Common Questions

Yes, only if you have a tax liability. No, if the IRS has a tax liability to you. You can opt to pay your tax liability through an installment plan. In addition to paying taxes through an installment payment plan, there may be other options such as the Offer in Compromise (OIC). Under an OIC agreement, the IRS may agree to settle the taxpayer’s liability for less than the full amount of taxes owed. The IRS is not likely to approve an OIC if there’s evidence that the taxpayer could pay the full amount through an installment payment plan or another method. A taxpayer can request consideration for an OIC by filling out Form 656, Offer in Compromise, or Form 656L, Offer in Compromise (Doubt as to Liability), and mail the application package to the IRS.

Interest: The IRS will charge you interest on any taxes you don't pay by the due date. This is true even if you’ve been granted a filing extension. You'll also have to pay interest on penalties from the due date of your return (including extensions).

Late Filing Penalty: The late filing penalty is 5% of the tax owed after the due date, for each month or part of a month the tax remains unpaid, up to 25%. The penalty is capped at 25% of the tax due. If your return is more than 60 days late, the minimum penalty will be $435 or the amount of any tax you owe, whichever is smaller. You may be excluded from this penalty if you have a reasonable explanation.

Late Payment of Tax: If you pay your taxes late, the penalty is usually .5% of the unpaid amount for each month or part of a month the tax isn't paid. The penalty can be as much as 25% of the unpaid amount. It applies to any unpaid tax on the return. Note that this penalty is in addition to interest charges on late payments.

Below are a list of common IRS forms if you receive that you should bring to your tax interview/intake meeting. It is best to schedule your intake meeting when you ALL your tax forms.

INCOME AND TAX INFORMATION:

• W-2’s

• Payment Card and Third Party Network Transactions (1099-K)

• Interest (1099-INT or substitute)

• Dividends (1099-DIV or substitute)

• Stock Sales (1099-B or Broker Statement)

• Cancellation of Debt (1099-C)

• Gambling or Lottery Winnings (W-2G for some winnings)

• State Income Tax Refund or Unemployment Compensation (1099-G)

• Social Security or Railroad Retirement (SSA-1099 or RRB-1099)

• IRA, 401(k) Distribution, or Pension Income (1099-R)

• Miscellaneous Income (1099-MISC)

• Student Loan Interest (1098-E)

• Tuition Statement from eligible educational institutions (1098-T)

• Mortgage Interest Statement (1098 Mortgage Interest Statement)

• Distributions from HSA, Archer MSA, Medicare Advantage MSA (1099-SA/5498-SA)

Yes, daycare expenses. You will need the name of the person or company that provided the care as well as their Employer Identification Number (EIN) or Social Security Number (SSN).

Depending on which Chapter you filed for, taxes may not be exempt. With Chapter 7 bankruptcy, federal taxes are exempt from discharge. When filing Chapter 13 bankruptcy, it is very important to file and pay your taxes during the bankruptcy proceedings because the court can dismiss your claim if you fail to meet this requirement. Dismissing the claim leaves you responsible for all of your debts. For further tax information on bankruptcy, read the IRS Publication 908 (10/2012), Bankruptcy Tax Guide.

No. The federal tax laws do not consider gifted money to be earned income therefore it is not taxable to you. No state has a tax law on gifted money either.

Generally, property received as an inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, the income is taxable to you.

Yes, any money which you received as a result of work is taxable income and must be reported on your tax return. Attach your W-2 showing your earnings and your taxes withheld to your tax return.