Posts Tagged ‘Taxes’

What Should You Do IF You Can’t Pay Your Taxes When Due???

Tuesday, April 3rd, 2012

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

 Over the span of many years I have often been in the unfortunate situation in which I was working with someone who was tasked with solving (or resolving) a problem who honestly believed that “If we just ignore the situation, it will go away!”   This foolhardy logic is obviously  rarely,  if ever, true for almost all of the similar situations in our lives, and it certainly is not true when it involves the payment of our tax liability.  “Tax liability” in this context refers not only to income taxes, but sales taxes, payroll taxes, estate taxes, gift taxes, etc. 

If you have a significant amount of taxes which are owed but for which you do not have the financial resources to pay, consider contacting an attorney/CPA or a CPA who specializes in tax law and who has an extensive experience base in negotiating favorable terms for taxpayers with the Internal Revenue Service.  However, avoid contacting anyone who advertises in any medium in which they offer to negotiate on your behalf to pay just pennies on a dollar for the taxes that you owe.   

There are also other options which may be available to you for smaller amounts of taxes which are due, but for which you can not pay: (more…)

Federal Tax Payment Procedures

Wednesday, April 6th, 2011

There are several options which are available to you if you will be required to send an addtional tax payment to the U.S. Treasury.  However, do NOT send cash!  Among the choices which you have are:

  • Use the Electronic Federal Tax Payment System (EFTPS) at;
  • File your tax return electronically (e-file) and use the free electronic payment system (direct withdrawal) from your checking or savings account;
  • Pay via a telephone call using your credit or debit card (there is a “convenience charge” if you use this method);
  •  Enclose your payment (check, money order etc) with your tax return.  If it is available, include the payment voucher (Form 1040-V) which provides all of the essential information for your payment;
  • If necessary, pay all that is possible and request that you be approved for installment payments using Form 9465 (“Installment Agreement Request”) for the unpaid balance. (more…)

Do You Require More Time or $$ To Pay All of Your Taxes??

Saturday, April 2nd, 2011

The state of our national economy and the associated high unemployment rate have created many financial problems for all of us.  Addtionally, poor personal financial management and the placement of inappropriate priorities on our financial obligations throughout the year often create significant problems, especially when your unpaid taxes are due.  Note:  This situation is equally applicable to mortgage loans, particularly those that are ARM based,  notes, car loans, payroll tax deposits, business working capital requirements, etc.  This article is intended to provide possible solutions to the problem, and not offer criticism.

Many years ago a fellow employee stated his philosophy on problems to me (true story):  “If you ignore it long enough, the problem will go away!”  This is absolutely not correct, especially when it relates to unpaid taxes.  To the contrary, be proactive and start making telephone calls, sending out e-mails etc as soon as you become aware of the fact that you can not pay your tax obligations when they are due.  There may be options that are available to you for which you do not know.  If you have been notified by either a State of Federal taxing authority, respond to the notification immediately and follow through on the communications until the problem(s) are resolved to the satisfaction of everyone involved.  The list of possible solutions below is not in any order of priority, nor is it intended to be all-inclusive.  It’s simply a starting point:

  1. Request an extension of the time to pay your taxes, especially if there is a personal or financial hardship;
  2. Sumbit an installment agreement request (Form 9465) with your tax return;
  3. Request a “temporary delay” in the payment due dates;
  4. Determine if you may be eligible for an “Offer In Compromise”;
  5. Apply for a loan from your bank;
  6. If available, use some of the available credit from your credit card or line of credit from you bank;
  7. Consider a withdrawal from your savings accounts
  8. Apply for a loan from your retirement account (i.e. 401(K)) but not your IRA which is ineligible. Retirement plan loans usually have to be repaid in five years or less;
  9. Consider a withdrawal from your IRAs.  If you are younger than 59 1/2 you will avoid the 10% premature withdrawal penalty if the funds are used to satisfy a tax levy from the IRS;
  10. Obtain a loan using the cash surrender value of your life insurance policy;
  11. Apply for a loan using the equity in real estate holdings or your investments as collateral;
  12. Sell or liquidate some of your assets, i.e. investments, CDs, etc
  13. Borrow from friends, relatives etc 
  14. If you own a business and there is sufficient working capital available, you could use some of these funds.  Be sure to record the required accounting entry in either the Note Receivable or Accounts Receivable account and re-pay the loan as soon as possible.     (more…)

