Tax Relief with Timalyn Bowens

Episode 58: In this episode, Timalyn explains how much time you have to pay your tax bill and how much time the IRS legally has to collect.  Your tax balance is due on the due date of the return. However, when the IRS sends you a CP14, this Notice and Demand for Payment will give you 30 days to pay before the IRS uses any enforcement. This includes things like an IRS Lien or Levy.  If you can pay the debt off within 180 days you may qualify for a short-term installment agreement. This agreement can be arranged using your online IRS.gov account to set up an online payment agreement (OPA). If the amount is over $50,000 you will have to call the IRS to set up this arrangement.  Don't just assume you have 180 days.  A payment arrangement is a privilege, not a right. Communication is key when dealing with the IRS.  If the debt is $10,000 or less and you've been compliant the past 3 years you may be eligible for a Guaranteed Installment Agreement. Timalyn offers 1-1 consultations to help set this up at www.Bowenstaxsolutions.com . Timalyn also have an e-book you can purchase to walk you through the process, Guaranteed Payment Plan: How to Guarantee A Payment Plan with the IRS. Timalyn also goes into more detail about IRS Installment Agreements in Episode 10 of the Tax Relief with Timalyn Bowens podcast. Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  The IRS legally has 10 years from the time your taxes were assessed to collect on the debt. If you can't afford to pay the debt off within 72 months you may be able to get the payments lower. But this means that you will have to pay on the debt until the last day the IRS can collect. This is known as the collection statute expiration date (CSED). Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it. After all, back taxes shouldn't ruin their life either. As we conclude Episode 56, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/. If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/co....   Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 57:  In this episode, Timalyn explains the reason you likely owe taxes this year. She highlights 5 common reasons that people owe each year. It is ultimately the responsibility of the taxpayer to ensure that they are withholding enough taxes. The top 2 reasons that people owe the IRS is because their withholding and/or estimated tax payments are off.  Timalyn has created a series on her YouTube channel to walk you through the process of correcting your withholding for a W-2 job, pension, or your social security. You can find this series below. Withholding Series If you are self-employed or make investment income you may need to make estimated tax payments. Timalyn discusses this in Episode 21 of this podcast. You can check it out here - Estimated Tax Payments.  In addition to those estimated tax payments, if you are self-employed, you are looking at a new tax, the self-employment tax. This is your share of Social Security and Medicare Tax. It's 15.3% of your net profit. Which is double what you'd pay if you were a wage earner. Timalyn explains this in more detail in Episode 8 - What is Self-Employment Tax? You may qualify to pay your balance over time. If you owe less than $50,000 and have been tax compliant, you may qualify to set up an OPA yourself using the IRS website. An OPA is an online payment arrangement.  The final 2 reasons that Timalyn discusses for you potentially owing are that you went through life changes that affected the deductions/credits you qualify for and you are in a higher tax bracket.  Both situations call for an adjustment to be made in your withholding or estimated tax payments. If you can't pay the current balance in full you may be eligible to request for an Installment Agreement with your tax return by using Form 9465, Request for Installment Agreement. Timalyn has a video on her YouTube channel that can walk you through the process. You can find it here: IRS Installment Agreement Timalyn also goes into more detail about IRS Installment Agreements in Episode 10 of the Tax Relief with Timalyn Bowens podcast.  Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 56, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/. If you have any feedback or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 56:  In this episode, Timalyn explains that all hope is not lost if you can't pay your taxes in full. You do have options! First, take a deep breath! Make sure that you have your tax return filed on time. This will help you avoid any additional penalties, such as the failure to file penalty.  Payment Arrangments You may qualify to pay your balance over time. If you owe less than $50,000 and have been tax compliant you may qualify to set up an OPA yourself using the IRS website. An OPA is an online payment arrangement.  If the balance is $10,000 or less and you haven't owed in the past 3 years or defaulted on an IRS payment arrangement you may qualify for a Guaranteed Payment Plan. Timalyn offers 1-1 consultations to help set this up at www.Bowenstaxsolutions.com . Timalyn also have an e-book you can purchase to walk you through the process, Guaranteed Payment Plan: How to Guarantee A Payment Plan with the IRS.  You may also make a request for an Installment Agreement with your tax return by using Form 9465, Request for Installment Agreement. Timalyn has a video on her YouTube channel that can walk you through the process. You can find it here: IRS Installment Agreement Timalyn also goes into more detail about IRS Installment Agreements in Episode 10 of the Tax Relief with Timalyn Bowens podcast.    Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 56, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/. If you have any feedback or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 55:  In this episode, Timalyn explains what the failure to file penalty is and why it is adding so much to your tax bill. She will not only talk about what it is but how it's calculated, and how to potentially get it removed. Can't File Your Taxes On Time? You can avoid the failure-to-file penalty by filing a timely tax return or tax extension. If you're an individual needing to file an extension you can do so by filing Form 4868. Timalyn will have a video to walk you through filing the 2024 4868 on her YouTube channel, coming out on March 31st.   The Failure to File Penalty This is the penalty that the IRS assess to taxpayers when they file their tax return late. For individuals and corporations, it can be up to 25% of the balance owed.  For Partnership and S-Corp returns the penalty is $245 for each partner/shareholder for each month, up to 12 months. This penalty can easily cripple small business who just doesn't understand their filing obligations.  Getting the penalty removed Timalyn has covered penalty abatement in previous episodes of this podcast. There is first time penalty abatement and there is also reasonable cause abatement. This is a service that Timalyn offers in her firm. But it's best to get the information to understand if it's something you'd qualify for. You can check out the previous episodes by using the links below: IRS Penalties - First Time Penalty Abatement IRS Penalties - Removing them for Reasonable Cause Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 55, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

In Episode 54 Timalyn discusses unemployment tax and how it affects a taxpayer's tax liability.  Some forms of unemployment are not taxable such as workers compensation.  The topics covered in this episode are:   What is unemployment? Is unemployment taxable? What's workers compensation? How is unemployment reported? What is Form 1099-G?   If you'd like to work with Timalyn directly, you can book a call with her at www.Bowenstaxsolutions.com .  As we conclude Episode 54, we'd like to encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode. For more information about tax relief options, visit: https:/www.Bowenstaxsolutions.com If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/co... Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

In this episode, Timalyn discusses severance pay and the tax implications of receiving a severance package. She breaks it into 3 sections:    What is severance pay? Is severance pay taxable? Why is my severance pay taxed at a higher rate? How to lower the taxes on your severance pay. If you are already facing a tax debt that you can't pay in full Timayn mentions episode 18 - How to Temporarily Delay IRS Collections as a resource for you to use to stop the IRS from using enforcement such as tax levies to collect from you.  If you'd like to work with Timalyn directly you can book a call with her at www.Bowenstaxsolutions.com . As we conclude Episode 51, we'd like to encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit: https:/www.Bowenstaxsolutions.com If you have any feed back, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/co... Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

In this episode, Timalyn walks the listener through a checklist of tax "to-dos" couples should complete before saying "I do."  This list includes updating the taxpayer's address for communication with the IRS and adjusting their withholding. Below are resources to help you with both. Form 8822, IRS Change of Address Form Update Form W-4 One of the most difficult conversations for taxpayers to have with their future spouses is about finances. Timalyn discusses how a spouse's previous debts can affect the taxpayers filing together. A spouse can protect their share of a tax refund is by claiming injured spouse relief. This was previously discussed in Episode 15, Injured Spouse Relief.  As we conclude Episode 52, we'd like to encourage you to connect with Timalyn on social media.  You'll be able to subscribe to this podcast on Apple Podcasts, Spotify, and your favorite podcast platform. Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode. For more information about tax relief options, visit: https:/www.Bowenstaxsolutions.com If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/co...   Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Timalyn comes back after a 10 month break from the podcast microphone with the 2025 tax calendar for US taxpayers.  Listeners can find the tax calendar dates that Timalyn refers to in IRS Publication 509.  Timalyn also announced that she is now accepting new tax preparation clients for the first time since 2020. If you are interested in having Bowens Tax Solutions prepare your 2024 taxes you can book an initial consultation at www.Bowenstaxsolutions.com As we conclude Episode 51, we'd like to encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA andshe's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode. For more information about tax relief options, visit: https:/www.Bowenstaxsolutions.com If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/contact Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.      

Episode 50:  In this episode, Timalyn explains your rights as a taxpayer.  How do those rights balance with what the IRS' mission is?  You may have an opinion on how the IRS is doing, but either way, it's a part of the government that definitely impacts your life. Taking a Quick Moment to Celebrate Before she begins, Timalyn is excited about having recorded 50 podcast episodes!  It's been a way for her to fill the tax literacy gap, one taxpayer at a time.  It's her hope that these easy to follow episodes breakdown complex tax issues into understandable topics.  Did you know that 95% of podcasts fail?  There are 2.8 million podcasts and less that 500,000 are considered active.  Only 11% of podcasts make it to 50 episodes.  So, now you can understand why she's so excited.  Thank you for following her podcast over the past 2 years.  The Mission of the IRS The IRS is focused on providing America's taxpayers with top-quality service.  They want to help taxpayers to understand and meet their responsibilities.  Finally, the IRS wants to enforce the law with fairness and integrity. Timalyn admits, things could be much worse.  She wants to make sure you understand your rights when dealing with the IRS.  That's correct, you have rights as a taxpayer. According to the Taxpayer Bill of Rights, you have the right to representation.  Timalyn has described the specific tax professionals who are qualified to handle tax debt issues with the IRS.  These 3 groups are enrolled agents, CPAs and tax attorneys.    There are 9 other important rights and they can be found in IRS Publication 1.  It explains the rights, but also the processes for examination, appeals, collections and refunds.  Today, we'll focus on the Taxpayer Bill of Rights.  Let's go through them, below. #1:  The Right to Informed.  You have the right to know what you need to do to be in compliance with the IRS.  “Taxanese” is a complicated language and it can sometimes difficult to follow or understand.  The IRS issues publications to help you.  IRS.gov is a free resource that explains compliance matters. Nevertheless, you may need to consider hiring a tax professional to assist you.  #2:  The Right to Quality Service.  Yes, that's part of the IRS' mission.   While the slow responses and backlog (especially since the pandemic) may not seem like they're on the way to achieving their mission, Timalyn actually credits the IRS with doing a good job investing in new technology to serve you better.  You have a right to prompt, courteous and professional response from the IRS.  While the publications are written to be easily understandable, the reality is that tax issue are complicated.  You might want to check out the Tax Tips with Timalyn blog.  It's a good resource. #3:  The Right to Pay No More than the Correct Tax.  This means you have the right to only pay the amount due, including any interest and penalties.  It's why the IRS posts the quarterly interest rates.  You might want to listen to Timalyn's Episode 7 on tax transcripts.  #4:  The Right to Challenge the IRS' Position and to Be Heard.  You have every right to be heard by the IRS.  Believe it or not, the IRS actually does want to hear from you.  You have the right to have your claims about what you owe examined.  This is why you'll need to substantiate your claim with documents and other proof.  You have the burden of proof in this situation. #5:  The Right to Appeal and IRS Decision in an Independent Forum.  In Episode 26, Timalyn explains that your appeal is actually handled by another department, not the IRS Collection Department.  You can appeal all the way to tax court, but you must do it in a timely manner. #6:  The Right to Finality.  This means you have the right to know your deadlines for challenging the IRS' position.  The IRS will let you know how long you have to appeal. If you are going to exercise this right, you must do it within a specified period of time.  Finality also refers to the right to know when an audit has been finished or where they are in the process.  #7:  The Right to Privacy.  You have the right to expect that the IRS will keep your information private and to stay within reasonable/necessary limits.  The information privacy means the IRS can't publicize how much you owe for separate years.  They are permitted to communicate with your bank, if they are going to levy your account.  They can communicate with your employer if they need to apply a garnishment until you've paid off your tax debt. #8:  The Right to Confidentiality.  The information you provide the IRS cannot be disclosed to other parties, unless they've been authorized by you or the law.  For instance, if you hired Timalyn, you'd complete IRS Form 2848, designating her as your tax power of attorney.  Once this form is submitted, the IRS would be authorized to communicate with her regarding your tax situation.  She is also bound by confidentiality, so Timalyn can't speak to others about your taxes.  If you file as married filing separately, the IRS cannot even speak to your spouse about your taxes.  If you file married filing jointly, then they can communicate with either spouse.  #9:  The Right to Representation.  This means you have the right to seek assistance from the Low Income Taxpayer Clinic, if you qualify.  Timalyn offers multiple, free resources to help you, but she does charge for representation.  If you can't afford the fee, you could always check with the Low Income Taxpayer Clinic to see if they can work with you.  Also, check out the Taxpayer Advocate Services website. #10:  The Right to a Fair and Just Tax System.  This is the right Timalyn protects the most.  Do you feel as if you've been taken advantage of by the IRS?  The system will consider specific facts and circumstances that might impact the amount you owe, your ability to pay or your ability to provide timely information.  In Episode 37, Timalyn describes the Tax Relief Journey.  The person you hire to represent you is going to tell your side of the story.  They should also be ready to work hard to ensure the IRS treats your fairly.  Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 50, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 49:  In this episode, Timalyn continues the discussion began in Episode 48.  Today, she's explaining how to qualify for an offer in compromise.  She'll also provide information regarding how to apply for it. NOTE:  Click here to listen to Episode 48. What Is the IRS Considering when You Apply for an Offer in Compromise? Remember, the offer in compromise allows you to settle your tax debt for less than you actually owe.  The IRS doesn't approve this option for every tax payer who applies.  The IRS provides a pre-qualifier tool to see help you see if you qualify.  The IRS is considering 4 factors: Your Ability to Pay Your Income Your Expenses Your Assets When it comes to your ability to pay the IRS also considers your age. Your medical condition and medical history also comes into play.  Do you have a disease or condition that might prevent you from working? This, along with your level of education all impact what the IRS considers to be your ability to pay. The IRS will analyze your earned and passive income.  Earned income is produced as a result of an action or activity you perform or something you did to in the past. Passive income considers  investment income, dividend income, and interest income. Your expenses can be subjective.  What you consider a necessary expense may not be allowed by the IRS. If this is the case  you may have to increase your initial offer.  Remember, the IRS provides national standards that are used to determine an individual's ability to pay.  In Episodes 38 and 39, Timalyn discussed using IRS Form 433-F.  This form helps to calculate your disposable income, for an installment agreement.  You'll can use IRS Form 433-A (OIC) for the offer in compromise.  Are You Eligible for an Offer in Compromise? Before you pursue this route, you need to have all of your required tax year returns filed.  Timalyn comments that this commonly refers to the last 6 years of returns.  Employers must also have all of your IRS Form 941s filed.  These are the Employer's Quarterly Federal Tax Return forms.  The same goes for your 940 FUTA (Employer's Annual Federal Unemployment Tax Return).  You also need to be up-to-date on your required estimated payments (listen to Episode 21). Additionally, you can't be in an open bankruptcy proceeding.  If you're applying for an offer in compromise for the current year, you need to have filed a tax extension, if it's tax season.  Timalyn stresses that you need to make sure you have all of the above completed and filed before you even begin the offer in compromise process. Substantiation of Your Expenses Along with the 433-A (OIC), you must provide all of the information necessary to substantiate your expenses.  This includes, mortgage information showing your required monthly payment amount and where you are on those payments.  If you are leasing (renting), you'll need to supply a copy of the lease and proof of payments.  Form 656-B This is the booklet you'll use in applying for your offer in compromise.  It includes important information about additional documents, including IRS Form 656 and the non-refundable $205 application fee.  Make sure you are using the most current version of these forms. You'll also need to include the initial payment for each Form 656 you are submitting.  It's important that you have a separate check or money order for each one.  The application fee is also a separate check.  Designate Your Payments The application fee and the initial payment(s) will be applied to your tax debt.  Timalyn recommends designating payments to a specific tax year and tax debt.  It's going to take several months (maybe 6-9), to find out if the IRS has accepted your offer in compromise.  If they reject it, you won't receive the money back, so at least you'll know where it's going.    The IRS Can Still File a Lien Against You It's possible for the IRS to file a tax lien while they're reviewing your offer.  In Episode 3, Timalyn explained what this is and how it might impact you.  The IRS will suspend other tax debt collection efforts (including garnishing your wages, levying your bank account, etc.).  What If the IRS Rejects Your Offer in Compromise? If this happens, your assessment and collection period will be extended.  If you were hoping your CSED (Collection Statute Expiration Date) would lapse, that's not going to happen.  They'll add the time it took to process the offer.  Make all required payments detailed in your offer during the time the IRS is processing (i.e. evaluating) your offer.  One option is the lump sum cash payment.  This is 20% of whatever amount you were offering.  The remaining balance due must be paid in 5 or fewer payments.  Again, be sure to make those payments while you're waiting for a written response from the IRS. The other payment option is to make periodic payments.  Basically, continue to pay the same amount as you sent for your initial payment, each following month.  If they accept your offer, simply continue paying your monthly installments until the tax debt is fully repaid.  You only have 24 months to pay the debt in full, using this option.  Those 24 months have to be before the CSED lapses. A failure to make the required payments nullifies your offer, even if the IRS was going to accept it.    Timalyn points out that during this process, you don't have to make payments on an existing installment agreement.  The 2-Year Automatic Acceptance Your offer is automatically accepted if the IRS doesn't make its decision in a period of 2 years, from the date they receive your offer and supporting documentation.  Timalyn strongly recommends you mail correspondence to the IRS using certified mail.  The post office will return a receipt with a specific date the IRS received the offer.  This is the date you use in determining your 2-year window.    Remember, before you go down this road, it's important that you determine if you even qualify for an offer in compromise.  Again, refer to the beginning of this episode during which specific forms were explained. You should really consider working with an experienced tax professional who handles tax relief cases.  An offer in compromise is extremely complicated and isn't something most people should do on their own.    In addition to all of the filings, if the IRS actually accepts your offer, you MUST meet all of the offer terms listed in IRS Form 656, Section 7.  The IRS won't release any existing tax liens, until your offer terms are satisfied.  Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either.  As we conclude Episode 49, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.  For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 48:  In this episode, Timalyn explains an option some people have in resolving their tax debt.  This option is referred to as an offer in compromise.  Understand that not every tax payer qualifies for this, but you hear commercials about it all the time. Note:  This is a complex topic and deserves more than a quick, 15-minute episode to fully explain it.  The plan is to cover this topic in 2 separate episodes.  The next episode will explain how you qualify for an offer in compromise, while this episode explains what an offer in compromise is. While not every taxpayer will qualify for the offer in compromise, the vast majority (90%+) would actually qualify for an installment agreement (Episode 10).  This may be the better option for many people.  An important reason Timalyn is covering this topic is so that you can understand “WHY” you may or may not meet the criteria for an offer in compromise option.  Regardless of what you may have seen on the Internet, filing on your own is not something you should do, if you're in serious tax debt.  When you hire someone for tax representation, that person takes on the responsibility of speaking on your behalf before the IRS.  Offer in Compromise – Doubt as to Collectability This is an agreement that settles your debt for less than the amount owed.  Again, this is the hook used by many of the commercials you may have heard.  The partial pay installment agreement would do the same thing without exposing your assets to a potential liquidation requirement.    The IRS will not accept your offer if there's a chance the liability can be paid in full, in a lump sum or in an installment agreement.  The streamlined installment agreement typically has a 72-month pay-off term.  If you've already been working to get yourself in a better situation to be able to pay your taxes, and you owe $10,000 or less, you may have the option of a guaranteed payment plan.  Even though you might think you can't repay your debt via an installment program, remember, the IRS has some additional discretion, because they are limited by the CSED (the Collection Statute Expiration Date).  However, if they determine you would be able to pay off your tax debt before the CSED, they would reject an offer in compromise.  Owe $100,000 or more in Tax Debt? Getting an offer in compromise approved will require an additional level of authorization.  This would be granted by the IRS District Counsel.  Some people refer to the Offer in Compromise as the fresh start initiative. The program began in 2011.  It changed the computation for a taxpayer's future income.  It also extended the amount that can be repaid for student loans, as an allowable expense.  Episode 38 goes into more detail as Timalyn discusses IRS Form 433-F.  Offer in Compromise – Doubt as to Liability You would submit this when there's a genuine dispute as to the existence of a tax debt, or the amount of the tax debt.  It's used when there's a likely error by the IRS in assessing the tax debt.  The offer must be greater than $0 and based on the amount you believe is the correct amount of tax liability (not what the IRS is claiming you owe).  The Doubt as to Liability option will require you to submit IRS Form 656-L.  The Doubt as to Liability option is typically used after an audit was performed and tax was assessed.  However, you had incomplete documentation at the time.  Now, the supporting documentation you've found shows you really don't owe the amount indicated by the IRS.    