible status, the ten-year statute of limitations that the IRS has to collect taxes continues to run. Unless the taxpayer is removed from currently non-collectible status, the statute of limitations will eventually expire, and he will not owe the IRS back taxes.
     
    Dissipated Asset
    Money used for paying something other than tax debt. If an individual owes back taxes and is asking for debt relief, the IRS will look for dissipated assets. The IRS may say that the dissipated assets should have been used to pay down tax debt and refuse to settle for less than the amount of the dissipated asset or refuse to negotiate all together.
     
    Form 1040
    The form used for individuals to file a tax return. Two simplified versions of this form, 1040EZ and 1040A, exist for individuals with relatively easy tax returns. The 1040 form has six sections that taxpayers commonly use:
    Schedule A – Describe itemized tax deductions. Individuals taking the standard deduction do not need to use Schedule A.
    Schedule C – Describes tax deductions from self employment. Self-employed individuals may write off many business expenses as long as they can prove that those expenses were used for their business.
    Schedule D – Describes capital gains and losses. A physical asset sold for a profit is a capital gain, and an asset sold for a loss is a capital loss.
    Schedule E – Describes income or loss from an estate, trust, royalty, real estate rental, S-Corporation or partnership.
    Schedule F – Describes tax deductions from farming income and expenses. This form is very similar to Schedule C.
    Schedule SE – Describes the amount of taxes a self-employed individual must pay based on his income. Generally, income tax from self-employed individuals is due quarterly.
     
    Income Statement
    A financial statement used by self-employed individuals to show their business’s profitability. The statement reports net income by calculating the revenue generated minus the expenses incurred.
     
    Innocent Spouse Relief
    The IRS offers innocent spouse relief to spouses who have a clean tax record, but get married to individuals who owe the IRS money. The relief means that the IRS will only assess fines and collect the assets of the individual owing back taxes. As long as the spouse does not file jointly, he or she should be eligible for innocent spouse relief.
     
    Levy
    An action that gives the IRS authority to seize a taxpayer’s property if that taxpayer does not pay back taxes. The IRS can issue a levy against a taxpayer’s property, home or even bank account. A levy is usually used as a last resort by the IRS, therefore individuals should have plenty of warning and opportunities to settle tax debt before a levy is issued.
     
    Lien
    A public record attached to a taxpayer’s property saying that he owes the IRS money. A lien tells creditors that the IRS has a claim on that taxpayer’s property, including the property that he buys after the lien is filed. A lien significantly hurts a person’s credit score.
     
    Offer in Compromise
    An offer in compromise is an agreement to settle debt between the IRS and a taxpayer who has no way of paying his back taxes. If the IRS accepts the offer in compromise, the taxpayer will be relieved of any tax debt he owes. The IRS will accept an offer in compromise if there is doubt a taxpayer’s tax is correct or if there is doubt he can pay what is owed. Occasionally, an offer in compromise will be accepted if a taxpayer proves the tax would be unfair or create an economic hardship. The taxpayer must file and pay tax returns for the next five years after his offer is accepted, or he will again be responsible for all taxes and fines.
     
    Penalty Abatement
    The IRS can issue a tax penalty abatement, removing all tax penalties, if an individual can show that he had reasonable cause for not paying his taxes on time. To qualify for a tax penalty abatement, an individual must show the IRS that he has showed due diligence in trying to repay the debt. A person could qualify for tax abatement if he or a close family member has recently experienced a serious health problem, theft, bad accounting advice or a natural disaster.
     
    Proposed Tax Change Notice
    A notice sent to a taxpayer by the IRS showing proposed changes to the taxpayer’s income tax return. The IRS will send a proposal if the numbers on an individual’s tax return are different than the numbers provided to them by that individual’s employers and banks. The notice is not a bill, it is simply a statement that allows the taxpayer to disagree, partially agree or agree with the proposed changes.
     
    Retired Debt
    Debt that is completely paid off. However, if the IRS is evaluating an individual’s ability to pay back debt when considering a debt relief compromise, they may consider debt that will soon be paid off as retired debt. It is important to consider debt that the IRS may consider “retired” when filing for an offer in compromise.
     
    Statute of Limitations on Taxes
    Under normal conditions, the IRS has 10 years to collect after a tax has been assessed. This statute of limitations can be suspended, however, if a person files for bankruptcy or an offer in compromise. The statute of limitations is not suspended if a taxpayer is in currently non-collectible status.
     
    Substitute for Returns
    All individuals are required to calculate their own taxes and file a tax return every year. However, the IRS will file a substitute return for an individual if he fails to file one. Before filing the substitute, the IRS will request one more time that the taxpayer files the late return on his own. Substitute returns are subject to fines and fees. They are usually not filed unless a tax return is late by at least two or three years.
     
    Tax Refund
    If an individual completes his tax return and finds out that he paid more in taxes through the year than was required, he is eligible for a tax return. If that individual owes back taxes from previous years, the taxing agency might keep the tax refund to help pay that tax debt.
     
    Trust Fund Recovery Penalty
    If a business does not pay the IRS enough payroll taxes, certain individuals in that business could be held responsible to pay back that money. Owners, officers and payroll employees could be charged a trust fund recovery penalty, meaning that the IRS could go after that person’s property or bank account.
     
    Wage Garnishment
    A levy that the IRS can issue against a taxpayer’s wages. When the IRS garnishes an individual’s wages, that person’s employer must pay a certain percentage of those wages directly to the IRS. The wage garnishment can be released only if the taxpayer completely pays off the debt, agrees to a payment plan or shows that the garnishment is causing an economic hardship. Wage garnishments usually collect a high percentage of an individual’s wages – sometimes 80 percent or more.
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