Federal Tax Payments and the EFTPS

Tuesday, April 6th, 2010

Virtually all of the Federal and State taxing authorities want to make it just as easy as possible for you to pay your taxes.  You may remember many years ago when there was the multi-use Federal Tax Deposit coupon (Form 8109).  It was about the size of a standard check, could be used for different tax deposits, but the deposit itself had to be made in a Federal depository bank. Over the past 15 years major improvements have been provided to taxpayers everywhere – choose your “weapon”!  You have the option to pay using:

1)  Electronic withdrawal from your bank account

2)  Your telephone

3)  Either your debit or credit card

4)  A personal check and the U.S. Postal System, or

5)  The Electronic Federal Tax Payment System (EFTPS)

This FREE system began in 1996. If you’re not familiar with the EFTPS, you can obtain more information at this website:  There’s information on how to enroll, how to make payments, payment records that are available to both the business owner and to individual taxpayers, and the Frequently Asked Questions (FAQs) via this link:  You can even enroll on line!  This is an encrypted, secure website. 

Payments must be scheduled at least one calendar day prior to the tax due date by 8:00 p.m. ET. Your payment instruction will be executed on the date you selected, and your records will be updated at the IRS.  There is an advantage here for improving either your personal or business cash flow.  You retain your cash or working capital until the due date for the deposit or the date that you select for your payment(s).  If you are uncomfortable with the Federal or state government having access to your bank account, open a separate or special account just for your tax payments.  Most banks and financial institutions do not impose additional charges for these accounts.  Here is additional information on this subject: 


Standard or Itemized Deductions??

Wednesday, March 10th, 2010

This is the time of year when most Americans are becoming more actively engaged in the preparation of their individual Federal income tax returns.  While there are not many options available for reporting income, there could be some opportunities to reduce your taxable income (and directly related income taxes) by carefully reviewing the instructions for the completion of Schedule A (Itemized Deductions) for Federal form 1040.  While there are variances from state to state, most states either allow the same deductions as provided by Federal laws or they require various adjustments.  You can obtain specific details for your Federal tax return deductions by reading the instructions for Schedule A  on the IRS website: 

There are seven major categories:  1)  Medical and Dental Expenses, 2) Taxes You Paid,  3) Interest You Paid, 4)  Gifts to Charity, 5) Casualty and Theft Losses, 6) Job Expenses and Miscellaneous Deductions, and 7) Other Miscellaneous Deductions.

You will only realize a tax benefit from those total medical expenses that are greater that 7 1/2% of your total income (Adjusted Gross Income).  There is a deduction for state and local income taxes for those states that do not have a state income tax (i.e. Florida and Texas).  If you have all of your receipts to document your deductions, you have the option to use either the amounts from the IRS tables or the actual total amount from your receipts.  Large ticket (cost) items such as cars, boats, airplanes, recreational vehicles, etc are additions to the IRS tables.  If you own a home, in addition to your mortgage interest don’t forget to deduct any points that were paid (this amount is usually provided on the Form 1098 that you receive from your mortgage company) plus Mortgage Insurance Premiums (PMI) paid for homes purchased after December 31, 2006.  PMI is required if you had less than 20% equity in your home when you purchased or re-financed it. 

If you and your spouse paid expenses jointly and are filing separate tax returns you should review IRS Publication 504 for guidance on the allocation of these expenses.  Additional information on itemizing deductions from the IRS follows: