Ask The Expert: Why Do I Owe So Much In Taxes?

Ask The Expert: Why Do I Owe So Much In Taxes?

The Alliance Tax and Accounting Service Team, based out of Elm Grove, a western suburb of Milwaukee, has been solving tax problems for individuals and businesses since 2009. With a dedicated staff of Certified Public Accountants, experienced tax resolution specialists, and case managers, we’re ready to solve your tax problem – permanently. Most of our tax clients come to us when their most pressing concerns become:

“I finally filed my 2016 taxes, but want to make sure 2017 is less of a headache. What can I do to prepare?

Arthur Lee, owner of Alliance Tax and Accounting Service has a response for those concerns:

It’s very common for individuals and business owners to put off taxes until they are due. For many, taxes and bookkeeping appear complicated and confusing, so they avoid it until the federal tax deadline. The biggest issue with this approach is the potential for tax problems to snowball. When caught early – especially before the end of the tax year – many issues can be turned around by your accountant or at the very least, you can make the right changes going forward.

At Alliance Tax, many of the clients that come through our door simply don’t know that there were things they could have done throughout the year to lessen the impact of their tax problems. Many of them are surprised to learn that spending a small amount of time each month on bookkeeping can lead to a headache-free tax appointment with us.

Each year, millions of Americans have far more taxes withheld from their pay than is required. Now is a good time to sit down and adjust your withholding so that the taxes withheld from your pay are closer to the taxes you’ll owe for this year. This is especially helpful if you receive a large refund but would prefer a larger paycheck throughout the year. If instead you owed tax when you filed for 2016, you may need to increase your federal income tax withheld from your wages.  

Now is also the perfect time to shop for a tax professional. You’ll have more time when you’re not up against a deadline or anxious to receive a tax refund. Our team at Alliance Tax is available to walk you through the best bookkeeping and tax practices so that you are on track. They can also assist you in planning for the rest of the year, taking into account things such has a child starting college or the start of a new business.  

Some of the best actions you can take are for the month of December. This is a great time to sit down with one of our certified accounts and assess the current year – starting with your retirement accounts. It’s a smart move to make additional contributions before the end of December. You’re limited annually on the amount that you can give, so you should utilize each year to contribute the maximum amount possible. Besides the obvious benefit of increasing your retirement savings, contributing to these accounts will reduce how much tax you’ll owe or could even ensure you get a refund.

If you’re saving for your children’s education in a 529 Plan, the end of the year is a great time to consider making additional contributions. Not only are contributions tax-free up to $14,000, they could also lead toward a state tax deduction or credit.  

Planning ahead a bit each month can offset future tax problems and make it easier for you to utilize deductions or tax credits. Many of the tax problems that our clients face begin with simply not having the proper resources or assistance of someone who understands the current tax laws. Whether you are an individual or a business owner, Alliance Tax is available to answer questions and offer advice with no judgment. GIve us a call today and we’ll get you started with a complimentary consultation: (262) 786-4442.

Ask The Expert: What’s It Like Working with Alliance Tax?

Ask The Expert: What’s It Like Working with Alliance Tax?

We’re excited to be partnering with the Shepherd Express on a monthly “Ask The Expert” Column in 2017! The month’s question was: “What can I expect when working with Alliance Tax?”

Arthur Lee, owner of Alliance Tax and Accounting Service has a response:

Our expertise lies in helping people find permanent solutions for their tax problems. When your state or the IRS believes you owe money, it can be challenging to figure out how to resolve the situation, and over time, late payments and interest can compound the problem. Our team specializes in representing you and resolving your tax problem, permanently.

Not all business owners are accountants or have backgrounds in finance. That’s why those that have a dream to start their own business come to us for business accounting. We help them map out their business plan or navigate licensing or registration to avoid issues as they start to grow. Many owners come to us after struggling to do everything themselves, and feel tremendous relief to be able to hand-off tasks such as tedious bookkeeping.

Tax preparation is another way that we have helped our clients be proactive with their finances. We provide a tax organizer, interview, and review once we’ve completed your taxes to make sure you understand your situation clearly. We’ll even create a pro forma tax return to see what you’ll owe and help you plan for the rest of 2017.

Hear from a few of our clients on how we’ve helped them turn their financial situation 180 degrees:

“They are very professional, caring and will get it done. I am pleased to say as of December 2015 my IRS debt was finally resolved and I really appreciate Alliance Tax for all of their hard work.”

“Alliance Tax saved me thousands of dollars in fines and interest along with negotiating any back taxes that were due to a very modest number and in some instances, a return to my surprise.”

“To any future clients: Alliance Tax treats you with respect and dignity. You are made to feel comfortable when speaking to them. They always know who you are and are eager to help!”

