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Tax

Income Tax Preparation Miami Medical and Dental Expenses

Income Tax Preparation Miami Eight Things to Know about Medical and Dental Expenses and Your Taxes

If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you do your Income Tax Preparation. Here are eight things the Tax Preparation Miami wants you to know about medical and dental expenses and other benefits.

1. You must itemize. Tax Preparation Miami want you to know you can deduct qualifying medical and dental expenses if you itemize on Form 1040, Schedule A.

2. Deduction is limited. Tax Preparation Miami remind you that you can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on Form 1040, Schedule A.

3. Expenses must have been paid in 2012 You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You’ll need to have good receipts or records to substantiate your expenses, according to Tax Preparation Miami VieraCPA.

4. You can’t deduct reimbursed expenses. Tax Preparation Miami remind you that your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

5. Whose expenses qualify.  Income Tax Preparation Miami CPA’s warn that you may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.

6. Types of expenses that qualify. Tax Preparation Miami state that you can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

7. Transportation costs may qualify.  Tax Preparation Miami remind you that you may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 2011.

8. Tax-favored saving for medical expenses Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

 

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Tax

Income Tax Preparers in Miami Advise on Offer in Compromise

Income Tax Preparers in Miami Advise on Offer in Compromise

The offer in compromise program is one method for Income Tax Preparers in Miami to resolve a tax debt liability with the Internal Revenue Service. There are three situations where an offer in compromise may be accepted: doubt as to collectability, doubt as to liability, and effective tax administration. In preparing an offer in compromise, the Income Tax Preparers in Miami must disclose all assets and sources of income. The IRS will verify this information and evaluate the chances of collecting from the taxpayer in determining whether or not to accept an offer in compromise. There is no guarantee that the government will accept your offer in compromise. In fact, less than 25% of offers made are accepted.

Quick-Tips:

  • In general, an offer in compromise will not be accepted if you can pay the full amount as a lump sum or through an installment plan.
  • An offer in compromise will not be accepted unless all tax returns have been filed.
  • Only 21% of the offers submitted are accepted by the IRS.
  • The average settlement value is $14,296.

In-Depth:

An offer in compromise is a program to help Income Income Tax Preparers in Miami resolve a tax liability for less than the full amount. An offer in compromise is not available for all Income Tax Preparers in Miami. In general, only Income Tax Preparers in Miami who have a tax bill, when compared to the taxpayer’s overall financial situation, that is so large that it is unlikely that the taxpayer will ever be able to pay the total amount, even in the future.

There are three grounds for an offer in compromise: doubt as to liability, doubt as to collectability, and the promotion of effect tax administration.

Doubt as to Liability – Doubt as to liability exists when there is a genuine uncertainty that the amount of tax due is correct. A taxpayer preparer may submit a doubt as to liability offer when (1) it is believed that the examiner made an error in interpreting the tax law, (2) the examiner neglected to consider the taxpayer’s evidence, or (3) the taxpayer preparers have new evidence. The IRS will likely accept a doubt as to liability offer if it proposes a fair amount the IRS could collect if the dispute was taken to trial.

Doubt as to collectability – A Income Tax Preparers in Miami may submit a doubt as to collectability offer when it is unforeseeable that the taxpayer will ever be able to pay the full amount. In submitting a doubt as to collectability offer, a taxpayer is required to disclose all information about the assets owned by the taxpayer and all sources of income. The IRS will verify all information provided and investigate for other sources of income to determine the reasonable collection potential (RCP). This process is extensive and will require the production of many forms of documentation.

The RCP is calculated based on four components: the assets owned by the taxpayer, the future income of the taxpayer, assets the IRS could collect from third parties, and assets belonging to the taxpayer or income available to the taxpayer but beyond the reach of the IRS. To calculate the value of the assets owned by the taxpayer, the IRS calculates the net realizable equity (NRE) of each asset. The NRE for each asset is 80 percent of the fair market value of the asset minus any amount owed to creditors. Assets include real estate, business property, vehicles, furniture, artwork, jewelry, and other personal property.

The future income of the taxpayer is the amount of the taxpayer expected future income less any amount for necessary living expenses. In general, the IRS will use a taxpayer’s current income as the taxpayer’s potential future income. Unless the taxpayer provides detailed information regarding the necessary living expenses, the necessary living expenses for a taxpayer is determined by using the National Standard Expense, see http://www.irs.gov/individuals/article/0,,id=96543,00.html.