Offer in Compromise – Effective Tax Administration This is when the amount owed is not in dispute.  There are assets that could be liquidated to pay the debt, but exceptional circumstances exist that would result in an undue economic hardship, if full payment of the debt would be required.  The same would exist if paying the full tax debt would be unfair or unequitable. Timalyn provides an example of an elderly individual living on a fixed income.  Even if this person owned his/her home, selling the home to pay the taxes would make it very difficult from a financial standpoint, assuming the person were to live another 10 years, or more.  Social security retirement benefits are really not enough to live off of, given today's inflationary environment.  The cost of living is relatively expensive, so adding a rent payment would make it nearly impossible.  In the above example, this individual might be an ideal candidate for the offer in compromise – effective tax administration option.  Need Tax Help Now? If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website.  Click this link to book a call. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 48, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 47:  In this episode, Timalyn discusses three top issues arise involving your taxes after a divorce. Divorce happens and Timalyn has worked with many clients who are caught in this situation.  While she'll focus on 3 important issues, that doesn't mean those are the only issues related to divorce and taxes.  Today, she'll address filing status, claiming dependents moving forward, and dealing with a joint tax liability after the divorce.  With that being said, let's listen to Timalyn. Note to Tax Professionals:  Timalyn is going to be teaching a class on Divorce and Taxes via the myCPE platform.  She's previously provided a class to subscribers of Think Outside the Tax Box.  Those classes take a deeper dive into topics such as property settlements and transfers, Qualified Domestic Relation Orders (QUADROs), etc. Determining Your Optimal Filing Status Timalyn begins by discussing whether the divorce was amicable or not.  If the divorce was not finalized by the end of the tax year, then technically and legally, the couple can still file as married filing jointly.  If there's a tax liability, you want to consider not filing jointly because that will be just one more thing tying you together.  Another option is to use the status, married filing separately.  This could make sense if you and your soon to be ex-spouse aren't getting along, but a refund is expected.  You wouldn't have to worry about splitting the refund.  If there's a liability, because you filed separately, you wouldn't have to worry about the other person's tax liability.  If you were to choose married filing separately, you'll be in the same tax brackets as if you were filing as a single.  Therefore, more of your income is going to be taxed at a higher rate.    Here are some quick examples: ●      Married Filing Jointly – the standard deduction is ~ $27,000 for 2023 returns. ●      Married Filing Separately (e.g. Single) – the standard deduction is ~ $13,000. Therefore, the person filing separately or as a single, will remain in the 10% and 12% tax brackets for a shorter period of time compared to someone who is filing using the status married filing jointly.  This couple wouldn't jump to the 22% tax bracket until the reach almost $110,000 in gross income.  However, a person using married filing separately, or as a single, they'll jump to the 22% tax bracket when they get to ~ $55,000 in gross income.  The thing to remember is that if you had your W-4 withholdings set as married filing jointly, assuming  you made $50k and your spouse made $60k, your withholdings are only going to cover 12%.  So, the spouse making $60k will still have withholdings closer to 12%.  But, after separating if that spouse files using married filing separately, they will now be getting taxed at the 22% bracket. By working together as the divorce proceeds, you may be able to agree to file using married filing jointly to receive the best tax benefit for both parties.  The IRS 1040 provides a spot so you can file an additional form enabling a couple to split the tax refund so that it goes into 2 separate accounts.  The court may need to decide how the allocation will be made.  How to Handle Dependents for Tax Purposes After a Divorce If dependents are involved, an important consideration is the determination of whether the couple was separated at all, during the tax year.  If they were separated (not cohabitating), did that occur in the last 6 months of the year?    Assuming the couple wasn't living together during the last 6 months, but one parent took care of more than 50% of the dependent's expenses: ●      The parent who did not have the child could file married filing jointly (if the other spouse agreed) or married filing separately. ●      The parent who did have the child could file married filing jointly (if the other spouse agreed), married filing separately or file as head of household (because for the last 6 months they were legally separated and they did maintain the household, incurring more that 50% of the dependent's expenses).  Filing using the head of household status gives you a tax bracket that is lower than married filing separately, but not as low as married filing jointly.  The jump to the 22% bracket won't happen as quickly and the standard deduction will be ~$19,000 (for the 2023 tax year). Timalyn strongly advises that your either have a tax professional prepare your taxes during this period, or that you at least consult with one.  You have some options and you want to make sure you select the best one for your particular situation. NOTE:  If you were divorced as of December 31st of the tax year, then married filing jointly and married filing separately are not available to you.  You have the options of filing as a single or as head of household (if you qualify). Which Parent Gets to Claim the Child? If the divorce is amicable, you could have the custodial parent complete IRS Form 8332.  This is an important form.  It's a Release or Revocation of Release of Claim to Exemption to Child by Custodial Parent.  Because there are no longer exemptions for a child or children, it's an all or nothing situation.    The custodial parent gets to claim the child tax credit.  However, the custodial parent can use Form 8332 to release the child tax credit to the other parent.  Depending upon the divorce decree's designation of the custodial parent, it's that person who needs to sign the release, designating which year(s) it will apply.  It's during that year or years the non-custodial parent can claim the child.  Understand, there is nothing to block a child from being claimed when you e-file.  It can be a race to see who claims the child first.  If a return is submitted including the child's social security number as a dependent, it blocks the other parent's return from being accepted – if that child was already claimed.  This is why the IRS Form 8332 is so important.  If you did have the right to claim the child, you have the 8332 to support your position when you take it to the IRS.  Many people don't realize the IRS trumps your divorce decree.  Even though the family court designated the custodial parent, the IRS is going to look at specific rules.  This includes the number of overnight stays during a particular tax year.  It also considers which parent maintained the household where the child lived, as well as who paid more than 50% of the expenses.  If the parents were even on the overnights and expenses, there are tie-breaker rules.  Again, these are just a few reasons why the tax law is different than your state's family law.  Form 8332 can eliminate the frustration and games.  It can protect both of the parents, down the road. For more information on which parent should claim the child, listen to Episode 19.  There's also a related article on Tax Tips with Timalyn.    Dealing with Joint Tax Liability after a Divorce If you had a tax liability while you were still married, it is a joint tax debt, regardless of what the divorce decree states.  The IRS considers both individuals responsible.  There may be a way for you to claim injured spouse relief or possibly innocent spouse relief.  Timalyn has published episodes on both topics.  Remember, there are specific timeframes for making these claims and your specific state jurisdiction may have guidelines. If you think you are eligible for innocent spouse relief, book a consultation with Timalyn at Bowens Tax Solutions.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 47, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 46:  In this episode, Timalyn discusses 4 various options you have to handle your IRS debt, if you cannot pay it in full.  While you need to pay your tax debt, there are ways to do it so that you're not overly burdened.  In addition to the lump sum payment, she'll explain the offer in compromise, installment agreements, currently not collectible status, and bankruptcy.  Have You Received an IRS CP504 Notice? If this is a letter you've already received, then you know the IRS is notifying you of their intent to levy.  The reality is you're now in a tough situation.  While you haven't been able to pay your tax debt, you most likely haven't communicated with the IRS about your particular situation.  Now, the IRS is going to have the right to access your bank account(s) and decide how much they are going to take.  The Offer in Compromise You've probably heard about commercials claiming you can settle your tax debt for pennies on the dollar.  In reality, many people won't qualify for this option.  This is sometimes referred to as the Fresh Start Program, which was implemented by Congress.  However, the Fresh Start Program isn't just about the Offer in Compromise.    There are ways to qualify for the Offer in Compromise.  You may be able to claim the debt doesn't actually belong to you.  This is “Doubt as to Liability.”  Unfortunately, this may be very difficult to prove.  “Debt as to Collectability” means the IRS probably won't be able to collect the debt from you.  “Effective Tax Administration” is another claim you may be able to use to qualify. The IRS has a pre-qualifier tool on its website, so you can see if you might be able to qualify for the Offer in Compromise resolution.  In Episodes 39 and 40, Timalyn discussed IRS Form 433-F.  By completing this form, you'll have a good idea of whether you'd qualify for the Offer in Compromise option.  The form will help to prove your ability to pay or lack thereof. It also takes into consideration your health, age and education.  These are factors the IRS will use to determine if you qualify.  Any offer you make will have to include a certain percentage of the equity you have in specific assets.  If you have a lot of equity in your home or other assets (including your retirement portfolio), the IRS could require you to sell one or more of the assets to create funds available to pay your tax debt.  So, if that's your situation, the Offer in Compromise might not be the preferred option for you.  It's important for you to consider working with a qualified professional who will help you to best represent your situation to the IRS.  Installment Agreements Timalyn discussed this option in Episode 10.  These are generally various payment plans you can have with the IRS.  There are 3 popular options:  Streamlined, Regular and Partial Pay.  Timalyn prefers the Partial Pay Installment Agreement because it looks at your assets, but focuses on your income and your expenses.  Assuming you can't pay off your tax debt before the Collection Status Expiration Date (CSED), the IRS will still want as much as they can get from you.  Establishing an installment agreement may be a good option, based on your specific situation.  Currently Not Collectable Status Timalyn explains that this option temporarily puts your tax account on hold.  You'll still complete the IRS Form 433 to prove that you really have nothing left after calculating your income and deducting the allowable expenses.  The IRS cannot put you in a financial hardship to pay your taxes.  There may be a difference in what you consider a necessary expense and what the IRS considers.  These would include your rent/mortgage and monthly car payment.  Now, this does not mean you never have to pay the tax debt.  Interest will continue to accrue during the period of not collectable status.  But as Timalyn discussed, the IRS only has the option of collecting the debt before the CSED.  The IRS will not levy you during the Currently Not Collectable (CNC) period.  Once the period has passed, the IRS can require you to submit documentation to see if you should still qualify.  If this sounds like a good option for you, listen to Episode 18, where Timalyn explains how to temporarily put your tax account on hold. Bankruptcy Now, admittedly, this won't be the right choice for everyone.  However, if you qualify, you can use this to eliminate certain types of debt.  Timalyn cannot provide legal advice about bankruptcy, because she is not an attorney.  She does have relationships with bankruptcy attorney to whom she can refer you, if you need this option. There is a 3-year, 2-year and 240-day rule, you need to understand. You can't have any fraud claims, no taxes related to a trust and no Substitute for Return (SFR) on your account.  The tax debt you're trying to discharge must be at least 3 years old.  It must have been filed with the IRS for at least 2 years.  Additionally, no other tax assessments can have been made by the IRS during the past 240 days.  Assuming you meet the above qualifications, that tax year is eligible for bankruptcy.  However, if there is a tax lien, even if you bankrupt the tax debt, you'll still have to repay the amount covered by the lien.  Again, this may not be the best option, but depending upon your situation, it may be the option you can use.  Final Words of Advice As Timalyn has advised in previous episodes, it's important to remember to breathe.  She invites you to contact her to see if she would be able to represent you.  The majority of her clients come owing 6-figures or more to the IRS, they may be facing an audit or even worse, they are actively being levied by the IRS.  Don't wait for that to happen to you.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 46, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 45:  In this episode, Timalyn discusses IRS Notices.  She'll explain what they are, why you're receiving your IRS notice and how to read it.  Then, she'll provide some insights into the 3 types of IRS Notices that are currently being sent out fairly aggressively by the IRS.  Love Letters from the IRS Timalyn lightheartedly refers to notices and communications from the IRS as love letters.  In all reality, they can be extremely serious and require immediate attention.  Once a client hires Timalyn to help resolve tax debt issues, she also receives copies of the same letters. What Is an IRS Notice? This is written correspondence from the IRS to the taxpayer.  It can address a number of issues including a balance due, updates on activity on your account or if any changes to a tax return have been made.  Not every IRS Notice involves bad news.  Nonetheless, receiving one can cause anxiety.  For example, during the pandemic some people received notices of stimulus payments or confirmation of payment of the advanced child tax credit, etc.  If you've filed an amended tax return or you find a refund you were due, the IRS will also send you a notice. Some IRS notifications are issued to inform you of why you are receiving an IRS communication and what you need to do to resolve any potential issues.  IRS CP503 Notice The bulk of the notifications being sent to taxpayers are CP503 notices.  In Episode 29, Timalyn explained the IRS CP14 notice (demand for payment of unpaid taxes).  The CP503s are different.  The CP503 notification is the second notice and a reminder of an unpaid tax balance due.  If you have a tax liability when you submit your tax return, you'll receive a CP14.  Then, if the balance hasn't been paid, the IRS will issue a CP501 (the first notice for balance due).    IRS CP504 Notice Timalyn explains that the IRS CP504 notification is the one you really need to be concerned with, if you receive it.  This is a final notice and balance due.  The CP504 is also notification of the IRS' intent to levy.  In Episode 5, Timalyn answered the question, “What Is a Tax Levy?”    Basically, the Intent to Levy is the IRS telling you they have the legal right to take money owed from your personal bank account or business bank account.  The IRS also has the legal right to contact your employer to request a garnishment (funds to be withheld) from your paycheck, which are then sent to the IRS.  The latter can happen regardless of whether you are a W-2 employee or 1099 independent contractor.  The IRS can also require the employer to make backup withholdings.  Don't Put Your Head in the Sand If you have received notifications from the IRS, don't ignore them.  In many situations, the IRS is willing to work with you.  However, if you don't open the letters and fail to respond, you're going to run out of options and the IRS will run out of patience. How to Read the IRS Notice The office address of the IRS will tell you which actual office is sending the notification.  It also signifies the level of importance of this particular IRS notice.  If the address has a local address and the name of an IRS representative, your case has been assigned to an IRS revenue officer.  Your assigned IRS revenue officer is the only person you'll be able to communicate with, going forward.  He/she is the only IRS contact with whom you can correspond or speak with on the phone about your tax debt situation.  These revenue officers are already overloaded with cases, you just added to his/her workload.  At the top right of your IRS notice, there is a designation of the type of notice you're receiving.  This could be the CP501, CP503 or the dreaded CP504 (the Intent to Levy).  Timalyn comments that there are other types of notices, but these are the more common ones being issued, at this time.  Remember, there are also notices of Accuracy-Related Penalties if you failed to report all of your income or miscalculated a deduction/credit.  The IRS Notice also provides information regarding the deadline for you to respond.  There may still be a way to deal with this, even if the deadline has passed.  However, you need to take action, quickly.  You can appeal an IRS decision if you've received an IRS CP504 (Intent to Levy) notification.  You have the option of trying to contact the IRS via telephone (good luck).  You may also want to pull your tax transcripts to identify where you might disagree with the IRS and what information they are using to support their claim.  The IRS Notice should also include a copy of the Taxpayer Bill of Rights.  It grants you the right to tax representation.  In Episode 10, Timalyn explains how to set up a payment arrangement with the IRS. Bowens Tax Solutions specializes in tax representation.  Consider booking a consultation to speak about your tax debt situation and potential options.  In Episode 37, Timalyn explains the Tax Relief Journey.  It'll explain the 3 phases of tax relief. In closing, Timalyn urges you to make sure you read any IRS notification you may already have.  These can become extremely serious, but there are steps you can take to resolve the issues.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 45, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

As 2023 comes to an end and we look forward toward 2024, Timalyn Bowens, America's Favorite EA, shares a few brief comments for her audience.  It's been a long road, full of interesting twists and turns.  Next year promises to bring more of the same.  However, Timalyn is grateful for opportunity to continue her mission to close the tax literacy gap, one taxpayer at a time.  She wishes you Happy Holidays for you, your family and your business.    

Episode 44:  In this episode, Timalyn discusses issues related to tax audits.  The fear people have about being audited is often paralyzing.  It's a serious issue and you need to be prepared to both avoid it and to know what you need to do if it happens.  There are steps you can take to ensure your business is audit-ready. There's No Such Thing as an Audit-Proof Return Regardless of what some tax professionals might claim, there's no way to guarantee you won't be audited.  There are different types of audits and the selection “triggers” vary.  The IRS has the Discrimination Function System that produces a DIF score.  This system rates the potential for change based on past IRS' experiences with similar returns. The IRS can track returns for similar businesses, using categories such as NAICS codes.  This code describes your type of industry.  When they look at a collection of similar returns from the same industry, they can determine averages for specific data points, such as expenses, credits, etc. for your reported income level.  If your DIF score is out of that range, it could trigger an audit.  Irregularities can also raise flags.  For instance, if all of your figures on your tax return are round numbers, that would seem odd and could result in an audit.  The IRS has a whistleblower program.  They pay snitches who were correct about something they alerted the IRS to regarding someone else's tax filings.  It Doesn't Mean You Did Anything Wrong Timalyn emphasizes that just because you're being audited, it doesn't mean you did anything wrong.  She explains that for 2023, there was a 0.4% chance that taxpayers would face an audit.  Lower income individuals actually had a slightly higher chance.  Don't Fear the Boogey Man An audit isn't as scary as it sounds.  It's a review or exam of your tax account and your financial information to ensure proper reporting.  If you keep good records and don't inflate/deflate your income or expenses, is there really anything to fear?  You have the information and it's accurate.  As long as you can prove that information was reported correctly to the IRS, you should be fine.  If your records are extremely unorganized, you had to guess at certain dollar amounts or someone else guessed for you, the audit may become a problem for you.  Correspondence Audits This is where the IRS will contact a taxpayer to request specific information.  If you've received an audit notice, or a field audit where the IRS agent comes to you, Timalyn recommends you don't handle this on your own.  It doesn't matter how good your records are.  Yes, you may be able figure out how to handle the process, but you're going to be at a disadvantage and the opportunity to make a mistake is significant.  This is not something you should simply search for on YouTube.  You need an experienced tax professional who knows how to deal with the IRS and the rights you have, during the audit process.  If you've received an audit notice, you can book a tax relief consultation with Timalyn.  She also has an episode on what you need to look for when hiring a tax professional.  Episode 23 is titled, “Which Type of Tax Professional Do I Need?”  In the show notes for that episode, there's a link to Episode 16, “How to Choose a Tax Professional.”  Both are full of valuable information for your consideration.  When you receive a Correspondence Audit, the IRS may not explain specifically why they are requesting the information.  It can be a significant source of anxiety.  Make sure you respond to the IRS in a timely manner.  Timalyn suggests responding before the deadline, in case something else needs to be addressed.  If you have good records, this will be much easier. Do You Already Have a Tax Power of Attorney? If you already have a tax power of attorney, you've already authorized this person to speak to the IRS on your behalf.  They've filed submitted IRS Form 2848, so they will also receive the correspondence from the IRS.  Don't assume the person who prepared your tax return is receiving the same correspondence you have received from the IRS.  Unless they've submitted Form 2848, the IRS does not have the authorization to speak with that tax preparer and vice versa. Prepare Your Business for an Audit This is the best thing you can do, especially because of the random nature of IRS audits.  Timalyn re-emphasizes the importance of good record keeping.  You have to be able to substantiate everything you entered on your tax return.  This applies to both income, expenses and credits.  There are many ways people have committed fraud by overstating their income when applying for the PPP loans, SBA loans, or a mortgage.  These are reasons the IRS may require you to substantiate your income.  Good financial statements, based on accurate bookkeeping can help you to prove you received the income you claim, even if you don't have a 1099 to back it up.  Your bookkeeper or accountant will reconcile your bank account.  The financial reports should reflect your income.  Make sure the person who prepares your financial statements has access to your bank statements.  If they are doing it without access, you may be setting yourself up for a significant issue or issues. The same record keeping applies for your expenses.  It's why business owners should not co-mingle their business and personal funds.  During an audit, explaining the different purchases will be more complicated if you can't determine whether they were for business or personal reasons.   You Need a Bookkeeper This person is a valuable resource.  It's something Timalyn often recommends you outsource.  A business owner can waste a lot of time trying to do their own bookkeeping.  You should definitely understand your financial records, but the time spent doing all of the record keeping and reporting could be better spent generating more revenue. The 3-H's of Record Keeping Timalyn suggests there are questions to consider related to record keeping.  ●      How long should you keep your records?  ●      How should your store your records? ●      How do you deliver your records? Episode 20 specifically deals with how long you need to retain your tax records.  Don't Create More Problems for Yourself If you're being audited, remember to only provide the IRS what they are asking for.  Make sure the support for those records is readily available.  Timalyn uses the example of someone who was asked to show income for a number of years.  However, because they didn't have good records, they instead decided to turn over all bank statements to the auditor.  This resulted in the auditor finding even more questionable transactions that were flagged.  If you're going through an audit, you typically wouldn't know how to handle the IRS.  Even good intentions can lead to many more problems.  That's why you should work with a tax representation professional who is familiar with the process and can best represent you.  Check out Episode 33, “What Is Tax Representation?”  Just because someone prepared your taxes doesn't mean they're equipped to represent you. As 2023 comes to a close and tax season looms, you need to ask yourself if your business is audit-ready?  Do you have good financial records?  