Practical Resolutions For IRS Back Taxes and Tax Troubles

I recently provided advice about how to successfullyan Offer in Compromise
file tax returns and avoid potential IRS back taxesQuestion: Is it true you have been able to help your
during my interview on the Big Biz Show. I discussedclients negotiate penalties down to ten cents on the
the penalties of filing late returns and urged people todollar? You've obviously negotiated some fees and
seek extensions the proper way in order to avoidinterest right?
failure to file penalties such as fines up to $25,000 perAnswer: Of course.  When you do an offer in
year and/or sentences of one year in prison per eachcompromise, which is a tax settlement situation, tax
un-filed year.  Due to the current recession morepenalties don't matter because the principle is being
people are struggling to pay their back taxes.  In fact,reduced. We don't even talk about penalties and
the economy is so bad Motel 6 won't even leave theinterest when we're doing an offer because they're
light on anymore! Read on for more tax resolutiongetting a reduction on the principle.
advice from my interview.How to Avoid IRS Back Taxes --Helpful Filing Tips
How to Deal with Delinquent Tax Returns, Late TaxQuestion: A lot of people think January 1st is a fresh
Returns, and Late Tax Filingstart.  With three quarters of the year left to get my
Question: If I have not taken care of my taxes and it's2010 taxes in shape, what is the first thing I need to
April 14th should I file an extension?do?
Answer: Yes, do an extension, but send in someAnswer: Well, you've got to sit down with your CPA,
money with it.  That way, you avoid the failure to fileaccountant, or tax advisor and do an estimate. Do a
penalties, and the IRS has a record that you actuallyprojection for the end of the year.  Do it now. At
filed an extension and made a good faith effort to paylatest do it in the summer otherwise you're going to
something.get a surprise and it's not going to be pretty.
Question: Michael, before you mentioned that yourQuestion: Is filing a Schedule C, a tax return for small
average client is between four and eleven yearsbusiness or independent contractors, a possible red
behind on their tax returns.  Is that accurate?flag for auditing?
Answer: Yes. That's accurate.  I recently pulledAnswer: If you file a Schedule C attached to your
something up on the Fox News website forform 1040 with $100,000 or more of gross, not net, of
Dallas-Fort Worth that said "Recent IRS statisticsgross income it's five times more likely to be audited
show that the number of people with tax debtthen if you were a W-2 wage earner because small
problems is at a 10-year high. And this year alone,businesses often co-mingle business and personal
more than 4 million people will not be able to pay byexpenses.
April 15. There are currently more than 26 million peopleQuestion: One of my daughters is about to start
with some kind of IRS problem."working.  Does she have a requirement at the end of
Question: I left my return lying around the house, itthe year to file taxes with form 1040EZ at age
wasn't signed, and my girlfriend accidentally sent it in.sixteen?
So how does that work?  Will I have to file for anAnswer: She will file her own return, but will not claim
extension?herself.  It will be more advantageous for you to claim
Answer: Yes.  You will need to get an extension orher as a dependent so she'll get the withholding back
get a copy of the return, sign it, and send it in beforeand you'll get a bigger refund or pay less because you
the deadline or it will be considered a delinquent taxsupport her cost of living.
return.For more expert advice on how to beat IRS back
Reducing your Tax Debt to Pennies on the Dollar withtaxes listen to the full interview on the Big Biz Show.