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Unexpected Tax Increases

July 20, 2023

Factors to Consider for Year-Round Tax Planning

Proper tax planning is a crucial aspect of financial management that should be addressed throughout the year. Waiting until April to assess your tax liability is a risky move. To ensure you keep more money in your pocket, it's essential to be aware of factors that can unexpectedly raise your taxes. Today we will explore five key factors that could potentially increase your tax owed at the end of the year. By being proactive and considering these factors, you can better plan your finances and mitigate tax surprises.

Factor #1 - Cashing in Your Retirement Plan:
Early withdrawal from your retirement plan, such as a 401(k), can lead to significant tax penalties. If you opt to receive the proceeds in cash instead of rolling them over into an Individual Retirement Account (IRA), you will be required to pay taxes on the withdrawn amount. Additionally, a 10 percent penalty may apply. By avoiding these pitfalls, you can safeguard a substantial portion of your hard-earned retirement savings.

Factor #2 - Working as a Freelancer:
While freelancing offers independence and flexibility, it can also introduce complex tax implications. Freelancers and self-employed individuals are subject to the self-employment tax, which includes both the employer and employee shares of Medicare and Social Security taxes. Failing to account for this tax burden and set aside funds accordingly can lead to unpleasant surprises come tax season.
 
Factor #3 - Failing to Take Your Required Minimum Distribution (RMD):
Retirement accounts, such as IRAs and workplace plans, require individuals to begin withdrawing minimum distributions once they turn 70. Failing to meet this requirement can result in substantial tax penalties. It is crucial to stay informed about RMD rules and ensure compliance to avoid unnecessary financial setbacks.

Factor #4 - Skipping Your IRA Contribution:
Opting to skip your annual IRA contribution can have unforeseen consequences for your tax bill. Before deciding to forgo contributing to your IRA, it is prudent to evaluate the potential impact on your overall tax liability. Running the numbers and seeking professional advice can help you make an informed decision.

Factor #5 - Paying Off Your Mortgage:
While paying off your mortgage may provide a sense of financial freedom, it can affect your tax situation. Mortgage interest is typically tax-deductible if you itemize your deductions. Losing this deduction could potentially increase your tax liability. While this shouldn't be the sole reason to keep a mortgage, it's an important consideration to keep in mind.

Seek Professional Assistance for Tax Debt Cases:
If you find yourself owing back taxes, it is crucial to seek professional assistance to navigate the complexities of tax debt resolution. Our firm specializes in helping individuals negotiate with the IRS and we can potentially settle tax debts for a fraction of the amount owed. Contact us today for a confidential consultation, and let our experienced tax resolution specialists guide you through the IRS maze, providing you with peace of mind.

Year-round tax planning is essential to minimize surprises and optimize your financial well-being. By being aware of factors that can unexpectedly raise your taxes, such as early retirement plan withdrawals, self-employment tax obligations, missed required minimum distributions, skipped IRA contributions, and the impact of mortgage payoff, you can take proactive steps to manage your tax liability effectively.

Remember, hiring a tax resolution specialist for IRS problems is crucial for protecting your hard-earned income and assets. Let us help you take back control of your financial life by reaching out to our firm today.