How are we handling the 3-H's of record keeping?  Is our tax preparation professional asking questions about our records?  It's time to get ready. One step you can take is to book a tax relief consultation with Timalyn. If you are a tax professional who would like to help taxpayers with their audits, Timalyn strongly suggests joining her Tax Pro Representation Journey community.    Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either.  As we conclude Episode 44, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 43:  In this episode, Timalyn discusses the Corporate Transparency Act (CTA), which is not necessarily tax related, but US Treasury Department is in charge of the CTA.  It's a topic many will approach their tax professionals for explanations and advice.  Timalyn will explain what it is, who's in charge of it and who it affects. The Corporate Transparency Act was passed in 2021.  It's currently scheduled to go into effect on January 1, 2024.  There is pressure to delay the date, but as of now, it remains set for January.  What is the Corporate Transparency Act? The Corporate Transparency Act is a law to enhance the transparency of entities and entity structure.  Over the years, people have chosen to start businesses in certain states to shield specific information from the general public or other considerations.  This concept is used for good purposes, and unfortunately it can be used for bad purposes (some of which may even be illegal). The Corporate Transparency Act requires that companies must provide the government information about the owners and beneficiaries of the business.  It's an effort to reduce potential illicit activities.  Who Is Responsible for Enforcing the CTA? The Financial Crime Enforcement Network (FinCEN) is who will be enforcing the reporting requirements under the Corporate Transparency Act. FinCEN is housed within the Treasury Department, along with the IRS. This is one reason that individuals will think that this is a tax issue.  If you have overseas bank accounts or are in a business that has them, you may already be familiar with FinCEN.  Timalyn explains that organizations or individuals having $10,000 or more in cash or other assets must submit an annual report to FinCen. This form is known as the FBAR. The Corporate Transparency Act reporting requirement is actually a legal issue, not a tax issue.  For this reason, Timalyn advises you to reach out to an attorney for advice, especially if you don't know if you have to comply with the CTA reporting requirements.  Who Needs to Comply with the Corporate Transparency Act? Almost all legal entities will  fall under the Corporate Transparency Act reporting requirements.  If you registered a business as a corporation, LLC or an LLP, you are required to file the Beneficial Ownership Information report (BOI).  The BOI information that is to be reported includes: ●      Full Legal Name of the Beneficial Owner ●      Date of Birth ●      Social Security Number ●      Government Picture ID ●      Current Address of the Individual ●      Address of the Business Entity  Who is a Beneficial Owner? Timalyn explains they are people who exercise substantial control over the entity, either directly or indirectly.  You would also be considered a beneficial owner if you own over 25% of the company.  It's usually people who are responsible for major decisions related to the company.  The same person may also work in the day to day operations.  Are there Exemptions for Certain People or Types of Organizations? Yes.  In fact, there are currently 23 exemptions.  For information on these, subscribe to Tax Tips with Timalyn.  As more information becomes available, Timalyn will post it on this blog, along with other useful information for business owners Here Are 5 Entities Exempt from the BOI Filing Requirement ●      Governmental Authorities ●      Banks ●      Credit Unions ●      Tax-Exempt Entities ●      Accounting Firm If you are an accountant, Timalyn recommends you subscribe to her blog, at www.AmericasFavoriteEA.com.  You'll find plenty of useful information for accounting and tax professionals. What is the Deadline for Filing the Beneficial Ownership Information Report? As of the recording of this episode, if your entity is formed after 01/01/24, you have 90 days to after the official start of your business file with FinCEN.  If your business was open prior to 01/01/24, you have the full year to gather and submit the information for the beneficial owner(s). Please don't procrastinate on filing the BOI.  If you already have the required information, go ahead and file it.  Remember, this doesn't get filed with your tax return.  You'll file the BOI on the FinCEN website.  What if I'm Late in Filing the BOI? There is a $500/day civil penalty if you are late in filing your report.  If you are found to be engaged in fraudulent or illegal activity by FinCEN, you will be subject to up to 2 years in prison and/or up to $10,000 in a criminal penalty.    If you have trouble filing the report, Timalyn advises you to reach out to an attorney.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 43, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 42:  In this episode, Timalyn speaks to individuals and business owners.  Tax debt can be a serious issue, both financially and emotionally.  When it comes to taxes, you need to have a plan.  Failing to plan is planning to fail.  But, what is tax planning?  What Does Failing to Plan Look Like with Taxes? Assume last year you didn't like your tax bill.  It is now November and you are  just beginning to think about your taxes, you didn't really have a plan for 2023.  You should have been developing tax reduction strategies and implementing them much earlier.  Timalyn recommends looking at tax reduction strategies before the year even starts. Another way people fail to plan for taxes is by not seeking out the advice and guidance of an expert in their industry.  If you have a retail business you don't need a tax professional who focuses primarily on the transportation industry.  If you have real estate properties, it would be better to work with a tax professional who understands real estate investing.  Tax law has different ways of applying tax credits and deductions for different tax industries.  You need a specialist who understands the nuances of your specific industry segment.  Don't Rely only on the Internet for Tax Planning Advice Assume you Googled “Tax Planning” or some other phrase and found Timalyn.  Not every piece of advice applies to your particular situation.  Rather, treat that information as a starting point.  Dig deeper for a tax expert who is closely aligned with your type of business.  Tax strategies are not universally or equally effective for everyone.  Developing an Effective Tax Plan An efficient tax plan will involve tax strategies customized to fit your lifestyle, your goals and focused on reducing your tax liability over time.  There's no one-size-fits-all strategy. Roth IRA vs. Traditional IRA For instance, a Roth IRA is a popular savings tool. Contributions to a Roth IRA are paid with after-tax dollars.  They will not reduce your tax liability in the current year.  The good news is that the dollars you put in, and the interest that accumulates, won't be taxed when you pull them out.  Now, a traditional IRA is paid with pre-tax dollars, which would reduce your current year's tax liability. The down side is that you'll eventually pay taxes on the money when you pull it out, years from now. Are you making more money now, during your working years, than you will be in your retirement years?  It might not make sense for you to invest in a Roth IRA instead of a traditional IRA, depending upon your specific situation and your specific goals.  This is especially true if you are concerned with reducing your tax liability during those earning years.  This is why it makes sense to work with a tax planner as well as a financial advisor when planning your retirement. Should I Hire My Minor Child to Work in My Business? This will probably be a separate episode in 2024.  If you're interested in learning more about this option, subscribe to Timalyn's blog, Tax Tips with Timalyn.  Does Your Tax Professional Give You This Type of Advice? Before you get upset with your tax professional, ask yourself, “Have I asked for tax strategies or have I asked for a tax plan?”  You may not realize it, but tax planning is a different service.  It's generally not included with tax preparation service.  It's an investment in your future.    Many tax professionals assume you already know there's a difference between tax preparation and tax planning.  If you need the latter, ask your tax professional if they provide that service and if it's something you can invest in to lower your tax liability.  If not, they may be able to refer you to someone or maybe it's time for you to spend time looking for a tax planning professional.  As a starting point, check out Tax Relief with Timalyn Bowens episode 16 , How to Choose a Tax Professional.    Invest in Your Future Spending money to hire an experienced tax planning professional will usually save you money.  It'll also give you some control over your tax bill and tax liability. You tax bill is what you owe after everything you've already paid in during the year.  While everyone has a tax liability, if you've properly implemented an efficient tax plan, you may be able to avoid a tax bill.  Timalyn is going to go into more detail about this on her YouTube channel, in the upcoming weeks.  Be sure to subscribe to it, so you'll know when that information is published. Please consider sharing this episode with your friends and family. This information may be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 42, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . f you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 41:  In this episode, Timalyn talks specifically to business owners.  There's a possibility that you either owe taxes now, or that you will owe them in the future.  As a person whose focus is on achieving your business goals, let's assume you've hit your income goal for the year.  As you begin to pull together your information, you suddenly realize you owe taxes.  Maybe you actually owe more this year than you did last year.  Are you beginning to worry that the more you make, the more you'll owe?  Timalyn will provide 3 ways to reduce your business tax liability.    Timalyn begins by setting up a scenario many business owners are familiar with, because a tax liability can cause a lot of stress and even throw you off of your game.  But, it doesn't have to be that way.  Tip #1:  Be Proactive Let's not worry about issues in the past.  This is about moving forward by taking proactive steps to reduce your tax liability by investing in your business. You do this by hiring experts.  Timalyn comments that she receives the best return on her investment when she invests in herself.  The same is true for investing in your business.  On September 18, 2023, Timalyn launched the Tax Pro Representation Journey.  This is to help other tax professionals.  When you invest in an industry expert to help you in your business, the return on that investment should be at least 2 to 3 times what it cost you.  As an example, 75% of the tax professionals in Timalyn's program brought in new clients within 3 weeks of beginning her program.  It's a perfect example of how investing in yourself, as a business owner, can have a significant impact on your progress.  Tip #2:  Consider Hiring Financial Experts Having another set of eyes on the situation can be a big benefit.  But what type of financial expert should you consider hiring? The Value of a Bookkeeper / Accountant In Episode 16, Timalyn discussed, “How to Choose a Tax Professional.”  The same steps apply to hiring a bookkeeper.  The bookkeeper is managing historical data.  In other words, when and where you spent money.  Remember, the fees you pay your bookkeeper are also tax deductible. The value of tracking the historical data is that it enables you to make income projections.  Trend data is a good way to make projections about your specific business.  You can also consider how you are performing relative to your industry. The data will also highlight areas of weakness you may need to address.  You may notice certain expenses are unusually high.  By knowing your numbers, you'll have better insight into how your business is performing.  This is especially important when a problem exists.  Once you uncover it, you can develop a plan to effectively deal with it, much earlier than if you'd simply waited until the end of the year. A bookkeeper can also highlight areas of opportunity.  For example, you may be able to outsource an activity.  Knowing your numbers enables you to make an informed decision as to whether you can afford to outsource and/or hire. Tip #3:  Consider Investing in a Tax Plan Tax preparation is not the same as tax planning.  You should expect to pay an additional fee for tax planning services.  Tax planning is specific to you and your business.  You'll have customized strategies designed to help you.  However, not all tax professionals are tax planning experts.  While Timalyn can do tax planning, she specializes in tax relief and she'd refer you to a trusted colleague for tax planning services.  Timalyn will be posting more information about reducing your tax liability on her blog, Tax Tips with Timalyn.  She'll also be launching a video series on her YouTube channel.  Be sure to subscribe to both of these free resources.  Please consider sharing this episode with your friends and family. This information may be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 41, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 40:   Have you ever filed your tax return and then realized something doesn't look right on the return?  You have the right to file an amended tax return to correct mistakes and/or oversights.  Timalyn will explain what this is and why you should file it. IRS Form 1040-X The IRS Form 1040-X Amended Individual Tax Return is the form you'll use to correct your original return.  There are other types of amended returns. Form 1065-X  is used for Partnerships, Form 1120-X  and 1120S-X  are used for Corporation and S-Corporation amendments.  For today's episode, Timalyn will focus on the 1040-X. What Is a Continuous Use Form? The IRS Form 1040-X is considered a continuous use form.  This means the IRS isn't updating this form each year.  If your return is for 2020 or later, you'll use the same form.  You Found a Mistake, So Now What? It's possible that by filing the 1040-X, you could be able to reduce your tax liability based on the new (amended) information.  Even if it doesn't reduce your liability, it may still reduce the penalties and interest. Timalyn uses the example of how business owners may have overlooked the Sick and Family leave credit during the COVID years.  There are 2 resources you may want to review to see if you are eligible for the credits: Sick and Family Leave Credits for Self-Employed Taxpayers  Is there a Tax Credit for Self-Employed Workers Affected by the Coronavirus? The 1040-X is used to correct a 1040, 1040-SR (for seniors) or 1040-NR (for non-residents).  It can be used to make adjustments for credits or deductions originally missed, it can be used to claim a carry-back due to a loss or unused credit.  The 1040-X can also be used to make certain elections, after the prescribed deadline. The 1040-X shows your original information and then shows how the additiona information changes the originally submitted return. You can use the form to correct a genuine mistake.  If the IRS doesn't correct a math mistake, you could use the 1040-X to make the correction.  If you are worried about being assessed with an accuracy-related penalty, listen to Episode 28.  In Episode 25, Timalyn discussed Tax Basics 101.  A credit against tax owed may need to be entered, because if the IRS corrects a math error, it may not address other issues related to that new information.  Timalyn provides an example of this from a recent client's situation.  Don't Procrastinate Timalyn explains that you must move in a timely manner when you realize there's an error on your return.  IRS form 1040-X must be filed within 3 years of the date you filed your original return, if you are now claiming a credit or refund, or within 2 years of the date you paid the tax, whichever is later.  Note, the 3-year window does include extensions.  While this episode primarily deals with mistakes on your federal tax return, you may also need to review your state and local tax returns. The current 1040-X be e-filed. The 1040-X for 2019 and prior tax years cannot be e-filed.  Timalyn uses the example of someone who either did or didn't claim their child, this may need to be amended, once the error is identified.  Injured Spouse Relief This was covered in Episode 15.  You can use it to protect your share of a refund if your spouse owes back taxes, child support, or any other government entity entity. Timalyn also wrote an article about it.  Make sure you include an updated injured spouse form with the 1040-X if a credit or refund is due.  For more information on the form watch Timalyn's video . Don't Intentionally Manipulate Your Income to Get a Mortgage If you're trying to get a mortgage and you intentionally file fraudulent information or try to manipulate the tax return so you qualify, you may be committing mortgage fraud.  The 1040-X shouldn't be used, after you've qualified using false information.  If you need to generate additional income to qualify for a loan, focus on doing that and avoid the legal liability. If you've enjoyed this episode, please leave a review on the podcast platform you are streaming on or Google. Please also consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either.  As we conclude Episode 40, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 39:  In this episode, Timalyn continues her discussion of the importance of IRS Form 433-F when negotiating with the IRS.  You may want to review Episode 38, which is Part 1 of the discussion.  It'll help you to better understand today's episode. To listen to Episode 38, click here. What Is IRS Form 433-F? This is the Collection Information Statement.  This is the form the IRS uses to collect a wide range of financial information including your income, debts, expenses and assets.  When you're attempting to negotiate with the IRS, you're asking them to understand that you are unable to pay the full amount of your tax debt, at this time.  They obviously want the full picture about your financial situation, so the information you enter onto this form is the starting point.  If you're working with a tax professional to represent you in a tax debt negotiation, but they haven't discussed the Form 433-F, it's probably a red flag.  For tax professionals who aren't using this form with your clients, you may be doing them a disservice. In Episode 9, Timalyn explained the 3 Phases of Tax Relief.  These are the investigation, compliance and negotiation.  IRS Form 433-F substantiates what you can actually afford to pay and why.  It's not uncommon for your and the IRS to have differing opinions on this answer.  Today, Timalyn explains the detailed information you need to input on the form.  Again, if you haven't already listened to Episode 38, this might be a good time to listen to that brief episode.  She'll also discuss what you will need to substantiate as proof.  Finally, she'll help you to know if you've completed the form properly.  Basically, “Is it right?” In Episode 38, Timalyn discussed why you'll need to use this form if you're requesting an installment agreement, because you're unable to pay the tax debt within 72-months or before the Collection Statute Expiration Date (“CSED”).  This includes whether you owe $25,000, but can't pay it off within 72-months, or if you more than $50,000 but you could pay some of the tax debt. Understanding the Detailed Information The IRS wants to know you bank account(s) information.  This helps to prove your cash flow.  If your name is attached to an account, you'll need to list it.  Do you have lines of credit?  If so you'll need to list this information.  This includes your actively used credit cards and the credit card numbers.  They want to see what you're purchasing.  Are you using these cards for necessities or is it for discretionary items, like steak dinners, concerts and vacations?  The IRS will want to know about your assets.  You'll need to submit the account numbers for retirement accounts including 401(k), IRA, Pensions and brokerage accounts.  It would also include the VIN for any vehicles (i.e. cars, motorcycles, boats, etc.) you may own.  They'll look at what you owe verses how much equity you have in those vehicles.  There's a possibility that the IRS could require you to sell a vehicle to pay your tax debt.   Timalyn advises you not to try to lie about your vehicles/assets.  The IRS will eventually find out about them.  This is especially true if you've posted pictures of it/them on your social media.  It's best to be upfront and honest. In one situation, a client has several vehicles and assumed the IRS would see how much he was paying on the loans, so that would obviously reduce his available cash flow to pay the tax debt.  In reality, the IRS looked at the situation differently.  As Timalyn explains, she had already advised him of what would happen, and it turns out she was right.  Friends, listen to your tax professional.  She/he has been through this, many times.  They've studied it.  And most importantly, you're paying for their advice in the first place. You'll also need to provide any loan numbers and balances.  The IRS wants to see what you owe and actually, when you incurred that debt.  There's more information you'll need to include, but the above should give you an idea of the types of information.  Substantiating the Debt You've listed the assets on Form 433-F.  Now, you need to list the expenses associated with the assets.  As Timalyn explains, if you have a vehicle, you'll need to supply at least the last 3 months of insurance payments.  You may pay your premium on a semi-annual or annual basis.  No problem, you'll simply divide the payment by 6 or 12 to get a monthly expense amount.  Any payment information should also match your bank account records.  You'll need to substantiate all liabilities.  For instance, you'll need to show credit card and/or loan payments. If you own or rent a home/condo/apartment, you'll need to supply a copy of the mortgage or lease agreement.  This is all about proving the debt you're claiming to owe and the payments you're making toward those debts.  Pay Careful Attention to Your Expenses Expenses are handled differently from debt obligations.  For this reason, you should consider working with a tax professional, who is familiar with tax debt negotiation.  Certain expenses can be compared to what are called the National Standards or Local Standards.  Timalyn explained what National Standards are and how they can be used to your advantage in Episode 9.  The IRS sets certain levels of acceptable expenses based on various areas of the country.  It's possible you can list the national standard defined amount, even if you don't actually pay that much.  A word of caution, you should consult with a tax professional on this point.  The IRS will find out, if you're trying to make false representations on IRS Form 433-F.  By using the limits allowed in the Standards, this can help to substantiate and ultimately lower the amount you're able to pay as part of your IRS Installment Agreement.  The fact is, you're using the IRS guidelines to do it.  Understanding Your Cash Flow Timalyn explains that any income you receive will need to be substantiated.  This includes non-taxable income, such as social security retirement benefits. This will be factored in as income, even if it may not be taxable.  If you work a W-2 job, you'll need to provide all pay stubs for the last 3 months and yes, this must match your bank account information. Alimony payments will need to be included on IRS Form 433-F.  This is true even if it was ordered as part of a divorce prior to the Tax Cuts and Jobs Act.  You'll also need to show any child support payments.  Don't Go It Alone If you're going to negotiate with the IRS, don't go at it alone.  Even if you don't hire a tax professional to actually represent you, you should schedule a meeting with one to at least get advice for how you should handle it. Having an experienced tax professional on your side could save you much more than what it cost you to hire them in the first place. If you're a tax professional and you would like to become better skilled at helping your own clients, consider signing up for Timalyn's Tax Pro Journey.  It's a private podcast, including an article subscription and a private group community.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 39, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 38:  In this episode, Timalyn is going to discuss a document that's often used in tax relief negotiations, IRS Form 433-F.  In her previous episode, she addressed the tax relief journey to try to make it easier to understand.  Today, she'll do the same with a form that plays a big role in your negotiations with the IRS. NOTE:  Timalyn points out that you need to make sure you're using IRS Form 433-F.  There's a similar document, IRS Form 433-F (OIC), that's used when you're making an offer in compromise.  However, the “OIC” version is not the form for today's discussion.  Timalyn is on a mission to fill the tax literacy gap, one taxpayer at a time.  While she uses these forms all the time, she realizes that most taxpayers don't fully understand what they are or why Timalyn is asking for certain information that goes on them.  She understands what information the IRS is going to request, so having the correct information can both speed up the process and help to move the negotiations forward. It's a Collection Information Statement The 433-F is more detailed than your IRS Form 1040.  The form provides supporting information for an installment agreement, which allows you to pay your tax debt in installments, rather than in a lump sum.  If you are going to apply for an installment agreement on your own, and it's not a streamlined agreement (meaning you can't pay it back within 72-months or before the Collection Statute Expiration Date – CSED), you'll need to provide the IRS with additional information to support your situation.    Timalyn explains that if you owe more that $50,000, you will be required to submit specific financial information, using IRS Form 433-F.   If you are applying on your own and it is streamlined, you can use IRS Form 9465 to request an installment agreement.  For more information, watch Timalyn's video.  The IRS will charge you a $225 set-up fee.  However, if you do it online or over the phone, the fee is only $31.  If you plan to apply for an installment agreement on your own, consider purchasing Timalyn's Guaranteed Installment Agreement e-book.  It will walk you through the process and to get your plan set up quicker. What is the purpose for the 433-F ? This form collects your current financial information used to determine how you can satisfy your debt.  