Lowrance Law, LLC

April 15, 2011

The IRS issued a press release advising taxpayers of payment options when you file your income tax return. The release is IR 2011-42. I have placed it in the blog below. The most important thing for you to know is if you owe taxes but you cannot pay the full amount file your tax return and make a payment. Fill out and attach to your return Form 9465 — Installment Agreement Request. The IRS will contact you to work out a payment plan. Read the information below.

Remember, I am a tax attorney having worked in Office of Chief Counsel, IRS. If you have questions or need help with the IRS, just let me know.

Bill Lowrance
Lowrance Law LLC
McLean, VA

IRS reminds taxpayers with a balance due that there are several payment options available [IR 2011-42]: Taxpayers who have a balance due when they file their 2010 federal individual income tax returns have several payment options.

Payments can be made by electronic funds withdrawal, credit or debit card, the Electronic Federal Tax Payment System, or check or money order. According to IRS, some taxpayers who itemize their deductions may be eligible to claim as a miscellaneous itemized deduction the convenience fee charged to pay individual income taxes by credit or debit card.

Along with a check or money order, a taxpayer must include Form 1040-V, Payment Voucher. If a return has already been submitted but additional payment is due, a check or money order should be mailed to IRS with Form 1040-V. “For members of the military and others serving in combat zones, the filing and payment deadline is normally postponed until at least 180 days after the service member leaves the combat zone,” IRS said. “If you are eligible, you get the extra time without having to ask for it,” IRS added.

The agency advises taxpayers with a balance due to pay as much as possible by April 18 to avoid penalties and interest. Those who cannot pay in full have several options to consider. The first is an installment agreement. In most cases, this can be done in several minutes by using the IRS website, the agency said. The second payment option is an Offer in Compromise, which is an agreement between a taxpayer and IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. It is subject to acceptance based on legal requirements. The news release can be viewed on the IRS website.


Taxes 2008–What Is New

January 5, 2009

IRS has published the Form 1040 that individuals file for their 2008 tax returns.  Yes, it is time to think about filing your 2008 individual income tax return. The normal due date is April 15, 2009. There a some new changes this year. IRS publishes the new Form 1040, along with instructions, every year. The instructions are, believe it or not, organized and easy to read.

Many people are talking about the economic stimulus payment, recovery rebate credit and withdrawal of your stimulus payment from a tax favored account, see my favorite tax blogger Taxgirl.  You should read the IRS 1040 instructions, page 6, for some plain talk explanations. Click Here

Any stimulus payment you received is not taxable for federal income tax purposes, but it may reduce your recovery rebate credit. What? The recovery rebate credit, you ask. The credit is available if, for some reason, you did not receive a stimulus payment in 2008 and meet other requirements.  In the instructions there is a full explanation and a somewhat workable “worksheet.”  Also, see Recovery Rebate Credit Here

Other new items:

First time home buyer:  If you bought a home after April 8, 2008, and before July 1, 2009, and did not own a main home during the prior 3 years, you may be able to take the “first time home buyer credit.”  The single largest provision in the $15.1 billion package of housing tax incentives in the recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $7,500 of the purchase price. Qualified home buyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government.

The IRS standard mileage rate for business use of your vehicle in 2008 is 50.5 cents per business mile driven through June and 58.5 cents per business mile thereafter.  The standard mileage rate for 2009 is 55 cents.  You will need to allocate your automobile expenses between business and personal use based on miles driven during the year. Proper recordkeeping is crucial in the event of an IRS challenge.

If you received an economic stimulus payment last year that was directly deposited to a tax favored account and you withdrew the payment by the due date of your return (including extensions), the amount withdrawn will not be taxed.  Good news, eh?

Of course, I must tell you that all of the above information is general in nature. It is not meant to tax advice or a legal opinion. Always consult a tax professional before thinking that information here is a “slam dunk” for tax advice.

Bill Lowrance