Understanding the LT11 Letter: Take Immediate Action

By 7066766659 • December 30, 2024
Receiving an LT11 letter from the IRS can be incredibly unsettling. This notice is a serious warning that the IRS is prepared to take tough action to collect unpaid taxes. If you’ve received this letter, it’s important to understand what it means and why you need to act quickly. What is an LT11 Letter? An LT11 letter, also known as the "Final Notice of Intent to Levy and Notice of Your Right to a Hearing," is sent by the IRS when you have unpaid taxes and haven’t responded to previous notices. This letter means the IRS is ready to levy your assets, which means they can legally take your property to pay off the tax debt. This could include money in your bank accounts, your wages, your home, or other valuable belongings. What Can Happen If You Ignore It? If you ignore an LT11 letter, the IRS can take serious actions, such as: Seizing Money from Your Bank Account: The IRS can freeze your bank accounts and take the money. Garnishing Your Wages: Your employer will have to send a portion of your paycheck to the IRS. Taking Your Property: The IRS can seize your house, car, or other valuable items. Damaging Your Credit Score: A levy or lien can hurt your credit score, making it hard to get loans or credit in the future. Why You Need to Act Quickly The LT11 letter gives you only 30 days to respond. Within this time, you have the right to request a Collection Due Process (CDP) hearing. This hearing is your chance to dispute the levy action, propose a different payment plan, or challenge the amount you owe. If you don’t act within these 30 days, the IRS will start the levy process, and your options will be very limited. The Importance of Professional Help Dealing with the IRS and resolving tax problems can be very complex, and trying to handle it on your own can lead to mistakes that might make your situation worse. A tax resolution professional has the knowledge and experience to help you navigate this challenging process. Benefits of Professional Help: Expert Negotiation: A professional can negotiate with the IRS on your behalf to secure the best possible terms. Strategic Planning: They can develop a plan to resolve your tax issues without causing financial hardship. Legal Protection: A professional ensures that your rights are protected throughout the process. If you’ve received an LT11 letter, don’t wait another moment. Contact Advantage Tax Relief immediately at 630-773-3200. Advantage Tax Relief is a skilled tax resolution firm that can help you navigate your tax issues and achieve the best possible outcome. Call Advantage Tax Relief NOW at 630-773-3200 to prevent the IRS from taking your hard-earned money and assets.

What to Do If You Have an IRS Balance: Solutions from Advantage Tax Relief

December 9, 2024
Dealing with an IRS Balance? Reach out to Advantage Tax Relief today to solve all of your IRS problems! Receive expert guidance and support from a professional expert.

How to Handle a CP523 Notice from the IRS

November 25, 2024
What is a CP523 Notice from the IRS? Receiving a CP523 notice is a serious matter. It’s an official communication from the IRS informing you that your tax installment agreement has been canceled. This typically happens when you fail to make payments or violate the terms of your repayment plan. If you’ve gotten this notice, it means the IRS is prepared to take further action, so it’s critical to understand what it means for your situation. Why You Need to Act Now A CP523 notice signals that your repayment agreement is no longer in effect. Without an active installment plan, the IRS has the authority to initiate collection actions against you, including: Wage Garnishments: The IRS can garnish your wages without additional warning. Bank Levies: They may seize funds directly from your bank account. Liens on Property: The IRS could place liens on your property, affecting your ability to sell or refinance. Ignoring the CP523 notice can lead to significant financial consequences, such as: Immediate Tax Payment Demand: You could be required to pay your entire outstanding balance in full, which can be overwhelming. Escalating Collection Efforts: The IRS can move quickly to enforce collection actions if you don’t address the notice in a timely manner. Damage to Your Credit: Unresolved tax issues can severely impact your credit, making it difficult to secure loans, credit, or even housing. Steps to Take if You Receive a CP523 Notice While receiving a CP523 notice can feel intimidating, there are clear actions you can take to prevent further issues: 1. Respond Promptly: Time is critical. The sooner you take action, the better your chances of avoiding severe consequences. 2. Review the Notice Carefully: Understand the reason your installment agreement was canceled, the amount you owe, and any deadlines for taking action. 3. Evaluate Your Financial Situation: Take stock of your finances and explore your options for resolving your debt. This might include reinstating your installment agreement, negotiating new terms, or looking into other tax relief solutions. 4. Contact the IRS: Reach out to the IRS as soon as possible to discuss your situation and find out what steps you need to take to get back on track. 5. Consider Professional Help: Navigating the IRS system can be complex, but you don’t have to do it alone. A tax professional like John Bruszewski at Advantage Tax Relief can help you negotiate with the IRS, review your options, and work toward a favorable outcome. Don’t Wait – Get Help Now Ignoring a CP523 notice can make matters worse. It's essential to act quickly and seek guidance from a trusted expert. John Bruszewski at Advantage Tax Relief is here to help you understand your options, negotiate on your behalf, and guide you through the process. Call for a Free Consultation Don’t wait until it’s too late. Call Advantage Tax Relief today at 630-773-3200 for a risk-free consultation and get the help you need to resolve your tax issues and protect your financial future.
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