This applies to an individual or a small business owner.  The IRS wants you to prove why you're going to need more than 72-months to pay the debt.  The form gathers that information.  You'll use this form to report your income over the last 3 months.  Remember, it may have changed since you filed your tax returns.  Timalyn takes a minute to explain why you should probably seek a consultation with a tax professional who has specific experience in tax relief.  That information will be extremely helpful, even if you decide not to ultimately hire him/her to represent you in this process. While the IRS wants the last 3 months, you actually might want to provide the last 6, 9, or 12 months, because certain factors, such as a period of unemployment, may change the picture in your favor.  Timalyn explains the IRS is really trying to analyze your cash flow.  Some jobs pay weekly, while other sources of income such as social security only pay monthly.  Over the past 12 years as an enrolled agent, Timalyn knows the IRS is also looking at what you owe other people or companies.  Having other required payments will limit your cash flow, but it's not that easy.  The IRS will consider your credit card balance and your available credit.  They may determine you could use some of the available credit to pay your tax debt.  Additionally, the IRS will review your assets.  For instance, do you have equity in your vehicles?  How much do you owe on the loans?  How much are the monthly payments?  What is the fair market value of the vehicle(s)?  Realize the IRS may require you to sell some assets to pay your tax debt.  Starting to get the picture? Are You a Business Owner? If so, the IRS wants to know about your accounts receivable balance.  The IRS can consider you're A/R because it could increase your normal cash flow.  You need to be open and honest in your negotiation with the IRS.  If they think you're playing games, they will be much more difficult in striking any type of arrangement with you.  In fact, they could simply decide to issue tax liens on specific tax years.    Do I Have to Provide All of This Information? Timalyn's answer is, “it depends.”  The IRS has the right to specific information when you're involved in a negotiation with them.  Remember, you owe them and are at their mercy.  If you're trying to establish an installment arrangement, you're asking them for a favor (even though we may not look at it that way).    On the other hand, there are National Standards and Local Standards.  If your expenses fall below these levels, you still get the benefit of the allowable standard.  It's like taking advantage of the standard deduction on your tax returns.  Be sure to listen to Episode 39 for more information in this scenario. This is complicated, so you may decide to get a consultation with a tax professional.  You can sign-up for a tax consultation with Timalyn.  There is a fee, but you'll have a full hour for her to review your specific situation and give you a diagnosis.  You can later decide to hire her or you can decide to hire another tax professional.  Either way, you'll have solid advice and will be better prepared to take the next step. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 38, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.  Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 37:  In this episode, Timalyn describes what happens during the process of you retaining tax representation.  She provides explanations of what's going to happen during the 3 phases of tax relief.  Timalyn walks us through the onboarding process, the investigation phase, compliance and negotiation.  While she'll step in to represent you, it's still a partnership and she'll need your assistance.  Timalyn begins by mentioning Episode 9, which explains the 3 phases of tax relief.  However, people still have questions about the process itself.  This discussion is based on her process.  Other tax professionals may do it differently, and that's okay.  The Onboarding Process Everything begins with a consultation.  While Timalyn offers a number of free resources, the consultation provides you the opportunity to ask her specific questions about your situation.  She'll create a roadmap showing you how to resolve your tax debt issue. While not every situation requires you to hire a tax professional to resolve the issue, some do.  In Episode 36, Timalyn focused on the trust fund recovery penalty related to payroll tax issues.  That type of issue definitely justifies hiring a tax professional.  If you decide to hire Timalyn within 14 days of your consultation, she'll credit you the cost of the initial consultation.    4 Things Timalyn Needs, before She Begins  The first is an engagement letter.  It outlines the services she's offering, when payments are due, what you can expect from Timalyn and what she will expect from you.  The letter must be signed before the work begins. The second is a completed IRS Form 2848.  This is a form designating Timalyn to act as your Tax Power of Attorney.  This form is then sent to the IRS.  It authorizes her to speak directly to the IRS on your behalf. The third item is a signed Form 7216, which gives her permission to use a 3rd party software to pull your transcripts and evaluate your data.    The fourth item Timalyn needs is your payment for her services.  In her firm, Timalyn typically breaks the pricing up by each phase.  She goes on to explain that at a minimum, the investigation phase has to be paid for, before the work begins. Timalyn charges different fees depending upon whether you owe more or less than $100,000.  If your tax issue is $50,000 or more, she will need your financial information.  Expect a detailed questionnaire from Timalyn.  The Investigation Phase This is when Timalyn begins communicating with the IRS and evaluating your tax transcripts to identify any missing returns and to determine what penalties have been assessed.  She's also going to work with you to understand if you were going through something that may be eligible for abatement (i.e. “forgiveness”).  Once this is completed, she'll schedule a case update with you.  At this point you'll be able to decide if you can move forward on your own, or if you'll still need Timalyn to continue working on your resolution.  If she'll need to be involved, Timalyn will provide a price for the compliance process. The Compliance Phase This is where it really becomes a partnership.  Efficient communication and information is critical.  When any missing returns are prepared and submitted, this will alter the amount of tax debt and that typically results in additional penalties may be assessed.  A second case update will be scheduled to review your completed returns before they are filed.  You'll need to sign and file them.  Timalyn may be able to e-file the returns, using IRS Form 8879.  The Negotiation Phase At this step, you are still in a partnership with Timalyn, assuming you've retained her to represent you.  She'll continue to speak to the IRS on your behalf.  However, she'll need your financial information including current expenses, debts, and asset information. She needs to have the information in a timely manner (refer back to your engagement letter).    IRS Form 433-F is the most common document Timalyn and the IRS will use during the negotiation.  It's a detailed summary of your financial situation.  Remember, the IRS wants its money, but the information on this form can help prove to the IRS that there's only so much available.  There's a chance you may qualify for a temporary hold on the collections by having your debt classified, Currently Not Collectible (“CNC”).  Listen to Episode 18 to learn more about this. If you're not eligible, you may still qualify for an installment agreement, which Timalyn covered in Episode 10.  There's also the option of making an offer in compromise.  Timalyn has videos describing the offer in compromise on her YouTube channel.  Here are a couple: 1)    Offer in Compromise:  Do You Qualify? 2)    What is an Offer in Compromise? This was a lot of information.  The main point is that you'll need to stay in communication with your tax professional.  Don't disappear.  By ignoring or responding slowly, you'll delay resolution of your tax debt and may incur additional interest on the back taxes. IF YOU ARE A TAX PROFESSIONAL Before she goes, Timalyn wants to remind tax professionals that on September 18, 2023, the Tax Pro Representation Journey, a private podcast and article subscription will launch.  Make sure you take a look at the information and subscribe.   Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 37, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 36:  In this episode, Timalyn continues with a topic related to payroll taxes.  Today, she'll discuss the Trust Fund Recovery Penalty.  It's one of the biggest tax penalties the IRS can use.  The penalty can be up to 100% of the taxes owed.  Does she have your attention yet?  Let's listen to Timalyn discuss how to avoid this penalty. In episode 28, Timalyn discussed the IRS Accuracy-Related Penalty.  This penalty can be 20% of the miscalculated tax.  That seems like a big deal until you learn about the Trust Fund Recovery Penalty, which can be up to 100% of the unpaid taxes.  Additionally, there's no cap on the amount eligible for the penalty. The Trust Fund Recovery Penalty can be assessed to the business, but also to people the IRS deems responsible for the payroll taxes not being paid.   This extends to people that may not even be the owner of the business.  You may still be held responsible according to the IRS' rules.  What Is the Trust Fund Recovery Penalty? Timalyn explains the trust fund is the taxes withheld by the employer, on behalf of the employee.  Each private-sector employee has submitted a form W-4 instructing how much should be withheld for income taxes. In addition to those taxes money Social Security and Medicare tax (FICA) are also withheld from wages.  Those withheld funds are held in a  “trust.”  As previously stated, the Trust Fund Recovery Penalty is 100% of the trust fund tax.  This is the employee's portion of FICA and the income tax withheld.  The employer is required to submit those funds to the IRS.  If the employer willfully neglects to submit these fund, they are evading taxes.  This is significantly different from avoiding taxes.  Timalyn focuses on the important distinction between tax evasion and tax avoidance in Episode 34. How Long Does the IRS Have to Assess the Penalty? The IRS has 3 years to assess the Trust Fund Recovery Penalty.  If you haven't made an arrangement to pay those taxes, you need to address it ASAP.  The IRS actually has 10 years to collect the taxes.  Refer to Episode 5 for an explanation of the Collection Statute Expiration Date (“CSED”).  This date is established, once the penalty has been assessed. As stated in Episode 35, payroll tax penalties can be charged as civil penalties or as criminal charges.  So, beyond the financial aspects, there's also a risk of incarceration if you're found to have willfully not collect or didn't truthfully calculate the taxes.  Why Is the Trust Fund Recovery Penalty so Harsh? The answer is two-fold.  First, if this penalty applies, you've been a tax evader.  Second, if you haven't paid the taxes withheld from the employee, the IRS also considers you a thief.  You've stolen funds from your employee and the IRS. Because you didn't pay the taxes withheld, the employee won't receive the benefit of the tax payments they thought were lawfully paid.  If there's a tax refund, the IRS is coming after you because now they've paid out money that was never paid to them in the first place.  Additional Penalties Can Be Assessed Before assessing the TFRP the IRS will assess other penalties as well. They will still assess you with the failure to deposit penalty and the failure to file penalty if you didn't file the proper payroll returns. Once the IRS adds the TFRP on top of that it can cause a serious financial leak in your business, possibly resulting in you closing. If you're exposed to payroll tax penalties, including the TFRP, you need to communicate with the IRS.  Don't let the problem grow worse.  Timalyn explains that communication is key.  The IRS may be willing to work with you.    Who Can Be Held Responsible? At the beginning of the episode, Timalyn mentioned the penalty can be assessed to more individuals than just the business owner.  Any person responsible for withholding, accounting for, depositing or paying specified taxes – and willfully failing to do so. The above scenario could include the company treasurer, an accountant, an officer, director, shareholder, or even a bookkeeper.  If you have an employee responsible for payroll activities or anyone who has signing authority on certain checking accounts. Any or all of them can be assessed the Trust Fund Recovery Penalty.  Remember this is 100% of the unpaid withholdings. Imagine how financially devastating this could be.  Can I Get the IRS Trust Fund Recovery Penalty Removed? Yes.  If the IRS deems you were not responsible for the negligence.  There will be interviews and required proof, but it may be possible.  However, penalty abatement with payroll taxes can be very complicated. If you're involved in this type of situation, Timalyn highly recommends hiring a tax professional to represent you.  She explains tax representation in Episode 33.  That episode also has a link to help you decide on which kind of tax professional might be best for you. You can book a consultation with Timalyn to review and discuss options related to your specific situation.  A point to remember, it will probably be best for you to hire a separate tax professional to represent you, instead of trying to have the same professional represent the business and all impacted parties.  There could be a potential conflict of interest.  You want to make sure someone is representing your best interest.  It's important that you get the help you need to address this situation, before it gets any worse. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 36, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.  For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 35:  In this episode, Timalyn focuses on the importance of payroll taxes.  Paying employee taxes is a cost of doing business.  If you have classified actual employees as independent contractors, you are guilty of tax evasion.  The penalties are severe.  The IRS Test to Determine Classification Properly classifying people who work for you is an important responsibility.  The IRS has an online test to help you determine whether an individual should be classified as an employee or as an independent contractor or some other valid classification. If you are an employee working as an independent contractor (often for cash), why would the employer do this? They aren't looking out for you. They're looking out for themselves, avoiding to pay employee taxes.  This is tax evasion.  What Are Payroll Taxes? Timalyn explains that at the federal level, payroll taxes are comprised of 3 different taxes: ●      Federal Income Tax – your tax withholdings based on how your completed your W-4.  ●      FICA Taxes – social security and Medicare taxes. ●      FUTA – an annual tax paid by employers called the Federal Unemployment Tax Act.  It's paid on the first $7,000 of earning for each employee. Timalyn explains that if the IRS finds you guilty of tax evasion via misclassification, you'll be assessed significant fines and penalties over and above the actual taxes you neglected to pay.  Annual Payments, Quarterly Payments and Tax Deposits Payroll taxes can be complicated.  The FICA tax the business withholds is usually 7.65% of the employees' wages.  There's also the obligation for the business to pay another 7.65% of the wages.    On an annual basis, employers are required to send out IRS W-2 Forms by January 31st.  You may also be required to complete the IRS W-3 Form, which is a reconciliation of all of the employee W-2 Statements.  You'll also file IRS Form 940, for the federal unemployment tax to be paid by the employee.  On a quarterly basis, employers will file the IRS Form 941, which is for the employer's quarterly federal tax return.  This reports the income tax and FICA tax withheld for each employee.  It also shows the FICA taxes paid by the employer (that other 7.65%). Employees have taxes withheld during the year, on an on-going basis.  These withholdings are considered deposits, which will be used to offset your end-of-year tax liability.  Timalyn explains that once your payroll tax liability reaches a certain level, you need to understand your deposit schedule for the withheld taxes. If your quarterly deposits are less than $2,500, you can send a payment with the Form 941, without getting penalized.  It can be either e-filed or mailed.  The payment itself can be sent electronically via the EFTPS or a check can be mailed.  If you use the e-file option and the EFTPS, there's an advantage of having an electronic stamp showing when you completed these actions.  If your quarterly deposits are higher than $2,500, you need to make the payment by the 15th of the following month.  So, if you are submitting this monthly, your April deposits would need to be sent in by May 15th and so forth.  Timalyn notes that there's a threshold that would require you to make deposits semi-weekly deposits.  So, in this case, a company's payroll deposits of any payroll taxes withheld would need to be made within 3 days of having run the payroll.  If You Fail to Meet Your Obligations As Timalyn mentioned at the outset, there are severe penalties if you fail to meet your payroll tax obligations.  The IRS can assess civil penalties including: ●      Failure to File ●      Failure to Deposit ●      Trust Fund Recovery Penalties (one of the biggest tax penalties) o   It can be up to 100% of the tax owed o   A $15,000 deposit that wasn't made, could be assessed another $15,000 penalty ▪       Plus, the original $15,000, the Failure to File and Failure to Deposit penalties You have to keep up with your payroll tax obligations.  If you let them get away from you, they can potentially drive you out of business. The IRS can also file criminal charges including imprisonment and fines.  It's considered a felony to willfully not collect or truthfully account for the tax.  This is why making sure you're using the proper classification of anyone working for you.  You can be put in prison for up to 5 years and be fined up to $10,000.    If you are a business owner and you know you have a payroll tax issue, consider booking a consultation with Timalyn, via here Bowens Tax Solutions website.  Click this link to sign-up for your paid consultation. Additional Resources The upcoming Episode 36 will focus on the Trust Fund Recovery Penalty.  Be sure to listen in 2 weeks. If you are a tax professional, the Tax Pro Representation Journey will launch on Sept 18, 2023.  This is a group with a private podcast and article subscription for tax pros interested in representing taxpayers facing back tax issues.  This will include weekly tips to help you grow this area of your business. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 35, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.  For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 34:  In this episode, Timalyn discusses the seemingly controversial topic of tax evasion vs. tax avoidance.  These terms have very different meanings, although some people mistakenly use them interchangeably.  She'll explain the terms and how to help you understand whether you're attempting to do something illegal, or extremely (legally) beneficial. Tax avoidance is a legal strategy used to minimize your tax liability.  The bulk of today's episode will explore tax evasion.  She will discuss the underground economy and why you need to stop participating in it.  You could go to prison and be required to deal with your back tax issues.  Tax Avoidance You can think of tax avoidance as legal steps you can take to reduce your tax liability and to maximize your after-tax income.  Timalyn begins with the step of investing in a tax planner to help you with a strategy to minimize your taxes.  This is classified as tax avoidance and it's perfectly legal.  Timalyn lists some common tax avoidance tactics: ●      Claiming your home office deduction as a business owner ●      Itemizing your mortgage interest as a home owner ●      Itemizing charitable contributions  Common but Illegal Tactics that Are Considered Tax Evasion ●      Paying someone in cash so they don't have to report taxable income ●      Receiving cash payment and not reporting the taxable income ●      Paying a babysitter in cash, but not issuing a 1099 if required ●      Requesting to be paid in cash so you "don't have to report it" Remember, the IRS wants you to report anytime money is exchanged for goods or services.  We have a voluntary compliance system.  The IRS relies on you to perform your civic duty. Now, this may seem controversial to some (or many), but remember, Timalyn's goal is to fill the tax literacy gap one taxpayer at a time.  She's offering this advice to help you to better understand taxes and to help you to stay out of trouble with the IRS. Timalyn provides a tremendous amount of free information on her podcast and on her  YouTube Channel.  If you'd like personal advice, based on your specific situation, you can book a paid consultation with her.  The Underground Economy Surprisingly, many of us are probably participating in the underground economy without thinking, or realizing, we're doing it.  Consider these everyday activities: ●      Selling or buying something at a garage sale ●      Paying cash or accepting cash for tutoring ●      Paying cash or accepting cash for raking leaves or shoveling snow The IRS knows these activities happen, but they can't really track it.  However, some people purposefully take advantage of the activities to avoid paying taxes.  If the IRS proves that you have engaged in tax evasion, they will assess penalties in addition to the back taxes owed. Tax Evasion This is defined as the failure to report income or the deliberate underpayment of taxes.  If you are a W2 employee, taxes are normally deducted from your paycheck, based on your W-4 .  If you deliberately complete your W-4 without having any taxes withheld, it's considered tax evasion.  If you are a traveling nurse who will make 6-figures or more in a tax year, you should definitely make sure you are not going “exempt” on your W-4.  It's deliberately underpaying your taxes. If the IRS pursues and proves you are committing tax evasion, you will be forced to pay your back taxes and penalties.  However, Timalyn explains that you can also face up to 5 years in prison.  Is it really worth the risk?  Timalyn reminds us that Al Capone was ultimately convicted of tax evasion, because they were having problems convicting him on other charges.  He was sentenced to more than 5 years because they were able to add additional charges.  Martha Stewart and Willie Nelson were both penalized for crimes related to tax evasion.  Actors Nicolas Cage and Wesley Snipes also ran into legal problems involving taxes.  Timalyn also provides the example of a North Carolina man sentenced to a 36-month prison sentence for tax evasion.  He didn't file individual tax returns for 20 years.  He fraudulently filed W-4s that falsely claimed he was exempt from federal and state income tax withholdings.  You May Not Be Required to File Federal a Tax Return There are some circumstances in which you may not be required to file a federal return.  Some of these include: ●      You only receive social security income and no other sources of income ●      Your earned income is lower than the standard deduction and you have no other sources of income By the way, if you failed to file a federal tax return you were required to submit, you may have forfeited your right to any refund that may have been payable to you, based on the length of time that has elapsed. Remember, if your tax returns are late by 5 months or longer, you could be assessed a Failure to File penalty of up to 25% of the tax liability.  Under specific circumstances, you may be eligible for Reasonable Cause Penalty Abatement, which erases the penalty.  If you have unfiled tax returns and you know you owe taxes, you'll be assessed with the Failure to Pay Penalty.  You need to seek out an experienced, qualified tax professional to help you with your situation.  In Episode 33, Timalyn explains Tax Representation and how it can help you.    The bottom line is that it's time for you to be proactive in resolving your tax debt issues.  As Timalyn mentioned early in this episode, she encourages you to review the free information she's provided on YouTube and in the previous episodes of this podcast.  If you're ready to talk about your options, book an appointment with Timalyn.  There's link in the below paragraphs.  The IRS is serious about tax debt.  Timalyn Bowens is serious about helping you to resolve it. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 34, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 33:  In this episode, Timalyn takes a step back to explain what she means when she uses the term tax representation.  She mentions it in podcasts, but it's term people may not fully understand.  If you have tax problems with the IRS, there's a good chance tax representation is exactly what you're looking for, right now.  Before she begins, Timalyn takes a minute to thank her listeners for helping her to reach 1,000 subscribers on her YouTube channel!  She sincerely appreciates your support and helping her to continue on her mission to fill the tax literacy gap, one taxpayer at a time. You Have Rights as a Taxpayer Timalyn begins with a story about a client who set up an installment agreement with the IRS to pay the tax debt.  However, this person was struggling to make the payments.  You have a right, as a taxpayer, to not have to incur a financial hardship while paying the tax debt.  There are ways to navigate this process.  It often involves having a tax professional that understands your rights to represent you.  There are issues that can be negotiated to help you meet your obligations, while at the same time enabling you to do so in a reasonable fashion. Defining Tax Representation According to the Internal Revenue Manual (IRM), tax payers have the right to representation.  It means you can let your tax representative communicate with the IRS, on your behalf.  While the IRS can and will still mail you communications, in most situations they can't force you to attend meetings if you have an authorized representative.  The IRS cannot call you directly, if you've hired a tax representative.  Again, this is a protection you have under the taxpayer bill of rights.  Your representative will submit IRS Form 2848, informing the IRS that they have your permission to represent them. The tax representative you hire must be credentialed.  There are only 3 types of tax professionals who can officially represent you in front of the IRS.  