“I seriously believe God led me to your company. I really do. I was at a lost for what to do about my circumstances. I’m so happy we’re working through this.”

“They did a great job staying in contact with me, helping me understand what will happen next, explaining the progress of my case. They were very easy to talk to and did a great job!”

Our tax professionals have seen a variety of complicated tax situations and have always been able to give our clients peace of mind. Your current tax issues may seem daunting and confusing but we promise to be transparent, professional and attentive towards you and your financial predicament until it is solved for good. We offer complimentary consultations – so there’s no risk in giving us a call.

Why Does The IRS Say I Owe More Than I Really Do?: Ask The Expert

Why Does The IRS Say I Owe More Than I Really Do?: Ask The Expert

We’re excited to be partnering with the Shepherd Express on a monthly “Ask The Expert” Column in 2017! The month’s question was: “How in the world did the IRS or State come up with these numbers?! I can’t possibly owe this much, I never even made this much! And now they want to levy me?”

Arthur Lee, owner of Alliance Tax and Accounting Service has a response for those concerns:

The tax code has defined a pay-as-you-go system. This means that as you earn income you should be paying taxes on that income at least quarterly. The interest and penalties accumulate quickly on tax bills! There are penalties for not filing a return, for filing a return after the deadline, penalties for underpayment of taxes and penalties if you don’t pay estimates at least quarterly throughout the year. And of course, there are interest charges on any outstanding tax balances.

If you have unfiled tax returns, the IRS or State Department of Revenue may file a tax return on your behalf using the best information they believe they have. This is known as a Substitute for Return or SFR. With an SFR, the IRS or State will not give you credit for many tax credits and deductions you are legally entitled to and they may not recognize any tax payments paid or withheld from wages. Letting the IRS or State file a tax return may be in their best interest, but it’s not in yours.

Having unfiled tax returns is by far the biggest problem for those who owe back taxes. Taxpayers who haven’t filed each year for personal and/or business taxes can’t be sure exactly how much is owed without first completing those past returns! In addition, in order to settle tax debts, each taxpayer must be in compliance—meaning, all tax returns due must be filed before the taxing authority will negotiate the tax debt and attempt to reach any settlement plan.

Remember, you may not owe what the IRS and State says you owe, but you’ll never know until your back taxes are filed. Our advice? Let an experienced tax professional complete and file your back taxes, so that you can truly negotiate with the State or IRS. Our goal at Alliance Tax is to find a permanent solution to your tax problem, and to help you pay the smallest amount allowed by law. If you have unfiled returns and the State or IRS is sending you outrageous bills, call us today at 262-786-4442. We offer a FREE 1-hour consultation which allows us to understand your situation, and advise you on the best possible approach to a permanent resolution.

How Much Can Be Withdrawn From Retirement Savings Safely Each Year?

How Much Can Be Withdrawn From Retirement Savings Safely Each Year?

In retirement planning there is something called the 4% rule. This was the general rule of thumb that you could safely withdraw 4% of your portfolio each year without completely depleting it. This has been a generally accepted rule for many years but lately planners are starting to question it’s wisdom.

The reason is two fold

1) Life expectancy has increased. Meaning hopefully your money will have to last longer.

2) Expected yields have become lower. To quote CNBC “Low interest rates also complicate the picture for savers. A one-year certificate of deposit came with a yield of just 0.28 percent, on average, through most of September, according to Bankrate. That’s hardly enough to generate much retirement income.”

What does this mean for retirees?

1) The 4% rule is still a good starting point but cannot be considered completely safe.

2) It is important to reevaluate your plan frequently

3) Remember there are also laws about required minimum distributions (RMDs) from certain retirement accounts. These penalties for not taking enough out of a tax deferred retirement account can be substantial.

4) It is a good idea to consult with your financial planner or tax professional.

Who Needs an EIN (Employer Identification Number)?

Who Needs an EIN (Employer Identification Number)?

If you answer Yes to any of the following questions you need to have an EIN.

  • Do you have employees?
  • Do you operate your business as a corporation or partnership?
  • Do you file an Employment, Excise or Alcohol, Tobacco and Firearms tax return?
  • Do you have a KEOGH plan
  • Are you involved with any of the following types of organizations?
  • Trusts (except certain grantor owner revocable trusts), IRAs, Exempt Organization Business Income Tax Returns
  • Estates
  • Real estate mortgage investment conduits (REMICs)
  • Non-profit organizations
  • Farmers’ cooperatives
  • Plan administrators

 

If you need an EIN you can easily obtain one by clicking on the following link to the IRS.

Apply for an Employer Identification Number (EIN) online.

 

Applying online should take less than 15 minutes from start to finish. Taxpayers and authorized third party designees will receive an EIN immediately upon completion of the application.