Category: Blog

All You Need to Know About Earned Income Tax Credit


Each year, working people with low and moderate income receive a federal tax credit known as Earned Income Tax Credit, (EITC) which helps them reduce their tax liability and improve their standard of living. In the U.S. there are also currently 26 states, plus the District of Columbia, that offer EITC to families as a way to supplement the federal EITC credit. The EITC’s main objectives are to: Encourage employment Augment low wages Alleviate poverty Eligibility Criteria for EITC To be eligible for EITC, you must meet the following requirements: If you and your spouse are married, you must file

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IRS Fresh Start Program: 4 Pillars of Hope for Struggling Taxpayers

Individual income tax return form, glasses, pen and calculator on desk

Taxpayers who are unable to clear their tax liabilities live under a constant fear of the IRS finding out about the non-payment. The IRS, in general, has 10 years to collect unpaid taxes, and therefore, the risk of being caught does not go away if the people lay low. It is, therefore, advisable for taxpayers to address all tax liabilities as quickly as possible. If they struggle to pay what they owe, the IRS Fresh Start Program is there to make it easier for them to pay taxes and avoid liens. Let’s explore the four major components of the Fresh

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Tax Evasion vs. Negligence: Know the Differences to Keep Troubles at Bay

Hand cuffs and coins as security concept

Lying to the IRS about tax returns is an offense punishable with both civil and criminal penalties. Civil penalties would mean hundreds and thousands of dollars fine, whereas criminal penalties may mean spending anywhere between 5 to 20 years in prison. Although evading taxes is a crime, any negligence in filing taxes is considered a mistake. The core distinguishing factor between tax evasion and negligence is the intent of the tax-payer. Taking this discussion further, let’s learn how the IRS differentiates US taxpayers based on their “intent”. Cause of Non-payment Evasion Tax evasion implies a deliberate act of misrepresenting taxable

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Falsely Padding Deductions: A Prime on IRS’ “Dirty Dozen” List of Scams

sniper view finder for aim the target

The Internal Revenue Service (IRS), in many cases, does not have the resources to verify every deduction reported on the tax returns it receives from taxpayers. Many taxpayers take it as an opportunity to falsely inflate deductions or expenses on their returns. As a result, they underpay what they owe to the government and receive larger refunds. Every year, a number of taxpayers fail to resist the temptation of fudging their income-related information, which explains the inclusion of falsely padding deductions in the IRS’ Annual “Dirty Dozen” List of Tax Scams. Let’s take a closer look at the situations that

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Think You Can Evade IRS Taxes? Here’s a Wakeup Call

Stock image of handcuffs over Tax forms, concepts: Tax fraud or Slave to the Taxes

The IRS never forgets. It’s evident from various news flashes about people being chased around for non-payment of taxes, for years. In one such instance, the Internal Revenue Service followed the trails of a company and collected a 30-year old tax debt! In 1982, the company was unable to pay off its tax debts  due to insufficient fund, and later filed for bankruptcy. The IRS, in addition to the actual amount owed, charged a penalty of 100 percent for tax evasion. Examples like this remind us of the persistence, power, and reach of the IRS. In this post, we discuss

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Gambling Loss Deductions: All You Need to Know

Dice and money

Most people who gamble assume that they can use their gambling losses as write-offs, which is simply untrue. You need to know that gambling losses are tax deductible to the extent of your winning limitation. The limitation is applicable to all types of gambling, including slots, poker, lottery, and horse racing, among others. It’s also worth mentioning that you can’t reduce your tax burden by showing your gambling losses by claiming the standard deduction. The purpose of this post is to help you learn about the ways to deal with tax liability changes that manifest from gambling. Gambling Loss Deductions

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4 Must-Know Signs to Identify an IRS Scam and Take Guard

IRS Scam

IRS phone scammers have become increasingly deceiving and untraceable in recent times. Since October 2013, the Treasury Inspector General for Tax Administration (TIGTA) has received approximately 290,000 contacts from US citizens reporting a possible scam. The TIGTA has also confirmed that among the contacts, nearly 3,000 have fallen victims, collectively paying more than $14 million to fraudsters who made unsolicited calls to them claiming to be IRS officials. Considering the outreach of IRS scammers and the extent of possible damages, it becomes essential for every US taxpayer to know how to protect themselves from getting duped. To help, this post

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Procrastination in Filing Taxes Can Cost You Dearly

Close-up Of A Man Holding Statements Of Pending Dues

When it comes to filing taxes, many people tend to get stressed out, which often leads to procrastination. Taxpayers, however, are not the only ones to blame for such indecisions. The intricacies of the U.S. Tax Code is a cryptic language for most taxpayers, which is why many people are unable to file their taxes and have to bear various consequences including penalties. To validate the significance of filing taxes before the annual deadline (April 15), in this post, we discuss the penalties taxpayers have to pay for late filing and payment. Penalties The US citizens run the risk of

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Tax Evasion is a Road to Nowhere: A Lesson Learned the Hard Way

Online Tax Fraud, Computer Keyboard with a yellow warning sign with text Tax Fraud

Tax evasion costs the US government billions of dollars in losses every year, which explains why they are one of the biggest concerns of the IRS. There are companies with international subsidiaries in tax haven jurisdictions, established with the sole purpose of evading taxes. A recent study conducted by the University of California, at Berkeley reveals that the total overseas holding of US based companies is approximately $7 trillion – a sum that’s equivalent to the collective value of global gold reserves. The Thin Line Between “Evasion” and “Avoidance” What many people don’t know is that tax avoidance (nonpayment after

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Behind with Your Taxes? The IRS Fresh Start is a Possible Way Out

Behind with Your Taxes

In 2011, the IRS acknowledged the challenging times people were facing in the depressed economic climate by rolling out the Fresh Start Initiative (FSI). The Economic downturn we faced in 2015 suggests a revitalization of the is program may be on the horizon. The initiative provides a ray of hope to financially distressed and struggling taxpayers, giving them a chance to keep up with their tax payments and avoid tax liens. The program helps qualified taxpayers by exempting them from penalties on unpaid dues and accrued interest. Since inception, the IRS Fresh Start Initiative has helped thousands of struggling taxpayers

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