These three are:  a tax attorney, a certified public accountant (CPA) or an enrolled agent (EA). What Is an Enrolled Agent? An enrolled agent specializes in taxes.  An enrolled agent has an extensive 3-part test they must pass to qualify as an EA.  This is a special designation by the IRS enabling the EA to represent clients in all 50 states as it relates to IRS tax matters. Generally speaking, once you've hired a tax representative, you won't have to attend meetings requested by the IRS.  This is something your representative will do for you.  However, it's important to understand there are exceptions, such as if the IRS formally sends you a subpoena to appear, via a summons. Timalyn explains that in most situations, if the taxpayer is in an interview or conversation with the IRS, they have the right to stop the proceeding by asking to consult with a tax representative.  The taxpayer will need to show the IRS Form 2848 to prove he/she has a designated representative. Once hired, Timalyn will execute the Form 2848, provide a copy to her client (the taxpayer) and file a copy with the IRS Centralized Authorization File, also known as the CAF unit.  Once it's been filed and processed, the IRS will automatically see Timalyn is representing the taxpayer and therefore, the IRS must call her instead of the taxpayer.  If the IRS mails letters to the taxpayer, they are required to copy Timalyn.  It's important to note that an EA is NOT an employee of the IRS.  They are a tax professional authorized to represent taxpayers before the IRS.  Timalyn works for you, not the IRS. What if I Can't Afford to Hire a Tax Representative? There are situations in which an individual may not be able to pay for the services of a tax attorney, a CPA or an EA.  Don't panic.  If you can't afford representation, you still have a right to representation.  The IRS has a special program to address this situation.  It's the Low Income Taxpayer Clinic (LITC).  The nearest LITC can be located either via the above link, or by calling 1-800-829-3676.  There are guidelines to determine if you qualify to use the LITC.  Timalyn reminds us that the definition the IRS uses and your definition of being broke aren't necessarily the same. The LITC is independent from the IRS and also from the IRS Tax Advocate Service (TAS).  The TAS is there to help with the IRS systems aren't working correctly and may be abusing your rights.  The LITC works for you to make sure your tax debt payments don't place you in a financial hardship.  Again, this is part of your rights under the law. The LITC can represent you in tax audits, appeals and in tax collection disputes both before the IRS and in court.  If you still need help deciding which route is best for you and your specific situation, book a consultation with Timalyn.  This link will take you to the Tax Relief Consultation page on www.BowensTaxSolutions.com.  There is a fee for this consultation.  Before you book this appointment, you'll want to have specific information available.  This includes your actual questions, the amount the IRS alleges you owe, a rough idea of your income and your latest tax notice.  After the call, you'll have a roadmap for the next steps you should take.  If Timalyn takes you on as a client during the 14 days after the meeting, the fee for the consultation will be credited toward her fee for tax representation.  It's important that you take the first step in proactively addressing your back-tax situation.  Whether this means hiring Timalyn, handling it yourself or seeking out the services of a different tax professional, take action now. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either. As we conclude Episode 33, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.    Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 32:  In this episode, Timalyn will discuss the process remove a tax lien.  She recently taught a class to a group of tax professionals.  Many of them had questions related to this topic.  Based on their responses, she thought this would be a good topic to share with actual taxpayers who follow her podcast. If you're dealing with this situation, you've probably already received the IRS Notice of Federal Tax Lien.  The IRS files this with your county clerk's office.    What Is a Federal Tax Lien? Timalyn explains that it's when the IRS “calls dibs” on your property, until your federal tax debt is paid.  Even if you're not a homeowner, it applies to any property (real or personal), such as a car.  The lien is attached and will enable the IRS to recover its money from the proceeds, if that asset is sold.  A business may have accounts receivables. The lien also attaches to this so that the IRS gets paid from those receivables or other business property.  In fact, the IRS can even attach a lien to your retirement funds.  This is a serious situation. In Episode 7, Timalyn explained the Collection Statute Expiration Date (“CSED”).  It's the last day the IRS can legally collect on a tax debt.  Federal tax liens also have a similar date.  They are self-releasing within 10 years of the date they were filed, as long as the IRS doesn't re-issue a lien for specific years.    What if I Haven't Received a Notice of Federal Tax Lien? This doesn't necessarily mean you're in the clear.  The lien is issued after the tax is assessed and after a CP14 has been issued.  The CP14 gives a date by which the payment must be made.  If you fail to comply with that deadline, there is a silent tax lien.    Due process has been followed for the lien to exist. It just hasn't been sent to the county clerk's office. That's why it's referred to as a silent lien. This is important to note because the IRS can issue a tax levy, as discussed in Episode 5 without filing a lien with the county clerk. What if I Can't Pay the Tax Debt? As Timalyn discussed in Episode 10, you may have the option of setting an IRS installment agreement.  If you owe less than $10,000 and have been tax compliant for the past few years, it may be a guaranteed option.  Check out Timalyn's e-book, How to Guarantee a Pay Plan with the IRS. Assuming you've already received the tax lien, how do you remove it? 4 Ways to Remove a Federal Tax Lien The first way:  Pay the Debt  This is not sarcasm.  It's the obvious solution, if you can do it.  Things happen and situations change.  Once the debt is paid, the tax lien will be removed within 30 days.  The amount required can include the tax debt, any penalties and any interest that has accrued. Call the Centralized Lien Office at 800-913-6050.  You'll want to verify the total amount owed, request the years with a tax lien issued on them and importantly, to request a Payoff Letter.  This letter will be necessary if you're going to sell an asset with a lien attached.  Timalyn discussed selling a home with a tax lien in Episode 4.  The Payoff Letter would be needed by the title company, so you can prove how the lien will be resolved, without delaying or preventing the sale. The second way:  A Discharge of Property This process will usually take about 45 days.  You'll request that the IRS remove the tax lien so the property can be gotten rid of.  You'll have to provide specific information on the IRS Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien.  The information will include: ●      The Fair Market Value of the Property ●      Who Is Interested in Purchasing the Property ●      The Sale Price (to determine the proceeds available to pay off the tax debt) ●      And other, related details The third way:  Subordination This does not eliminate the lien.  However, with subordination, the IRS agrees to stand aside to allow another creditor to get its share before the IRS.  They'll potentially do this if they feel it's in their best interest.  Timalyn give the example of someone with an installment agreement who is struggling to meet the agreed upon payments.  If another debt could be eliminated, it would enable more money to be applied to the installment agreement payments. The fourth way:  Requesting a Lien Withdrawal If your tax debt is less than $25,000, you're setup with a direct debit installment agreement, you have no defaults related to the agreement, your most recent tax returns are filed, your tax withholdings are in order (or you're making your estimated quarterly payments) and you've made 3 consecutive payments on the agreement, a good faith request for lien removal can be made. You'll need to complete IRS Form12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien.  Is Bankruptcy an Option for Back Taxes? This is a misconception many people have.  You cannot put a tax return into a bankruptcy unless it meets a 3 year, 2 year, 240-day rule.  As of the recording of this episode in 2023, your 2022, 2021 or 2020 tax debt would not qualify.  Additionally, if you have a federal tax lien, you should not put that into the bankruptcy.  The IRS has a secured interest, via the lien, and you'll have to pay it back anyway.  Bankruptcy may be a viable option for debts unrelated to tax lien.  If this is your situation, Timalyn suggests you work with both a bankruptcy attorney and a tax professional to make sure your bases are covered.  Timalyn is the owner and lead accountant at Bowens Tax Solutions and they can assist with tax lien removal.  If you want to work with someone else, at least you now have good information to help you understand the process.  If you would like to work with Bowens Tax Solutions, make sure you book your tax relief consultation with Timalyn. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either.  As we conclude Episode 32, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.  Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 31:  In this episode, Timalyn focuses on preventative care for business owners.  Today, she'll focus on sole proprietor taxes.  She reminds her audience that over 90% of the clients she works with, who owe back taxes they can't pay, are business owners.  Many of these clients are single-member LLCs, also referred to as sole proprietors.  Let's listen to Timalyn as she continues her mission to fill the tax literacy gap, one taxpayer at a time. Spotting the Red Flag Timalyn begins by commenting about a common question she receives.  “I've filed my personal taxes, but can you file the tax returns for my business?”  This is a red flag.  Individual tax returns are due in April, but returns for a some corporations and partnership are due earlier.  If the person asking the question is a single-member LLC, the tax information related to the sole proprietorship should have been filed as part of the individual tax returns. What is a Sole Proprietorship? This classification refers to any business that's unincorporated.  Any individual who sets up an unincorporated business is considered to be a sole proprietor.  This would apply to an Uber or Lyft driver and many other types of individuals exchanging services for payment.  Many people don't actually realize they are a business, for tax purposes.  This can lead to confusion and potential problems down the road. What's the Difference Between a Sole Proprietorship and an LLC? A Limited Liability Company (LLC) is a state-designation.  There's no actual advantage relative to federal taxes when you're a single-member LLC.    A single-member LLC is the same as a sole proprietorship, at the federal level.  It changes if there are multiple members of the LLC. Timalyn explains the Federal 1040 tax form is used for both individuals and single-member LLCs.  However, the LLC will also file the IRS Schedule C, as part of the tax return.  This is what she referred to at the beginning regarding a red flag.  There is no separate tax return for a single-member LLC (also known as a sole proprietorship). The IRS Schedule SE is also an integral part of the tax return.  This is the form used to calculate the self-employment tax liability.  Timalyn recorded an episode on self-employment tax.  You can also watch her YouTube video explaining how to calculate the self-employment tax liability.  It's roughly 15.3% of income of your net income.  The tax rate for a sole proprietor is directly related to the tax rate for the individual's ordinary income.  You can use IRS Form 1040-ES to calculate your quarterly estimated tax payments.  Timalyn explains quarterly estimated tax payments in Episode 21.  If you're going to have a tax liability of $1,000 or more, you're required to make these payments.  Remember, we have a pay as you go system.  It has nothing to do with whether you received a tax refund last year.  If you make more than the IRS standard deduction, you're going to have a tax liability.  A Quick Tip for W-2 earners with a Side Hustle One way to deal with the issue of quarterly tax payments is to adjust your withholdings taken out of your W2-based paycheck.  This can relieve the pressure of having to make these manual payments.  Remember, if you're a sole proprietor this business income and your W2 earnings all go into the same pot for tax purposes.  For more information on filling out the IRS 1040-ES, watch Timalyn's YouTube video. State Obligations with a Single-Member LLC So far, Timalyn has focused on federal taxes.  Now, let's briefly transition to state taxes.  She uses Kentucky as a basis for the following information.  It's important to note that each state is different, so check with your state's Department of Revenue.  Kentucky requires single-member LLCs to submit an Annual Report by June 30th of each year.  This enables you to update or confirm basic information about your business.  In Kentucky, it also requires a $15 fee as of the time of this recording.    Kentucky single-member LLCs also include the Kentucky Form 725 with their end-of-year tax returns.  The current fee is $175.  Additionally, you may also have local tax requirements. Be sure to check with your local tax authority.  In the Louisville area, it's the Metro Louisville Revenue Commission.  Louisville requires businesses to submit Form OL-3, which is an occupational license.  The tax rate is 2.2% on your net profit.    In summary, single-member LLCs are sole proprietors and have specific forms required for taxes.  Rather than trying to know everything you need to know about taxes, Timalyn recommends you work with a qualified tax professional whom you trust.  They will be able to make sure the proper forms are accurately completed.  If you'd like help determining which type of tax professional to hire, please listen to Episode 23 and Episode 16. If you'd like to learn more, consider purchasing Timalyn's course:  Business Taxes 101.  She'll teach you about the other business entities and the obligations required for each.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin their life either.   As we conclude Episode 31, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 30:  In this episode, Timalyn discusses her mission to fill the tax literacy gap.  Many people, including business owners, don't fully understand their taxes and what they sign each year.  Timalyn will highlight some upcoming opportunities to help you to learn more. Welcome to the 30th episode of Tax Relief with Timalyn Bowens.  Timalyn begins with some quick stats about podcasts.  There are roughly 4,000,000 podcasts.  However, in 2022, only 500,000 of those podcasts were considered “active.”  To qualify, there only had to be 1 episode published in 2022.  Thanks to your interest, this podcast continues to grow. What is the Tax Literacy Gap? Timalyn defines this as the space between information people know about taxes, and what they should know.  When you sign your tax returns, you accept responsibility for the information contained in those forms.  The IRS can and will hold you both liable and accountable for the information you provided. One of the challenges our society faces is that taxes aren't typically taught about in school for t individuals or business owners.  Nonetheless, you're expected to understand it because you have to sign documents related to your taxes each year.  Timalyn's passion is to help the average taxpayer to fill in the gap between what you know and, again, what you should know.  She's been surprised by the reaction some of her clients have when the lightbulbs begin to light up because they actually are beginning to make sense of their taxes.  Knowledge is power.  Remember, your tax returns are legally binding documents.  It's important to understand what you're signing and submitting to the IRS. Another Insight Timalyn Learned As Timalyn continued to grow her practice, she began to realize that even highly-successful business owners are horrible at taxes.  Admittedly, most don't want to have the same depth and breadth of tax knowledge she has.  However, it's important that they understand the implications of what they're signing. Working with Older Retirees Timalyn comments about some of her older taxpayers who have come to her because they owed taxes each year.  Many retirees don't fully understand how some small changes to their pension and social security withholding can reduce the end-of-year tax liability.  Again, it's the tax literacy gap was showing up. You Can Reduce Your Tax Literacy Gap One of the resources Timalyn provides is her Tax Tips with Timalyn blog.  She also offers another subscription blog, on the Americas Favorite EA website.  Do you know about Timalyn's YouTube channel?  She has informative videos available for anyone who wants to know more about their taxes. Timalyn explains that at her core, she's a teacher.  Taxes just happen to be her area of interest and expertise.  She's committed to being even more intentional about providing new and insightful resources this year.    As part of this commitment, she's bringing back “Writing Wednesdays.”  She's going to have a new blog post available each Wednesday.  They'll be featured on her America's Favorite EA blog, referenced at the beginning of this section.  Be sure to subscribe! Who is she trying to help with this blog? ●      The average taxpayer ●      First-generation business owners ●      Retirees ●      Other tax professionals Timalyn is Launching New Resources On September 18th of 2023, Timalyn will launch 2 exciting, interactive opportunities.  She's launching “The Family” for business owners.  It's a 2-hour meeting, twice per month, focusing on tax and financial questions.  This is a paid subscription-based program. “The Cousins” is a different group is a little more intimate.  An application for entry into the is required and it will be limited to 5 people per cohort.  The program will last for 6 months.  It'll meet twice per month.  This will be a mastermind-style experience.  Members will have the opportunity to add on a 1-1 meeting with Timalyn as well. If you are interested in participating in being part of the Family or becoming a Cousin, contact Timalyn via her Americas Favorite EA Contact Page, to let her know.  She'll be happy to provide you with more details. For Tax Professionals If you are a tax professional, don't forget about Timalyn's Tax Pro Circle.  While she teaches other topics, she's going to focus on instructing other professionals who are pursuing resolution and representation as an area of service.  This will also be an application-only program.  Please get in touch with Timalyn via her America's Favorite EA Contact Page.  Timalyn hopes this provides a sense of where she's going over the next 3-5 years, as it relates to filling in the tax literacy gap. Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin your life. As we conclude Episode 30, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 29:  In this episode, Timalyn discusses the IRS CP14 notice.  You'll receive this form if you owe unpaid taxes to the IRS.  It's a demand for payment.  So, what do you do now?  Timalyn will provide all the information you need to know to handle this issue. Timalyn begins by pointing out that the IRS wants you to set up an account and ideally receive notifications electronically.  This may or may not be the best route for you.  Receiving important notices in the mail may be a better way of making sure you don't miss out on important communications. What is an IRS CP14 Notice? This is an official communication from the IRS informing you of taxes you owe, the specific amount, and it serves as a demand for payment.  CP actually stands for “Computer Paragraph.”  Understand this is a computer-generated form that no human has handled.  Also, understand that the IRS can and does make mistakes.  It may not be accurate. The CP14 provides the following information: ●      The amount due ●      The tax year related to the unpaid taxes ●      The date the payment is required to be made What Should You Do if You Receive a CP14 Notice? Timalyn explains that your first step is to remember to breathe.  Next, carefully review the information provided.  Compare that information to the copies of your IRS returns.  Do they match?  If You Think the CP14 is incorrect, Review the 3 Phases of Tax Relief In Episode 9, Timalyn explained these phases.  First, review your IRS transcript online.  It will tell you when your return was filed, any balance due on the account, and any payments already made.  Sometimes, payments can cross in the mail and this is why you may have received a CP14, even though you paid your taxes. Timalyn wrote a blog post titled:  “How to Get Your IRS Transcript in 3 Steps.”  This is a good resource if you don't know how to review your tax transcript.  What if You Do Owe Unpaid Taxes? Timalyn released a podcast episode (Episode 22) outlining your options if you can't pay your tax bill.  You'll want to determine how long it will take you to pay the taxes you owe. If the balance is less than $10,000 and you've tax compliant, you may be eligible for a guaranteed installment agreement allowing you 36 months to pay it off.  Timalyn has an e-book on her website, which you can purchase.  It will walk you through this process, step-by-step. If you owe more than $10,000 but less than $50,000, you may have the option of setting up a streamlined installment agreement.  Timalyn discusses IRS installment agreements in Episode 10. It's also possible to get the IRS to temporarily delay any collection activities.  Your status would be classified as “Currently Not Collectible.”  This takes effort because you have to be able to prove to the IRS that you're unable to pay, at this time.  This is usually due to financial hardship.  You and the IRS may disagree on “reasonable” living expenses.  Listen to Episode 18 for more information. Timalyn urges you to make every effort to pay off your tax debt as soon as possible.  The IRS can and will assess significant interest and penalties based on your unpaid taxes.  How to Avoid this Issue in the First Place (a Bonus) While the IRS has been lenient since the pandemic, they still have continued to issue tax liens and levy bank accounts.  You can avoid getting into this situation by making estimated tax payments.  Self-employed individuals make estimated tax payments on a quarterly basis.  Doing so can help you avoid an underpayment penalty.  W-2 employees already make estimated tax payments through their withholdings.  Interestingly, Timalyn points out that as a business owner, you don't have to wait until the end of the quarter to make the payments.  In fact, you can make tax payments on a monthly or even bi-weekly.  By paying into the IRS, you can create a cushion in case life happens.  Even though you are planning to pay your quarterly payment, an unforeseen emergency can creep up and cause you to have to cover the cost of expenses you didn't anticipate.  It happens. If not being able to pay your taxes is a reoccurring problem, consider getting tax planning advice.  You may be able to reduce your overall tax liability during the year.  The Taxpayer Bill of Rights provides certain rights, such as the right to representation.  Take advantage of that right.  If you are a tax professional, Timalyn provides a LinkedIn Live Event on Tuesday at 11:00EST.  It focuses on how to negotiate with the IRS on behalf of your clients.  Follow Timalyn on LinkedIn.  You'll need to sign-up for the events. The next episode is #30!  Timalyn encourages you to listen to the beginning of Episode 10 to see what a milestone that actually was.  Episode 30 will be even more special.  Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin your life.   As we conclude Episode 29, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.  For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 28:  In this episode, Timalyn discusses the IRC 662 Accuracy-Related Penalty.  She'll explain what it is, how it can be issued against you and how to avoid it.  She'll use the example of a live case involving Beyoncé Knowles-Carter.  Timalyn begins by explaining how a case is in the US Tax Court, part of the Taxpayer Privacy Act no longer applies.  This is why she's able to find public information about the case involving Beyoncé. What is the Accuracy-Related Penalty? This penalty applies if you underpay the tax required to be shown on your return.   Individuals have 2 common accuracy-related penalties. The first is negligence or disregard of the rules or regulations.  The second is a substantial understatement of income tax.  Timalyn explains that negligence is when someone doesn't make a reasonable attempt to follow the tax laws, when preparing a tax return.  Disregard means someone carelessly, recklessly or intentionally ignore the tax rules or regulations. Examples of Negligence Not keeping records to prove you qualify for specific credits and/or deductions is a simple example.  For instance, if you are claiming a child on your return, you need to be able to prove the child exists and that you have the right to claim him/her. Another example would be not claiming income shown in an information return, such as on a W-2 or 1099.  Finally, not checking the accuracy of a deduction or credit; especially when it seems too good to be true. Examples of a Substantial Understatement of Income Tax An individual can be hit with this penalty if he/she understates the tax liability by 10% of the tax required to be shown on the tax return or $5,000 (whichever is greater).  A business owner might claim a deduction based on Section 199a Qualified Business Income Deduction.  The penalty would apply if income is understated by 5% of the tax required to be shown or $5,000 (whichever is greater).  How to Avoid the Accuracy-Related Penalty ·      Don't claim a credit or deduction for which you don't actually qualify. ·      Claim all required income when completing your tax return. Timalyn reminds you that the IRS may be slow, but they're not stupid.  They will eventually find out and assess various penalties.  In previous episodes, Timalyn has discussed the Failure to File Penalty (which can be up to 25%).  If you are facing an Accuracy-Related Penalty, it can be up to 20% of the portion of the underpayment due to negligence or disregard.  It's also 20%, when a substantial understatement is made.  This means a penalty of 20% of the amount you understated.  You'll also be assessed the interest related to these issues.  Can I Get the Accuracy-Related Penalty Removed or Reduced? Timalyn explains that it might be possible, but listen to her episode on First-Time Penalty Abatement.  