Posts Tagged individual
Explanation of Enrolled Agents About Tax Dispute Process
Posted on June 28, 2011 | Tax Studies.
An important detail for enrolled agents to communicate with the public is that every taxpayer has a right to appeal an IRS decision. In addition to questioning the results of an audit, taxpayers also appeal tax liens, levies, seizures, termination of installment agreements, and penalty assessments.
Because every taxpayer case is different, enrolled agent careers are built around understanding each situation. A high level of tax knowledge permits an EA to often reach immediate IRS settlements for taxpayers.
With current macroeconomic conditions having the propensity to make rapid changes in a taxpayer’s finances, enrolled agent job opportunities are growing each year. EA familiarity with all types of tax matters is a real plus for an individual in rough straights with the IRS. An enrolled agent knows that an IRS examination of a tax return often allows for request of an on-the-spot meeting with the examiner’s supervisor in order to provide an explanation for reaching quick resolution of the case.
However, many examinations take place by mail. In these situations, a professional with an EA license explains a taxpayer’s position in writing to the IRS. A case is not final when the findings of the IRS examiner do not agree with the taxpayer. The next step is an IRS Appeals Office. These are separate and independent from the IRS offices of enforcement activity.
Tax dispute conferences with an Appeals Office are informal but require some preparation. That is where EA study becomes of significant value to taxpayers. An appeal must consider incorrect IRS interpretation of the law or IRS misunderstanding of the facts. Appeals are presented in writing, by telephone, or in personal meetings. But they all share the common requirement of clarity and documentary support.
Each properly presented appeals case cites specific IRS decisions. General complaints about IRS treatment are not grounds for appeal. Neither are objections to IRS actions based upon moral, religious, political, or constitutional arguments. Because of the emotional attachment a taxpayer may have to the case, representation by an enrolled agent is usually the best avenue for an IRS appeal.
An IRS Appeals Office usually settles most tax disputes. However, if that level does not adequately satisfy a taxpayer, the case is eligible for presentation to the independent office of the Taxpayer Advocate. When all of the dispute resolute channels are exhausted, the last resort is federal court.
Tax Relief Credit for Retirement Savings Contributions
Posted on May 8, 2011 | Tax Studies.
The Retirement Savings Contribution credit, also referred to as the Savers Credit, is a tax credit given to individuals who contribute towards a qualifying retirement plan, either employer-sponsored or individually paid. However, the tax credit is subject to various rules and limitations:
Income Limitation
The tax credit for the Retirement Savings contributions is given to individuals and couples who earn a given maximum income per year. The credit is given to singles, couple who file returns jointly, and to widows and widowers. For singles, widows and widowers, and for married individuals who choose to file separately, one needs to earn a maximum of $27,750 to claim the credit. For head of households with dependents, the limit for income is $41,625 to qualify for the credit. For married spouses who choose to file their returns jointly, the maximum income that they should jointly earn to qualify for the tax credit is $55,500.
Credit Limitation
The amount of tax credit that you can get for the Savers Credit is a maximum of $1,000 for individuals and $2,000 for couples who file jointly. The tax credit is calculated at different percentages of the contributions made based on an individual or couple’s income. The people who earn lower incomes will have a higher percentage of their contribution being given as a tax credit as compared with those who earn more.
Age Limitation
To qualify for a Savers Credit, you need to have been born before January 2, eighteen years prior to the date of return. In other words, to qualify for the credit for the 2010 tax returns done in 2011, an individual needs to have been born before January 2, 1993 to qualify for the credit.
Net the Distributions Received – The amount of contributions used to calculate the qualifying tax credit is the net of the contributions made minus any distributions received from the retirement plan. The distributions considered are the those made 2 years prior to the tax year the claim is made, the tax year that the credit is made, and any distributions received between the tax year and the due date for the returns.
Claimed Hand in Hand with Other Retirement Related Deductions
The Savers Credit can also be claimed hand in hand with any other retirement related tax benefits. Contributions to regular 401(K) for example, are not included in the income to be taxed and contributions to a traditional IRA are deductible for various income groups. The Savers Credit can therefore, be claimed over and above such tax benefits.
How to Apply
To claim for the Savers Credit, you will need to fill out a Form 8880, “Credit for Qualified Retirement Savings Contributions Form” and attach it to your tax returns for the year that the credit is being claimed.