You have the burden of proof as to why the penalty should be removed or reduced.  You'll have to show that you acted in good faith and can show a reasonable cause as to why it happened.  Timalyn explained Removing Penalties for Reasonable Cause, in Episode 12. If you want to book a consultation to discuss your specific situation, you can schedule an appointment at https://bookingbowens.as.me/schedule.php.  This is on the website for Bowens Tax Solutions.  Avoiding the Penalty by Substantiating As Timalyn stated earlier, it may be possible to avoid the Accuracy-Related Penalty, but you have to be able to prove why it shouldn't apply.  You need to report everything required, and to be able to explain why something as omitted from the return, or isn't actually required.  Beyoncé Knowles-Carter vs. US Tax Court According to public information, for the tax year 2018, her tax return showed a deficiency of $805,850.  Per the Internal Revenue Code Section 662a, she was accessed an accuracy-related penalty of $161,170.  In 2019, another deficiency of almost $1.5 million.  Per the Internal Revenue Code Section 662a, she was accessed an accuracy-related penalty of $288,549.  Now, as Timalyn explained in Episode 26, there is a IRS Collection Due Process.  You also have the right to appeal an IRS decision, which she covered in Episode 27.  Beyoncé deducted $761,455 on her Schedule C7.  The IRS disallowed that deduction.  She and her advisors will have to prove the deduction was ordinary and necessary.  They will also have to substantiate the deduction by showing the expense was actually paid.  Timalyn advises you should always keep receipts, because your bank statements may not give the full picture.    Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn't ruin your life. As we conclude Episode 28, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.    Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 27:  In this episode, Timalyn is relaxing after the federal tax deadline.  Today, she'll discuss the IRS appeals process.  Timalyn will discuss how to make an appeal and how it affects your current situation. You might find it helpful to go back and listen to Episode 26 on the IRS Collection Due Process.  It sets up today's topic. Let's face it, nobody like to pay taxes.  As an enrolled agent, Timalyn represents taxpayers in IRS proceedings.  There are times when she doesn't agree with a decision made by the IRS.  That's when IRS appeals offer a chance to revisit a particular issue, on behalf of the taxpayer.  Timalyn discusses a time she had to contact the IRS about a tax refund they forgot to issue to her.  For some reason, they couldn't simply apply the balance to an upcoming tax payment.  She had to go through the same process other taxpayers have to experience.  In the end, the issue was resolved without the need for an IRS appeal.  Making an IRS Appeal When you have a tax liability, you know you need to pay it to the IRS.  However, there are times when you dispute the amount the IRS proposes you owe, as well as penalties and enforcement actions. This is when you need to file an appeal.  In Episode 26, Timalyn explained that the IRS Appeals Office is an independent organization.  They can look at the situation objectively. When Can't I Make an Appeal? There are certain reasons you cannot use as a basis to appeal an IRS decision.  For instance, you can't appeal based on what you feel are moral reasons, religious reasons, political reasons, Constitutional reasons or what's called “conscientious reasons.” However, any other basis is considered fair game enabling you to make an IRS appeal.  What Happens When I Appeal an IRS Decision? Timalyn explains that the first step is a conference with your local appeals office.  It sounds more intimidating than it really is.  The conference may be in person, via written correspondence, or via telephone.  You can hire an authorized representative to handle your appeal.  Episode 23 outlines the 3 types of tax professionals who are authorized to represent you regarding IRS issues:  ●      A Tax Attorney ●      A Certified Public Accountant (CPA) ●      An Enrolled Agent Types of IRS Appeals The first type of appeal is a “Small Case Request.”  This is for issues less than $25,000.  You'll need to include a brief statement regarding the original IRS decision and what you are requesting to appeal.  You need to specifically include the issue with which you disagree.  You only have 30 days, from the date on your notice (not the date you received it), to submit this information.  The second type of appeal could involve more than one tax period or is $25,000 or more, this is called a “Formal Protest.”  There is more required with this appeal.  Here's what you'll need to include with your Formal Protest: ●      Taxpayer's full name, address and daytime phone number ●      Statement outlining why you want to appeal the decision ●      Include a copy of the letter Proposed Tax Adjustment (sent by the IRS) ●      List the tax periods or years ●      Include a list of changes you don't agree with, including your rationale for the disagreement ●      You must include facts substantiating your reason for disagreeing with the IRS ●      Include any law or authority used as the basis for your disagreeing ●      Don't forget to sign everything you're submitting. ●      State that you are signing “Under the penalties of perjury, you are signing that you believe the information your submitting is true, correct and to the best of your knowledge, complete.” This is a serious process.  It's not meant to enable you to game the system or to cause additional delays.  For Tax Professionals and Representatives Remember, we are required under IRS Circular 230 to sign and submit a similar statement regarding the validity of the information you submit on behalf of your client.  Cover your bases and ensure your client is being forthright.  What Can be Appealed with a Formal Protest? You can use this process to: ●      Appeal an offer in compromise ●      Appeal issues related to an exempt organization or an employee plan ●      Appeal issues on behalf of partnerships and S-Corps You wouldn't use the Formal Protest to: ●      Appeal an installment agreement ●      Appeal a tax lean ●      Appeal a tax levy Remember, you do have options.  The IRS is not always correct in its decisions.  The IRS Appeals process helps to ensure you are treated correctly.  After all, back taxes shouldn't ruin your life. As we conclude Episode 27, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 26:  In this episode, Timalyn explains what happens when the IRS pursues payment from you for back taxes.  She'll discuss some of your taxpayer rights, even when you're behind on your tax payments. Special Note:  This episode's launch will mark the podcast's 1-year anniversary.  Thank you for your continued interest and time. As we get started, please note the abbreviation CDP refers to Collection Due Process.  Timalyn may use this abbreviation throughout this episode. When You Can't Pay Your Taxes When this episode is released, the individual tax filing deadline will almost be here.  Unfortunately for many, the tax liability may be more than they have set aside to pay taxes.  People question whether they should file if they can't pay.  What will the IRS do if they don't pay?  Will they go to jail?  There are many reasons anxiety and stress begin to take over.  However, that's not the time to freeze and simply do nothing. Timalyn explains that the Taxpayer Bill of Rights ensures you have the right to due process when it comes to IRS collection enforcement. You have protections from asset seizure, such as your property or money in your bank account. IRS Collection Due Process Hearing Under this process, IRS collection actions that have occurred or have been proposed can be reviewed by way of an appeal.  For instance, if you've received a notice of a federal tax lien filing, you have a right to appeal it.  This also applies to a final notice (IRS notice of intent to levy). Taxpayer Appeals If you appeal an IRS action, the appeals process is handled by a department independent of the Internal Revenue Service collection department. It's meant to provide the taxpayer with a fair and objective review of the situation.  The objective is to ensure the IRS follows the rules. Remember, the IRS is authorized to levy your accounts.  Social Security recipients can actually have their monthly checks levied before they are deposited into the recipients' accounts.  The IRS can garnish wages.  Even though the IRS is a federal entity, it can grab your state tax refund, in addition to any federal tax refund you may be anticipating. Requesting a Collection Due Process Hearing In addition to the above situations, you also have other times during which you can request a CDP Hearing, as a taxpayer. ●      Have you received a Notice of Jeopardy Levy?  You have a right to appeal. ●      Have you received a Notice of Levy on your state tax refund?  You have the right to appeal. ●      Have you received any other form of IRS Levy?  Again, you have the right to appeal To request a hearing, IRS Form 12153 must be submitted by the taxpayer.  This is the Request for Collection Due Process Hearing or Equivalent.  It must be submitted within 30 days of the date on the notice, not the day you received it. How Many Times Can You Request a Hearing? Timalyn clarifies that you are eligible to request per tax period, per action.  For instance, if you've received a Notice of Intent to Levy after a Notice of Intent to issue a tax lien.  In other words, you can make 2 separate requests, for the same tax period.  Collection Statue Expiration Date Remember the IRS can collect on any tax debt up to 10 years from the date it was assessed.  The specific date that collection right expires changes if you request a hearing (i.e. make an appeal).  The IRS is unable to proceed while the appeal is being reviewed. However, the time the pause lasts will get added back onto the 10-year collections window, once the appeal has concluded.  For more information on this topic, refer to Episode 5 where Timalyn explains the Collection Statute Expiration Date (”CSED”). What Happens in a CDP Hearing? This is the opportunity for you, as a taxpayer, to tell your story.  Timalyn explains you are able to propose collection alternatives at the hearing.  It's a good tool for you to use. You'll need to be prepared.  This means having receipts and paperwork in order.  You may be able to propose an installment agreement, instead of having the levy imposed.  You could propose an offer in compromise and request the time required to submit the offer.  You could possibly propose you be placed in the Currently Not Collectible status.  What if I Don't Agree with the Decision of My CDP Appeal? Timalyn explains you still have another option.  You can appeal the decision in court.  Once again, this 2nd appeal will pause the collection enforcement.  However, as Timalyn discussed above, that time will be added back onto the 10-year window the IRS has to collect a tax debt. If you are going to submit the IRS Form 12153, be sure to send it to the address on the notice you received.  Equivalent Hearing If you decide to pursue your appeal, but you've exceeded the 30 days from the date on the notice you received, there's still an option.  You actually have 1 year from the date on the notice to request an equivalent hearing. The most significant difference between the Collection Due Process Hearing and the Equivalent Hearing is that you can't take the decision of the latter to court.  In Timalyn's experience, most people are able to reach some type of agreement during either of the hearings.    Does It Feel Too Complicated or Overwhelming? For some individuals, this can be a very intimidating situation.  It's understandable.  If this is you, remember, you also have the right to representation.  There are tax professionals who can represent you.  Check out Episode 23 for the full story.  In short, an enrolled agent (such as Timalyn) is licensed to represent taxpayers in all 50 states.  Certified Public Accountants (CPAs) and tax attorneys can also represent you. An EA (enrolled agent) or a CPA can represent you in the actual Collection Due Process hearing.  Understand that if you take your CDP appeal decision to court, you'll need a tax attorney to represent you in that venue.    Timalyn comments that her accounting firm, Bowens Tax Solutions, specializes in representing taxpayers at the CDP hearings.  They can actually handle this for you, so you don't have to appear at the hearing or equivalent. If you truly feel overwhelmed, you still have options.  Remember, back taxes shouldn't ruin your life. As we conclude Episode 26, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 25:  In this episode, Timalyn goes back to basics as it relates to taxes.  She'll discuss some common tax terms people misunderstand.  Reviewing the basics will help you be prepared to sign your tax returns with confidence.  Today, she'll discuss our progressive pay system and 5 basic tax terms.  Let's get started. Timalyn has a blog post you might find helpful, 15 Tax Terms Every Taxpayer Should Know.  She also has a YouTube video on the topic.    Term #1:  Tax Return The tax return is the form you use to file your taxes.  For most individuals, you'll use the IRS Form 1040.  Businesses have different forms.  For instance, a partnership will file using the IRS Form 1065.    These forms are different from a tax refund.  Timalyn's heard people confuse the terms.  A tax refund is the money you get back after filing your tax forms, if you have overpaid.  Term #2:  Taxable Income A lot of people are confused by this term.  This isn't simply based on the income you generate.  The IRS allows for a standard deduction.  It decreases your taxable income.  Timalyn uses the example of a married couple.  For the 2023 tax year, assuming they use married filing jointly, the standard deduction they can use is $27,700.  Assuming their combined income is $100,000, they will be taxed on $82,300 (after the deduction).     Timalyn's YouTube Channel has several videos about how to properly complete your W-4, depending on your specific situation.  Term #3:  Tax Deduction This is often confused with tax credit.  A tax deduction reduces taxable income.  There are other deductions including mortgage interest, charitable contributions, etc.  The deduction isn't an amount you'll receive as part of your tax refund.  It reduces the overall amount on which you'll be taxed.  Term #4:  Tax Credit A tax credit most often is actually better than a tax deduction.  A tax credit reduces the actual tax liability.  Timalyn uses the following example.  Assume someone has a tax liability (after deductions) of $2,000.  Also assume that person has a child under 17 years of age.  If they meet other criteria, they can claim the child tax credit.  For the 2023 tax year, the amount of the that credit is $2,000.  Applying this credit would completely offset the tax liability.  Tax credits are applied on a dollar-for-dollar basis.  They would owe nothing.  Tax Term 5: Tax Liability  Don't assume you don't have a tax liability because you get a refund . Unless you make less than the standard deduction, you actually do have a tax liability.  For a single person, or someone who is married filing separately, they have a tax liability if they earned $13,850.  If you are filing head of household in 2023, you have a tax liability if you made over $20,800.  During the year, your employer is withholding taxes, based on your W-4 elections.  So in reality, you're paying the tax liability as you go.    Business owners should be making quarterly estimated payments.  These payments are made to cover your estimated tax liability, at the end of the year.  On the IRS Form 1040, page 2, your tax liability is listed.  This is before any tax credits are applied.  Next, your automatic withholdings and/or estimated quarterly tax payment are factored in.  Remember a refund simply means you overpaid.  It's not income. Our Pay-As-You-Go System We have a “progressive” pay-as-you-go system.  As Timalyn explains, assume you're in the 22% tax bracket.  Not all of your income is taxed at that rate.  Returning to the example of a married couple earning $100,000.  Our current tax brackets show that income over $89,450 and below $190,750 is taxed at 22%.  We need to subtract the 2023 standard deduction of $27,700.  This results in taxable income of $82,300 (100,000 – 27,700).  This would be taxed at the 12% level, per the tax schedules.  The IRS taxes the first $22,000 at 10%.  Income after the first $22,000, but under $89,450 is taxed at 12%.  Every taxpayer pays 10% on part of their income.  Another part will be taxed at 12%, assuming they earned more than $22,000.  Income over $89,450 is taxed at 22%.    This can sound pretty confusing.  If you have any questions at all, please send them to Timalyn via the Contact Me page on her website.  Timalyn's goal is to help fill the tax literacy gap, one taxpayer at a time, not confuse you more.  As we conclude Episode 25, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 24:  In this episode, Timalyn discusses tax extensions.  The tax deadlines are quickly approaching, so this information is extremely timely.  She'll explain what the extension is, what you need to do, and the IRS forms you'll need.  She will also discuss how an extension doesn't prevent certain IRS penalties, even if you filed the tax extension properly.  While there's still time, many individuals and business owners may feel rushed to file their taxes.  When that happens, mistakes often occur.  Making mistakes on your tax filings can come with serious consequences.  You don't have to risk making mistakes.  Instead, consider filing for a tax extension. What Is a Tax Extension? A tax extension is simply a request for more time to get your tax return filed.  This is not an extension to pay.  Timalyn will cover more about this important difference in a few minutes.  Individuals will use IRS Form 4868 to file for a tax extension.  S-Corp or Partnerships will use IRS Form 7004 to file for an extension.  You will automatically get another 6 months to file your federal tax returns.  Individuals will have until October.  S-Corps and Partnerships will have until September. How Do I Request a Tax Extension? Timalyn explains there are 3 ways to request an extension.  Option 1 is to complete the form provided by the above links. You'll need to estimate your tax liability.  You or your tax professional can do this.  Next, you'll need to determine your estimated tax payments.  Then simply mail it to the IRS using the appropriate address provided in the instructions.  Use your updated address on the form.  It's possible you may have moved since the end of the previous mail.     Option 2 is to e-file it through the IRS system, through a third-party portal (e.g. TurboTax), or let your tax professional handle it.  Timalyn admits you might be able to determine the required information and submit the information on your own.  However, mistakes by people trying to handle it themselves are often made. Option 3 is to use the IRS Direct Pay/EFTS system.  You'll make your payment, but remember to mark it for an extension, allowing more time for you to actually file the return, itself.  Note:  For S-Corps and Partnerships, the process is similar, but you'll have to provide a reason for the extension request.  Remember, you'll also need to complete this by March 15, 2023.  The extension request won't be valid if you submit it after the required filing date.  Timalyn recently posted a video to show how to file IRS Form 4868 on her YouTube Chanel.  What an IRS Tax Extension Is NOT Timalyn clarifies that a tax extension only applies to the actually filing of the tax return.  It is not a request to pay later.  For this reason, she always encourages people to file as soon as they can, rather than wait the full 6 months of the extension.  Why?  It's because you can minimize the associated penalties. If you owe taxes, even with a tax extension, you'll be assessed a failure to pay penalty.  This penalty is 0.5% for each month the tax debt is not paid.  Timalyn also has a video on calculating estimated quarterly tax payments.  Also, she covered estimated quarterly tax payments for small business owners (and some individuals) in Episode 21. Some people decide not to file because they don't have the money available to pay their tax liability.  Without filing for a tax extension, you will also be assessed a failure to file penalty.  The penalty is 5% per month, based on your tax liability.  The maximum failure to file penalty of 25%.  In this case, you'll now be hit with an underpayment penalty, a failure to pay penalty and a huge failure to file penalty.  Wouldn't it be better to at least file the tax extension? Final Comments for this Episode First, the discussion today focuses on federal tax issues.  Your state may also require steps to deal with an extension at the state level.  Timalyn encourages listeners to consult with their individual State Department of Revenue for information related to state tax filings. Second, if you enjoy the information Timalyn provides in this podcast, it would be extremely helpful if you'd consider leaving a review on whichever podcast app you use to listen.    Unfortunately, 1 in 50 tax payers have some type of tax problem with the IRS.  Please consider sharing this episode with your family and friends. As we conclude Episode 24, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 23:  In this episode, Timalyn addresses a question she gets fairly often.  Do I need a Tax Attorney, an Enrolled Agent, or a CPA?  Timalyn's mission is to fill the tax literacy gap, one taxpayer at a time, so she's going to answer this important question for all of us.   She begins by explaining the answer may depend on your situation.  Each of the 3 types of tax professionals has different qualifications.  She discussed this issue in Episode 16 (“How to Choose a Tax Professional”).  Timalyn also strongly recommends that you research the individual before hiring them because even if they have the proper credentials, it doesn't mean they have a reputation for doing what they are supposed to do.  The IRS has a database of all tax professionals who have a Preparer Tax Identification Number (PTIN).  This is a good place to start.  There are only 3 licensed professionals authorized to represent you before the IRS.  Tax representation is when the professional acts on your behalf (i.e. “they step into your shoes”) in dealing with the IRS.  You'll need to complete a Tax Power of Attorney form to enable the professional to represent you.  This is IRS Form 2848.  Timalyn also has a YouTube video explaining how to complete form 2848.  Remember, the only people who can represent you are: ●      Tax Attorney ●      Enrolled Agent (“EA”) ●      Certified Public Accountant (‘'CPA”) Tax Attorneys These professionals focus on tax law, in a specific state or states.  They can represent you in fraud and criminal cases, in addition to tax matters.  Not all tax attorneys prepare tax returns. Also, they may or may not focus on tax representation.  If you are going to hire a tax attorney, inquire whether he/she performs these services.    The tax attorney can also represent you in court, even when it's not under the jurisdiction of the IRS.  An Enrolled Agent and a CPA cannot represent you in court.  Certified Public Accountants Most taxpayers are familiar with the term CPA but don't actually know what they do.  Did you know many CPAs don't prepare tax returns?  A CPA may not handle tax representation either, even though they are authorized by the IRS to do so.  The CPA license is a state-specific license to perform accounting work and services.  There are many other areas of accounting that don't focus on taxes.  A certified public accountant may handle internal audits and audit representation.  They'll help prepare financial statements for a business or entity.  Still, this often doesn't involve work related to back taxes or tax negotiations with the IRS. Enrolled Agents These tax professionals are licensed directly by the IRS.  Unlike a tax attorney or a CPA, Enrolled agents are authorized to represent clients in all 50 states.  Timalyn clarifies that when it specifically relates to tax representation, both the tax attorney and the CPA can participate in all 50 states, but their other services are limited to the specific states in which he/she is licensed. The Enrolled Agent license is the highest credential awarded by the IRS to a tax professional.  Timalyn has a passion for taxes.  This is why she chose this path, specifically.  Enrolled agents are required to pass the Special Enrollment exam.  It's a 3-part exam focused completely on tax law.  It includes sections on individuals, businesses, and tax representation.  Evaluate Your Specific Situation Before you select a tax professional, you should strongly evaluate your situation to understand the type of professional that is best suited to handle your tax issues.  Remember, for more information on selecting the right tax professional, check out Episode 16.    FREE WEBINAR Timalyn is providing a free, live webinar on Tuesday, March 2nd, 2023 at 3:00EST.  The topic is, “How to Negotiate with the IRS, Even If You Own $100k and Can't Pay Today.”  Remember, back taxes shouldn't ruin your life.  As we conclude Episode 23, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 22:  In this episode, Timalyn focuses on her passion.  It's helping you to face your biggest fear, the IRS.  Timalyn explains that the majority of her clients are first-generation entrepreneurs.  Today, she'll provide advice many of them have needed and others will need. The Biggest Reason People Run into IRS Issues Timalyn comments the biggest reason people, especially entrepreneurs run into problems with the IRS is that they fail to pay their quarterly, estimated tax payments. Episode 21 focused on estimated tax payments. For W-2 employees, the employer automatically makes the tax withholdings.  However, if they have gains from other transactions (i.e. sale of property, stock sales, etc.), they may also be required to make quarterly, estimated tax payments.  If they don't, they could end up in the same situation as a business owner who failed to make those payments. Remember to Breathe This is actually important advice.  The ostrich approach is not the solution.  Timalyn can help you develop a plan to resolve the issues.  The first step is to file your taxes on time.  Not filing, when you know you owe taxes, is the worst thing you can do.  You'll be assessed a failure to file penalty (up to 25% for the taxes you owe as a single-member LLC or corporation).  Partnerships and/or S-corporations can be hit with a penalty for each partner or shareholder, for each month the tax filing is late. Check out Episode 2, for more information about failure to file penalties.  Episode 11 covers the first-time penalty abatement, which could be used to get the penalties removed.  Episode 12 deals with getting IRS penalties removed for reasonable cause if you don't qualify for first-time penalty abatement. The Investigation Timalyn explains that after the returns are filed, it's important to figure out why you actually owe the IRS.  Often this comes down to, again, quarterly estimated payments not being made or a W-2 employee who didn't properly complete the W-4 form.  Timalyn has a series of YouTube videos explaining how to properly fill out the W-4 Form, depending on your status.  Click this link to go to her YouTube channel. Next, Timalyn will help you to determine if there was a valid reason preventing you from making timely IRS tax payments or filing on time.  Episode 12 has a list of reasonable causes the IRS may accept.  It may qualify you to have your penalties and interest removed.  Now, you need to focus on staying tax compliant.  It's something taxpayers often mess up.  You have to file your return on time.  If you don't you could lose any deal you previously negotiated with the IRS.  This could also happen if you fail to make your estimated quarterly tax payments or don't have the funds to pay your tax liability.  Remember, tax compliance requires filing on time and that you avoid owing taxes you can't pay.   Timalyn recently did a live video on tax compliance that you can check out here: Tax Compliance . What Does the IRS Say You Can Afford to Pay? This last step is confusing, because often a taxpayer may have his/her own definition of what they can afford to pay, but the IRS may have a different amount in mind.  So, how did they get there?  The IRS Standards provide the amounts, according to the area of the country in which you live, the IRS uses to determine what you should be able to pay.  The Standards also take into account the size of your family.  This link will show you the IRS Standards, effective April 25, 2022. Before you attempt to negotiate with the IRS, you should take time to download Timalyn's “Back Tax Negotiation Checklist.”  This list is a cheat sheet of the different forms you should download and complete before getting on the phone with the IRS. What if I Still Can't Pay My Taxes on Time? After completing the above steps, it's time to negotiate.  Timalyn advises you to remember to “play nice” when you're on the phone.  These are people who are there to help and may be able to help, but how you approach them is important.  Free Live Webinar On February 23rd, Timalyn is going to offer a free, live webinar: How to Negotiate with the IRS Even if You Owe $100k (and can't pay today).  To register for this free, upcoming event go to https://www.americasfavoriteea.com/workshops . There will be no replays available. Finally, remember, communication is key to working through your IRS issues.  Don't ignore letters from the IRS.  Get the help you need to resolve these issues.  As Timalyn always says, “Back Taxes Shouldn't Ruin Your Life.” As we conclude Episode 22, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.   For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 21:  In this episode, Timalyn discusses the confusion she encounters with some business owners.  This involves the question of why they owe taxes.  Often, the issue involves estimated tax payments.  This episode isn't only for business owners.  Individuals may also need to make estimated tax payments.  In today's episode, Timalyn will explain what these payments are, who should make them, how to make them and when they need to be paid. Our Pay as You Go Tax System In the US, we are on a pay-as-you-go tax system.  The IRS prefers taxpayers don't wait until the end of the year to pay a large tax bill.  The system is set up to get you to pay as you earn your income. For W-2 wage earners, you have a portion of your earnings withheld for taxes on each paycheck.  The amount is typically determined by how you completed your IRS W-4 Form. Business owners have the responsibility to submit your individual portion and the portion your employer would normally be responsible for (if you were still a W-2 employee).  How Often Are Estimated Tax Payments Made? These payments are set up to be made on a quarterly basis.  Who Should Make Estimated Tax Payments? Timalyn explains these are for sole proprietors and partners in a general or limited partnership.  This includes people who do jobs like door dash or other service-related jobs such as insurance agents, Uber drivers, and others who receive a 1099.  Partners and shareholders are also required to make a quarterly tax payment, assuming you have a tax liability of $1,000 or more from your activities.  The threshold is $500 for corporations.  It has nothing to do with whether you typically receive a tax refund.  Your tax liability and your tax refund are 2 different topics.  To learn more about this, check out Timalyn's blog post, “15 Tax Terms Every Tax Payer Should Know.” Note:  Timalyn is speaking about federal taxes, but states may also require estimated quarterly tax payments to be made.  She recommends checking with your state's Department of Revenue. How Do I Calculate Estimated Quarterly Tax Payment Amounts? Timalyn recommends hiring a tax professional to calculate these amounts.  This service would typically not be included in a standard tax preparation fee.  For an individual, you can calculate them using IRS Form 1040-ES.  You'll also want to use IRS Form 1040-SE (“Schedule SE”), to estimate your self-employment tax.  This will also provide you with your 4-Quarterly Cash Payment Vouchers, enabling you to pay your estimated quarterly tax payments via check.  For a corporation, use IRS Form 1120-W.  This is the same process for calculating your projected income and estimating your quarterly payments.  Remember, you don't need to submit the forms you used to calculate your payments.  For federal payments, you only need to submit the form (and voucher) not the background information.  Timalyn has a video series on her YouTube channel, providing information about the W-4 and how to properly complete it, based on your situation.  This information will also help you learn how to adjust your withholdings. When Are Quarterly Estimated Tax Payments Due? The first payment is due on April 15th, yes, the same due date as your previous year's tax payments.  The second payment is due on June 15th.  The third payment is due on September 15th.  The fourth payment is due on January 15th. If the above dates fall on a holiday or weekend, the due dates roll to the following Monday.  How Do I Make Quarterly Tax Payments? Timalyn explains you have several options for your federal payments.  There is an online option via the EFTPS system.  This is the Electronic Federal Tax Payment System.  You can sign up for an account at IRS.gov enabling you to make payments. In this YouTube video, Timalyn explains how to make a tax payment using your credit card or debit card.  You can also read her blog post on how to make an online payment using your bank account. Remember, you still have the option of mailing in your tax payment with a payment voucher.  The mailing information is provided on the actual voucher.  You might consider using the IRS2Go app to make your tax payment.  The IRS also provides a pay-by-phone option, but there may be fees associated with this method. What if I Don't Make Estimated Quarterly Tax Payments? You may decide to skip making these payments.  The bottom line is that you will owe the IRS.  It's possible some life event may happen which might require you to use the money you set aside for your payment at the end of the year.  Life happens.  Making quarterly payments helps to avoid not being able to pay the IRS when the tax bill comes due.  It's always best to be proactive.  If you fall far enough behind, you may eventually find yourself in a situation where the IRS issues a tax levy on your bank account.  Avoiding the Underpayment Penalty In addition, because you didn't make your quarterly estimated tax payments, you'll also be required to pay an underpayment penalty.  To avoid it, you need to make sure you've paid 100% of last year's tax liability when you file.  You may also be able to avoid it if you have 90% of the current year's tax liability paid.  The IRS can be lenient.  If you're in a pinch, pay whichever of the two amounts is smaller. Did you know 1 in 50 taxpayers has an IRS tax issue?  There are many reasons this occurs.  It could be confusion, maybe someone's ignoring the problem, or any of a myriad of other root causes.  You can help people by sharing this episode with your family and friends.  Back taxes shouldn't ruin your life or theirs either. As we conclude Episode 21, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 20:  In this episode, Timalyn explains the retention requirements for tax records.  As an individual or a business, you need to hang on to your tax records for a period of time.  It's a common question Timalyn gets and today, she'll walk you through what you need to do.  Be sure to grab your pen and paper. How long should I keep my tax records for an audit? There's not one single answer to the question of how long you need to retain your tax-related documents.  There are different scenarios to be considered.  In general, you need to look at: The Action The Expense, and The Event If the action, for example, is the purchase of a home, Timalyn recommends maintaining the tax records related to that purchase for as long as you own the property.  If the expense is for a business-related activity, you should keep the record for at least 3 years.  Remember, if you are claiming an item/expense on your tax return, you have to be able to substantiate the cost.  Your bank statements aren't proof of the expense just how it was paid.  You should keep a third-party document such as a sales contract or receipt.  While your bookkeeper will need the receipts, your tax professional will assume you have the documentation. Refunds Remember, you have 3 years to amend a return and claim a tax refund.  As an example, Timalyn uses a 2019 tax return, filed by April 2020.  In order to claim the refund, you would have 3 years from the original due date or 2 years from when the tax was paid, whichever is later.  The IRS will usually apply that refund to an existing tax debt or a balance from a different year.  Yes, you still get the benefit, but you might not get an actual check refund. The Tax Transcript Your tax transcript is a good place to start when you're trying to determine when you paid your taxes.  In Episode 7, Timalyn discussed the importance of your tax transcript.  If you think you overpaid your taxes in a particular year you can verify your payments with your transcript. Bad Debt Loss or Worthless Securities Timalyn explains that the IRS recommends you keep bad debt and worthless security tax documents for a period of 7 years.  However, bad debt really only applies to companies on an accrual basis for their accounting.  Those using a cash basis don't have bad debt, per se.  Yes, you still may have unpaid invoices, but this is an accounting term with a specific meaning. Income Not Reported on the Tax Return You should keep your tax records for 6 years, if all of your income was not reported on the tax return and if the unreported income is more than 25% of your gross income.  Not reporting all of your income isn't something Timalyn recommends, but she is commenting on an IRS recommendation. Do I Need to Keep My Tax Records Indefinitely? You can avoid this simply by filing your tax return.  Interestingly, the IRS actually recommends keeping your records indefinitely, if you don't file your returns.  Timalyn explains that the IRS has 10 years to collect a tax debt, based on when it was assessed.  If you didn't file, the tax was not assessed.  Therefore, keep the tax documents. Remember, if you don't file a return, the IRS can file a Substitute for Return (“SFR”).  This is considered a tax assessment.  When this occurs, that 10-year collection window begins.  Using a different example, if you properly file your tax returns, you will not be required to keep your tax records indefinitely.  If your return was fraudulent, you do need to maintain your tax records.  Understand, the IRS can come after you even if it's well beyond the 10-year collection window if the information on the return was fraudulent.  This is one of the reasons you should work with a knowledgeable tax professional to prepare and file your taxes.  In Episode 16, Timalyn explains how to choose a tax professional.  Employment Taxes If your small business pays employees, your tax documentation retention rules are different.  This includes IRS Form 941 (Employer's Quarterly Federal Tax Return) and the employee information used to prepare it. IRS Form 940 (Employer's Annual Federal Unemployment Tax Return or “FUTA”) should also be kept. Don't forget your W-4s, W-2s showing how you determined the employee's contact and withholding information.  These records should be retained for 4 years after the date due or the date paid. The Importance of Filing the Return In some circumstances, a business or individual may not have the money to pay their tax liability.  Even if this is the case, you should still file the return to avoid the Failure to File penalty, which she explains in Episode 2.  How to Store Your Tax Documents Timalyn recommends storing your paper documents in a fire-safe container.  Remember, you have the burden of proof, so preserving your documentation is your responsibility. It's a good idea to make an electronic version of your documents.  It's easier to store them and takes up less room.  You would then be able to shred the paper documents. There was a lot to consider in today's episode.  The key is to ensure you have the documentation you need and that you can easily find it if you ever need to do so.  Exercising proper document retention can help you to deal with any problems that may arise down the road.  Remember, back taxes shouldn't ruin your life. As we conclude Episode 20, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Thank you for tuning in to Tax Relief with Timalyn Bowens this year! It would not have been a success without you listening, subscribing, and sharing.  Enjoy the rest of this Holiday Season and come back in 2 weeks as we start 2023 off strong.  Don't forget to connect with Timalyn on social media! 

Episode 19:  In this episode, Timalyn explains a tax issue related to separated and/or divorced parents, as it relates to claiming a child for tax purposes.  This topic is confusing to parents, other tax professionals, and even some family law attorneys.  Remember, regardless of what the divorce decree states, this issue is governed by federal tax law.  They are completely different and guess which one has more authority? According to a Pew Research article, the US has the largest percentage of children living in single-parent households.  So, if this is your situation, you're not alone.  In fact, 23% of the people under 18 live with one parent.  As common as this situation is, the rules for which parents should claim the child on taxes are often misunderstood and handled incorrectly.  The IRS' Definition of Custodial Parent The definition used by the family court may not be the same as the IRS' definition.  The IRS considers the custodial parent to be the one the child lives with most nights.  This is the parent who gets to claim the child on his/her tax return. Based on the above definition, you may find it helpful to record the specific nights the child stays in your home.  It will be proof to help you substantiate your status as the custodial parent to the IRS.  IRS Tie-Breakers These exist in the event the child spends an equal number of nights with each parent.  Remember, federal law supersedes state law.  The IRS is federal law.  Your divorce decree is based on state law. Tie-Breaker #1:  Which Parent Has the Highest Adjusted Gross Income (AGI)? The AGI is explained in Timalyn's video, 15 Tax Terms Every Taxpayer Should Know.  It's actually listed on your tax return. Tie-Breaker #2:  The Parent with the Highest AGI, if Nobody Else Can Claim the Child as a Qualifying Child When the parents don't have custody of the child, this enables a grandparent or foster parent to claim the child. Tie-Breaker #3:  A Person with the AGI Higher than Either Parent, if the Parent Can Claim the Child as a Qualifying Child, but Does Not This comes into play when someone such as a great-grandparent or other individual has custody of the child.  If their AGI is higher than either parent and neither parent claims the child, the great-grandparent or other individual can claim the child.  While these rules exist, it doesn't necessarily prevent someone else (i.e. the other parent) from claiming the child on their taxes.  So, what can you do if this happens to you?  Timalyn will explain that in a few minutes. How Can a Non-Custodial Parent Still Claim the Child? If the divorce was cordial, it may be easier to accomplish this step.  The other alternative is to negotiate the completion of IRS Form 8332, as part of the divorce settlement, if applicable.  This is a Release or Revocation of Release of Claim to Exemption for Child by Custodial Parent.  Before the 2017 Tax Cut and Jobs Act, the child tax credit was expanded and the standard deduction was doubled, but the exemptions were eliminated.  Form 8332 enables a non-custodial parent to claim the child tax credit, the additional child tax credit, and possibly credits for other dependents and educational credits (i.e. the Lifetime Learning Tax Credit and the American Opportunity Tax Credit).  Form 8332 does not enable the non-custodial parent to claim Head of Household status, the Earned Income Credit, or the Dependent Care Credit. Keep the 8332 in Your Back Pocket You'll want to make sure you keep a copy of the completed IRS Form 8332.  It will help you to substantiate that you have the right to claim the child for specific years.  In the event the non-custodial parent is no longer able to claim the child, the custodial parent is to complete a new 8332 to revoke the authorization initially granted to the non-custodial parent.  You'll probably need to consult with your attorney to determine if the non-custodial parent has actually lost the right to claim the child. Until the IRS Form 8332 is complete, the IRS will use its Tie-Breaker Rules in making the determination, regardless of the divorce decree. What Can You Do if the other Parent or Individual Claims the Child without Authorization? There is another IRS form,  866-H-DEP available to deal with this situation.  Your tax filing for the year in question must be mailed in, not e-filed.  This form must accompany your tax filing.  It outlines which supporting documents you will need to prove you should be able to claim the child, not the other person.  You will need to provide Form 8332 if you have it as well as the cover and signature pages of your divorce decree.  Your normal tax documents will need to be submitted too.  You also need to send a copy of the above packet of information to your state agency.  The IRS will review your claim and the other e-filed return, which claimed your child.  They'll use the Tie-Breaker Rules first.  The IRS Form 8332 will help you to prove you had the right to claim the child for that particular year. If you're dealing with this type of situation, make sure you're working with a qualified tax professional with experience resolving this issue.  If you need help finding a tax professional, listen to Episode 16, How to Choose a Tax Professional.  If you aren't able to claim the child, you may have a resulting tax liability.  Timalyn encourages you to remember to breathe.  As she often says, “back taxes shouldn't ruin your life.”  If you've listened to this episode, you have the information and steps required to successfully claim the child.  It's time to take action. As we conclude Episode 19, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.     Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 18:  In this episode, Timalyn provides information on how to temporarily delay IRS collections.  Notice, these delays are temporary, not permanent.  The holidays can be difficult for many people.  There are people who have felt so overwhelmed that they chose suicide as a way out from the weight of their back taxes. Timalyn hopes this episode will provide some light and hope so that won't be an option for you. Before Timalyn begins, she reminds listeners of a valuable resource, if you are considering ending your own life:  National Suicide Prevention Hotline:  1-800-273-8255 (available 24/7).  There is also a Crisis Text Line available.  Just text HELLO to 741741.  Currently Not Collectible This is the formal name for the status you'll request to temporarily delay IRS collections.  This doesn't mean the debt will go away.  It simply means the IRS agrees that you currently can't afford to pay your tax debt.  Your definition of can't afford to pay and the definition used by the IRS are often different.  Timalyn explains you'll have to prove a substantial change in income and provide your expenses.  If you've downloaded Timalyn's Back Tax Negotiation Checklist, you know that you should also look at the national standards for living expenses.  These standards show what the IRS will allow for certain expenses, based on your family size and where you live.  Proving Your Income If you're self-employed, you may use a merchant processing system, such as Square or PayPal.  This system can make it easier to track your income.  Before you contact the IRS, make sure you have your paystubs and the merchant processing report.  You'll also need to be able to prove how many people are living in your home.  This may be indicated on your previous year's tax return.  Remember to be ready to explain a death in the household or birth that has increased the number of people in the household.  IRS Collection Actions Once your tax account has transitioned to currently not collectible, the IRS will not enforce collection activities.  Again, this is temporary.  This hold does prevent a tax levy, which Timalyn explained in Episode 5.  However, this may not prevent a tax lien.  This topic was discussed in Episode 3.  Your Tax Debt Will Grow Timalyn explains that even though you may temporarily avoid further collection actions, your IRS tax debt will grow.   Tax penalties and interest will accrue.  Still, the IRS has a limited amount of time to collect a tax debt.  It generally has 10 years, unless a tolling event extends that window of time.  In Episode 7, Timalyn covered the 10-year limit and discussed tolling events.  Currently not collectible status is not considered a tolling event.  It does not extend the time the IRS has to collect the tax debt.  The clock is ticking and may work to your advantage. IRS Forms You May Need The IRS may require you to submit IRS Form 433-F, the Collection Information Statement.  Business owners will also be asked to submit IRS Form 433-B, Collection Information Statement for Businesses.  These statements will include your assets, income sources, and expenses.  Again, you'll want to compare your expenses to the national standards. For a list of forms and things, you should take into consideration download your free copy of the Back Tax Negotiation Checklist today. Can I Handle This by Myself? Timalyn comments that some individuals may be able to complete and submit these forms successfully.  Having an experienced tax relief specialist on your side can certainly help you to avoid mistakes like accidentally submitting the wrong information.  You can contact the IRS at 1-800-829-1040.  When you eventually get connected with an IRS representative, he/she may be able to help you to determine if you qualify for currently not collectible status.  Completing the IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals will help you to determine if you're eligible, without having to wait on hold with the IRS.  If you're not eligible, you'll need to set up a payment plan.  Timalyn explained setting up an IRS installment agreement in Episode 10. If your debt is under $25,000 and you think you can afford to pay it off within 36 - 72 months you may qualify for a guaranteed payment plan. If that's the case you can download a copy of Timalyn's E-book, Guaranteed Payment Plan, where Timalyn walks you through how to set up that arrangement online or by phone. The Taxpayer Advocate is a free resource available through the IRS.  They can also help you through this process.  They can be reached at 1-877-777-4778.  Hire a Tax Professional If this is the option you want to choose, the advice and service won't be free, but it will be worth your while.  For a detailed explanation of what you should consider when hiring a tax professional, listen to Timalyn in Episode 16.  Whichever route you choose, it's important that you keep the faith and take action to resolve your tax debt.  There are numerous resources provided in the show notes for this episode.  As Timalyn commented at the beginning of this episode, people can feel overwhelmed.  Those feelings can build and result in tragic choices.  It doesn't have to be that way.  Please consider sharing this episode with your network of contacts and friends.  Back taxes shouldn't ruin your life and they definitely shouldn't end your life. As we conclude Episode 18, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 17:  In this episode, Timalyn reminds us that we're 6 weeks away from the end of the year.  With that in mind, she's offering 3 overlooked tax deductions for business owners.  These deductions are not income-restricted.  You can make as much as you want and still be able to put these tax deductions to work for you, assuming you actually made money in your business.  It's time to get your pen and paper.  Let's join Timalyn for today's discussion. What Can You Do to Reduce Your Tax Liability? Timalyn begins with this important advice.  Don't wait until you're 6 weeks away from the end of the year to think about tax planning. Invest in a 2023 tax plan.  This will enable you to be proactive, rather than reactive. What Is a Tax Deduction? To qualify, an expense must be both ordinary and necessary.  Buying a yacht in your company name is nice but not always considered ordinary or necessary.  Therefore, you would want to make sure it meets all of the qualifications to be a legitimate tax deduction. A tax deduction reduces your tax liability, but it's different than a tax credit.  As an example, Timalyn assumes XYZ Company had an income of $80,000.  It made an ordinary and necessary purchase of $20,000.  The taxable income is now $60,000.  For more on this, check out Timalyn's blog post, “15 Tax Terms Every Taxpayer Should Know.”  Tax Deduction #1 - The Self-Employment Tax Deduction.  This is not listed on your Schedule C or your 1120.  It's actually listed on Schedule 1 of your 1040.  This deduction is half of the amount of your self-employment tax.  This tax is a business owner's share of social security and Medicare.  Sole proprietors (Reminder: single-member  LLCs are sole proprietors) and partners pay self-employment tax. Timalyn explained self-employment tax in more detail in Episode 8 of Tax Relief with Timalyn Bowens.  A W-2 employee only pays half of the social security and Medicare tax (FICA).  The employer pays the other half and receives a tax deduction for this expense.  This is the logic behind granting the self-employment tax deduction for sole proprietors and partners. Click here to watch Timalyn explain, what self-employment tax is. Timalyn reminds business owners that the expense must have actually been incurred in order for them to be eligible to take the deduction.  Self-employment tax is roughly 15.3%, so you would be able to deduct half of that amount.  Did you miss the self-employment tax deduction for the previous year or years?  If you answered yes, you may want to check out Episode 16, “How to Choose a Tax Professional.”  Tax Deduction #2 – Self-Employed Health Insurance Deduction Before she begins, Timalyn stresses the difference between various insurance expense items on Schedule C and health insurance expenses.  The self-employed health insurance deduction is listed on Schedule 1 of the 1040.  Insurance premiums paid for you, your spouse and any children under the age of 27 are deductible.  There are 2 important caveats.  First, you have to have made a net profit in your business for the year being reported. This is for sole proprietors or partners. A W-2 employee of their own S-corps, assuming they are more than 2% shareholder also qualify. Second, you can't deduct this expense if you are eligible to be on another insurance plan, such as your spouse's group plan offered by his/her employer. It's important that you consult with a qualified, tax professional.  There are some important guidelines that need to be considered. Check out Timalyn's GoodRX article, What Is the Self-Employed Health Insurance Deduction? Are You Eligible? for more details on this deduction. Tax Deduction #3 – HSA Contributions An HSA is a Health Savings Account.  You are required to have a high-deductible health insurance plan, to qualify for an HSA.  If you're eligible for the 2022 tax year, you can contribute up to $3,650 as an individual.  If you're 55 years old or older, you can contribute an additional, “catch up contribution” of $1,000.  If you have a family high-deductible plan, you can contribute $7,300, for 2022.  The funds in your HSA enable you to pay for healthcare expenses with tax-free money.  Contributions to your health savings account lower your taxable income.  Any balance left in the account at the end of the year will automatically rollover to the following year.  It'll gain tax-free interest and will not impact the eligible contribution limit for that following year. It's a terrific option, if you qualify for it.  Here are some additional resources for your review: How to Open an HSA if Your Self-Employed 77 Items that Qualify as HSA-Eligible Expenses for 2022 Timalyn hopes these 3 overlooked tax deductions for business owners are helpful.  You may have been aware of 1 or more of them.  However, she encourages you to share this info with other business owners who may not be familiar with these tax deductions.  They'll thank you. As we conclude Episode 17, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.   For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 16:  In this episode, Timalyn shares her perspective on the question, “How to Choose a Tax Professional.”  Entrusting someone to help you with taxes is an important decision you should make with careful consideration.  This is even more vital when you have back tax issues.  Timalyn begins with 2 disclaimers.  First, she hasn't been able to get to the podcast studio, so you may notice a slight difference in the audio quality.  Second, Timalyn is recording this particular episode specifically for you; not for her own benefit. Timalyn no longer accepts tax preparation clients. This episode aligns with her mission to fill the tax literacy gap, one taxpayer at a time. Taxes are getting more complicated.  Your family and friends may also be able to benefit from the objective information, so please share this episode with them.  In the meantime, make sure you take notes while listening to this episode. Choosing a Tax Professional Begin looking for a new tax professional now.  Don't wait until January.  Now is the perfect time to begin the search and decision process.  Remember, really good tax professionals are going to be extremely busy working with their current clients.  It may be difficult for them to schedule time to discuss your specific situation once tax season begins. Make Sure the Tax Professional You Consider has a PTIN Beware of scam artists and those who may be less than prepared to handle your taxes.  You want to verify that your tax professional is able to sign the returns they prepare for you.  Timalyn explains that a PTIN is a Preparer Tax Identification Number.  The IRS requires anyone preparing tax returns, for compensation, to have a PTIN.  You can verify the professional you are looking to work with has a PTIN by looking in the PTIN directory. The PTIN gives the IRS the ability to track a lot of information about the person preparing your taxes.  If they are doing so without a PTIN, consider it a red flag.  The IRS has a page on its website to help you.  The Directory of Federal Tax Preparers with Credentials and Select Qualifications is a reliable resource. IRS Credentials The IRS issues various credentials for those who prepare Federal tax returns.  Here is a general overview of those credentials: Enrolled Agent (“EA”) – The highest license given by the IRS. Timalyn provided an in-depth overview of this credential in Episode 1.  Enrolled agents, such as Timalyn, are authorized to do tax planning, tax preparation, advising, and representation.  As an EA, she is authorized to represent taxpayers before the IRS in all 50 states.  There are only 3 credentials that are allowed to represent taxpayers before the IRS and they are EAs, tax attorneys, and CPAs.  The enrolled agent focuses exclusively on tax.  Enrolled agents are required to complete a certain amount of continuing education credits each year, including credits on ethics and other topics. Certified Public Accountant (“CPA”) – The CPA is licensed through the state. Interestingly a CPA may not actually do taxes.  Accounting involves a broad spectrum of specialties.  For this reason, before you hire a CPA, ask if they specialize in doing taxes.  CPAs are required to complete continuing professional education credits, annually. Tax Attorney – Some attorneys do actually do taxes. However, many tax attorneys typically represent clients when criminal charges with tax issues are involved.  If they specialize in tax representation, a tax attorney can represent taxpayers before the IRS.  Tax attorneys are required to complete continuing legal education credits, each year. Annual Filing Season Program – This credential is for tax professionals who do not have one of the above 3 credentials, but still want to prove they are qualified. They take continuing education regarding tax law updates and ethics. They have limited representation rights.  Timalyn also discusses the importance of choosing a tax professional with experience.  She explains that it's not always about the credentials.  Experience is a valuable teacher.  This is especially important when you consider the niche he/she has developed.  This could be a significant benefit for your specific situation. Another resource Timalyn shares is CPAVerify.org.  This free, online resource is a quick way to confirm the credentials of a CPA. Keep in mind, just because they are a CPA does not mean they have a PTIN and are authorized to prepare tax returns. The Ripple Effect of Not Doing Your Research Yes, Timalyn has built a solid business focused on providing tax relief for people who owe back taxes to the IRS.  However, she doesn't want you to become her client, because you mistakenly hired someone who wasn't qualified to prepare your tax returns.  Tax season will be here before you know it. Start researching tax professionals to work with for the next tax season.  Make Sure Your Preparer is E-Filing This is another red flag.  If a tax professional is submitting a certain number of tax returns, the IRS requires them to e-file those returns.  Tax returns that are paper filed are still taking much too long to process, especially while we are still dealing with the impacts of the pandemic.  E-filing is simply a more efficient way to get your returns filed and processed. If your tax preparer is urging you to mail in your returns, start asking questions.  You'll want to know the specific reasons for this advice. Timalyn comments that when a tax preparer makes you mail in your returns, it may be to enable the fraudulent preparer to disappear, before the problems are detected.  Please understand that there may be valid reasons, but in this day and age, e-filing is the preferred method.  If you owe taxes, it may not be because your tax preparer did something wrong.  You may need to adjust your W-4 withholdings. You can find out how to do that by checking out Tax Tips with Timalyn or watching the YouTube video for couples married filing jointly. When you e-file your returns, you'll be notified that your return was either accepted or rejected.  You'll know what issue or issues need to be resolved.  You'll be able to begin addressing those issues with your tax professional. As we conclude Episode 16, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 15:  In this episode, Timalyn discusses injured spouse tax relief: how do you know if you qualify, the difference between an “injured spouse” and  an“innocent spouse” .  She'll also provide information about the proper IRS form to use when filing for Injured Spouse Relief. Click this link to go back and listen to the previous episode on Innocent Spouse Tax Relief. What Qualifies You as an Injured Spouse? To begin, you have to have filed a married filing jointly with your spouse.  You then have a portion or all of your tax refund taken to satisfy a debt of your spouse's.  For example, perhaps your spouse owes back taxes from a previous year (even if it was before you were married).  When you file as married filing jointly, the IRS now looks at both of you since your refund is also your spouse's refund. Your joint refund will be offset by their debt..  Can the IRS only Offset a Federal Tax Debt? The IRS can  offset your refund to satisfy federal tax debt, state tax debt and unemployment compensation debt.  If your spouse owes back child support, the IRS can also take your tax refund to offset this debt.  The IRS can also do this to satisfy other federal non-tax debts, such as outstanding student loans. Seeking Injured Spouse Tax Relief Regardless of whether you knew about your spouse's back tax situation or not, you may be able to seek relief for your portion of the tax refund that was taken. Innocent Spouse Tax Relief Remember, innocent spouse relief is valid if there was fraud on your returns that you didn't know about, or wouldn't have reasonably known about.  This fraud could include an understatement of income or maybe your spouse used “creative deductions” to reduce your tax liability.  Be sure to go back and listen to Episode 14, if you think you qualify for Innocent Spouse Relief.  Protecting Your Tax Refund If you know there's a chance your spouse has back tax issues, you can file IRS Form 8379 the Injured Spouse form.  You should file this form with your tax return to prevent the IRS from taking your portion of the tax refund.  Can I File IRS Form 8379 after I Filed My Taxes? Yes, you can file an 8379 after you file your taxes. It's possible you weren't aware of the back tax debt or other debts.  You'll need to file it each year that your refund may be taken to satisfy the eligible debts.  How Long Do I Have to File Form 8379? Timalyn explains that you must file the form within 3 years of the due date of the original return.  Timalyn recommends that you file the form electronically.  The IRS has a significant backlog of returns.  If you file the paper form, your form may get delayed or even lost.  If you file electronically, it can reduce the processing time to about 11 weeks.  If you're filing IRS Form 8379 after you've already filed your returns, the IRS takes about 8 weeks to process the form.  Consult with a Tax Professional You should discuss this with your spouse and a qualified tax professional to help you  file this form.  There are important factors to consider, such as the proper allocation of your portion of the refund versus your spouse's portion.  It's possible your W-4 withholdings may further complicate the allocation calculation. Resources from Timalyn Click this link to watch Timalyn's video on How to Properly Fill-Out a W-4 for Married Filing Jointly. Click this link to watch Timalyn's video on IRS Form 8379. Click this link to find out how to get your tax transcripts in 3 easy steps. How to Get Your Tax Transcripts. Timalyn wants you to stay in control of your tax situation.  The resources above  will help you  prepare to file your tax return with 8379 so that your tax refund is protected. Do You and Your Spouse Owe $100,000 or more in Back Taxes?  Timalyn can help you.  She has a free training on how to negotiate a $100,000 or more debt with the IRS.  Click here to get access to the training.  Feel free to share this training with other people. As we conclude Episode 15, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 14:  In this episode, Timalyn explains how a spouse may do something, or neglect to do something which results in significant tax issues.  But what happens if you didn't know what your spouse was doing?  Today, Timalyn will discuss Innocent Spouse Tax Relief.  It's definitely worth the next few minutes to listen and learn. Note:  Tax Relief with Timalyn Bowens is now available on Apple Podcasts! Timalyn begins with the example of a widow with limited income, working in a fast food restaurant.  Her deceased husband ran a business and the IRS determined he had filed years of fraudulent returns.  She had to serve prison time and repay the taxes for this fraud, even though she didn't work in his business.  They filed joint returns, which made her liable for his fraud.  The Innocent Spouse Tax Relief Option Back taxes shouldn't ruin your life, but they can.  Innocent spouse tax relief enables a spouse to avoid full responsibility for the actions of the other spouse (or former spouse).  It includes the additional tax, penalties, and interest assessed due to fraud and/or negligence.  This is different from the Injured Spouse Relief involving the seizure of a tax refund to pay federal debts, back taxes, etc. Requirements for Innocent Spouse Tax Relief There are several specific requirements that must be met in order to qualify: Married Filing Jointly tax returns were filed for the year(s) in question. The return shows understated tax due to erroneous items of your spouse/former spouse. You must prove you were not involved in the fraud and/or negligence, nor would you have reasonably known about it when you signed the return(s). Common Types of Tax Fraud Understating or overstating your personal income or the income of a business. Using “creative” deductions. Claiming a child who is not yours on your returns. If you realize one or more of the above has happened, after filing, you can file for Innocent Spouse Tax Relief.  You'll need to use IRS Form 8857. Can the IRS Deny My Claim? Yes.  You will be denied if the IRS determines you were cooperating in the fraud.  This could include transferring the ownership of an asset to avoid tax liability.  Avoiding paying a third-party creditor can also cause your claim to be denied. What if I Can't Afford to Pay the Tax Penalties and Interest? You could still apply for an Installment Agreement, which Timalyn explained in Episode 10.  This assumes you are tax compliant in previous years and the current year.  Timalyn closes this episode with a reminder.  Back taxes shouldn't run your life.  She doesn't want you to serve prison time for your spouse's tax fraud like the women in the opening of this episode. As we conclude Episode 14, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 13:  In this episode, Timalyn discusses retirement and taxes.  Those topics were a result of some interesting conversations she recently had with her mother.  The economy is turbulent and when combined with complicated tax laws, it can generate a lot of confusion.  Timalyn is going to provide some interesting tips and perspectives for your consideration.  Is Retirement Income Taxable? Timalyn reminds us that we may have different types of income during our retirement years.  Most people have social security.  You may have worked for a company that offered pension benefits.  If you worked for the government, you may have a state pension.  There are traditional IRAs, 401(k)s, and Roth IRAs. Tax planning for people approaching retirement needs to take into consideration 2 important factors: What their total retirement income will be? How much should be withheld in taxes from each income source? Tax-Deferred Income Many plans such as 401(k)s, 403(b) plans, or a traditional IRA generate taxable income in your retirement years.  The contributions to the plans were made on a tax-deferred basis.  Basically, the money that went into your plan was contributed before you paid taxes on that money.  Think of it as this was paid from your gross income, each pay period, rather than from your net income. Social Security Income This depends on provisional income.  Stick around until the end of the episode for more on this topic. Roth IRA Distributions The distributions from your Roth IRA are not taxable.  The contributions were originally made with after-tax dollars.  Roth IRA contributions are made from your net income, rather than from your gross income.  This is different from the tax-deferred contributions of the other plans.  The growth and interest accumulated in your Roth are tax-free.  Timalyn recommends that your work with a financial advisor and a tax professional to help you make a good, long-term tax plan. Adjusting Your Withholdings If you work a W-2 job, you can tell the company how much you want to be withheld from each paycheck.  You do this on your W-4.  You have a Form W-4P for pension.  It takes into account the income from a variety of sources, including annuities and social securities.  If you don't complete this form correctly, you could have a significant tax liability at the end of the year. Watch Timalyn's video on how to complete your W-4 correctly.  Her YouTube channel has a collection of helpful videos.  She'll soon have a video specifically discussing the W-4P. Is Social Security Taxable? As stated earlier, it depends on your provisional income.  The IRS sets provisional income as the threshold at which your income becomes taxable.  Begin with your base income.  These levels are fairly low.  If you're not retired yet, this is an important decision to consider with your financial advisor.  You may want to share this information with your retired parents.  Many people aren't prepared for the taxes in retirement. If you file as a single, head of household, or qualified widower, your base level is $25,000.  Any income beyond this amount is taxable.  As a result, your social security can be subjected to a very high tax rate (i.e. 50% or higher, up to 85%).  If you're still working, you may want to delay taking social security until your income decreases. If you're married and filing jointly, the base income is $32,000.  If you go over that amount, 50%-85% of your social security will be considered taxable.  It depends upon your total household income.  It's Not Too Late If you owe $10,000 or less, can't pay it today and you've filed your taxes on time, go back and watch Timalyn's video or use the IRS Social Security Tax Calculator to help you adjust your withholdings.  You can set up a guaranteed payment arrangement with the IRS.  Timalyn has a step-by-step e-book you can purchase by clicking this link.  Some people can get your plan set up in as little as 20 minutes. As we conclude Episode 13, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode.   For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 12:  In this episode, Timalyn wraps up a 2-part series on getting rid of IRS penalties.  This episode focuses on how to remove IRS penalties for a reasonable cause. It might surprise you, but there's a process available, if you qualify.  So, do you?  Listen to this episode to find out. Note:  To listen to Part 1, check out Episode 11 for the discussion of IRS Penalties:  First Time Penalty Abatement. What is Reasonable Cause? Timalyn explains it's when the IRS considers the situation and decides to waive the penalty.  This process is different than the First Time Penalty Abatement (which gets rid of the penalties and interest).  Both are good options to understand and to pursue. Requirements for Reasonable Cause Abatement There's more work involved in pursuing this option.  However, it may be the only option for which you qualify.  #1:  The request must be in writing, not communicated over the phone. #2:  Timing is very important.  The cause you're using must apply to the specific tax year. #3:  You must have documentation to back up your request for reasonable cause. 9 Reasons the IRS may Approve Your Reasonable Cause #1:  Death, serious illness or unavoidable absence was involved in your inability to file or pay. #2:  Fire, casualty or natural disaster (as declared by the federal government).  #3:  Unable to obtain records. Listen to Timalyn's examples. #4:  A mistake was made.  You'll need documentation to prove this claim. #5:  Erroneous advice.  A paid professional gave you bad advice, resulting in penalties. #6:  Written or verbal advice from the IRS.  Document the individual's name, date and time you spoke with that representative.  There may be a recording of the conversation.  Always take notes when you interact with the IRS. #7:  Ignorance of the laws.  It's going to depend upon whether the IRS thinks you performed your due diligence.  Common knowledge issues typically don't work.  This may have to be combined with #5:  Erroneous advice to be considered a reasonable cause. #8:  Reasonable cause after “ordinary care” was completed.  You'll need to convince the IRS that you were trying your best, but a mistake occurred.  #9:  Undue financial hardship.  The IRS may be willing to negotiate the penalty and interest, but not completely abate it, in this case.  How Do You Submit the Request for Reasonable Cause Penalty Abatement? You'll need to use IRS Form 843 for Penalty Abatement.  This process is more difficult, but it's possible.  You'll have to substantiate the reasons you feel you qualify in writing.  You'll also need to provide the required documentation.  Once you've submitted it, it's a waiting game.  But remember, back taxes don't have to ruin your life. Remember to come back for Episode 11 for the discussion of IRS Penalties:  First Time Penalty Abatement. As we conclude Episode 12, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.  

Episode 11:  In this episode, Timalyn begins a 2-part series on IRS penalty forgiveness.  This episode focuses on first-time penalty abatement.  Episode 12 will be about how to remove IRS penalties with a reasonable cause.  Be sure to follow the podcast so in 2 weeks you don't miss that episode.  Today, Timalyn will discuss what first-time penalty abatement is, how you qualify for it and how you can get your penalties removed (if you qualify), today.  What Is First Time Penalty Abatement? This can be confusing.  Timalyn explains that penalty abatement is IRS forgiveness.  If you negotiated to pay back a reduced level of tax debt, that's not abatement.  For taxpayers who haven't had previous problems, they may qualify for first-time penalty abatement at no cost to them.  Actually, it also makes it easier for the IRS.  Note:  The abbreviation FTA stands for “first-time abatement.” What Penalties are Eligible for First Time Penalty Abatement? There are 3 eligible types of penalties that could be abated.  The Failure to File Penalty – This penalty was imposed because you didn't file your return on time. This penalty was explained in Episode 2.  For most taxpayers, if you don't file on time, penalties can be up to 25% of the total tax debt for individuals.  S-Corps and Partnerships are subject to up $210/shareholder or partner, per month.  The Failure to Pay Penalty – When your taxes were due, you didn't make the payment. You are subject to a penalty and interest if you don't pay.  The Failure to Deposit Penalty – This applies if you are a business owner who didn't pay the required tax withholdings on a scheduled basis. Timalyn comments that if you file as an S-Corp or a Partnership, and you filed an extension, your deadline for that extension is September 15, 2022.  If you go beyond that date, the Failure to File Penalty will begin accruing.  Individuals filing a 1040 have an extension deadline of October 15th. IRS Compliance Before being considered for a penalty abatement, the IRS will look at the previous 3 years to verify if you have been compliant.  This also applies to your current tax compliance status.  Did you file timely?  Did you have previous tax penalties?  Did you pay on time?  If you're an employer, did you deposit on time?  If you can answer “yes” to all of the above, the IRS will now verify whether you've previously had penalties abated for reasonable cause.  If they've been removed during the past 3 years, the current year in question may not be eligible. Can I also get the Interest Removed? If you've had a penalty abated, the IRS will retroactively remove the interest accrued on that penalty.  IRS Compliance in the Current Year It's important that you are making your estimated quarterly tax payments if you are a business owner.  The IRS will check on this status.  If you already have unpaid taxes, you must be on a valid payment plan.  Timalyn explained how to set up an installment agreement in Episode 10. There's a Long Way and an Easy Way to Request Abatement The simplest way to request first-time abatement is to call and request it.  Really, it's this easy. You'll ask if any of the penalties are eligible for first-time penalty abatement, and the IRS will review your file. .  No documentation is required.  The requirement is that you have been and are compliant.  Words of Caution Timalyn explains that you don't want to request the first-time penalty abatement prematurely.  You do not want to request forgiveness of a penalty if it is still accruing. For example, if you request abatement of the failure to pay penalty but have not paid the balance the penalty will continue to accrue. It will just start at $0 again. This process may sound confusing.  Some of you listening will be able to handle this on your own.  However, Timalyn is available to handle this on your behalf.  She'll make sure it gets done correctly.  Remember to come back for Episode 12 for the discussion of IRS Penalties:  How to Remove Them.  As we conclude Episode 11, we encourage you to connect with Timalyn on social media. You'll be able to follow this podcast on Google Podcasts, Spotify, and many other podcast platforms.   Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today's episode. For more information about tax relief options, visit https://www.americasfavoriteea.com/ . If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.   Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.