Promotion of Effective Tax Administration – A Income Tax Preparers in Miami may submit a compromise to promote effective tax administration if collection of the full amount would cause economic hardship. Similar to a doubt as to collectability offer, a taxpayer will be required to submit complete information about their current financial situation. Factors the IRS considers when evaluating an offer to promote effective tax administration are health of the taxpayer, the ability of the taxpayer to support dependents, and whether liquidation of assets available to taxpayer prevent the taxpayer from paying basic living expenses.

Payment Requirements – When a taxpayer files an offer in compromise, the taxpayer must pay a $150 application fee plus part of the offer amount. If the taxpayer offers to pay the tax due in 5 payments or less within 5 years, then the taxpayer must submit 20% of the offer amount. If the taxpayer offers to pay the tax due in installments within 24 months, then the taxpayer must pay the first payment. If the taxpayer offers to pay the tax due in a periodic payment plan longer than 24 months, then the taxpayer must pay the first payment. All payments of the offer must be paid by the taxpayer while the IRS reviews the Offer in Compromise.

Acceptance of Offer – If the IRS accepts the Income Tax Preparers in Miami Offer in Compromise, the IRS will mail a written notice of acceptance. Acceptance of an offer in compromise will only settle the Income Tax Preparers in Miami of liability for the tax years and for the amounts as specified in the letter.

Rejection of Offer – If the IRS rejects the Income Tax Preparers in Miami offer in compromise, the IRS will mail a written notice of rejection stating the reasons for rejection and will include instructions on how to appeal its decision. The taxpayer may appeal the rejection of the offer by submitting an appeal to the IRS Office of Appeals within 30 days after the date on the rejection letter.

Planning Tips

Before submitting an Offer in Compromise, it is important to obtain as much documentation of your financial situation as possible. This includes documentation of home ownership (including mortgage), vehicle ownership and loans, and a list of assets (furniture, jewelry, artwork, etc.).

Frequently Asked Questions

Question: The IRS sent me a notice that I owe $10,000 in back taxes, is an offer in compromise the best solution for me?

Answer: An offer in compromise is only one method of resolving your tax debt liability. In order to qualify, you must be able to provide documentation to the IRS to support the grounds upon which you are seeking the offer in compromise, including, but not limited to, bank records, income and expense records, and health records. The IRS will look at your current financial situation and the property you own and evaluate your anticipated future income in determining whether they feel you can pay the total amount of tax due. If you can pay the full amount over time, an installment agreement may be a better method of resolution.

Question: How do I determine what amount I should offer as a compromise?

Answer: There is no definitive answer as to what will be an acceptable offer by the IRS. There are many factors that the IRS looks out to determine whether an offer is acceptable. Beyond a taxpayer’s complete financial situation, the IRS will consider a person’s age, health, and other circumstances to determine what an acceptable offer is.

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Tax

IRS ‘Nudging’ Income Tax Preparers Miami Yet to Test

IRS ‘Nudging’ Income Tax Preparers Miami Yet to Test

David Williams, director of the IRS Income Tax Preparers Miami Office, has issued a Facebook “heads up” to Income Tax Preparers Miami who haven’t yet scheduled an RTRP test.

“We will begin a wave of e-mails to all Income Tax Preparers Miami who still have a requirement to pass the [RTRP] test but have not yet done so,” Williams’s message says. “Please, check your inboxes or Spam folders over the next 10 days for my e-mail to you. The purpose of the e-mail is to be a gentle but not-too-subtle nudge: Schedule your RTRP test today. Yes, you still have until Dec. 31, 2013. But there are 330,000 of you, 260 testing centers and 16 months left.”

Williams, who is expected to leave the IRS at the end of August (see IRS’ David Williams to Depart), adds that Income Tax Return Preparers Miami  yet to test must:

• Schedule their test through their online PTIN account at www.irs.gov/ptin (log in and select “View Next Steps and Outstanding Requirements”);

• Study using the resources at www.irs.gov/taxpros/tests (select “Registered Tax Return Preparation test” to review a pre-test check list and study materials); and,

• Pass the test and make sure to be current with individual and business tax obligations.

“As soon as you pass the test and a tax check, you will receive your RTRP certificate,” says Williams, also acknowledging what some Income Tax Preparers Miami have called “test anxiety.” “Seek out a professional tax return preparation course if you feel you need to brush up your skills. Through 2013, if you take a course from an IRS-authorized CE provider, you will receive credit toward your 15-hour CE requirement.”

Williams’ post elicited a number of comments on the Facebook page from preparers. Among them:

• Several preparers who have passed the test offered encouragement to preparers who have yet to test.

• Recommendations for test-prep courses

• Questions about PTIN requirements.

• Questions about when the IRS will post online a list of those preparers who have passed.

• Questions about the quality of questions on the exam.

• Whether having to regularly test for such positions as VITA Income Tax Return Preparers in Miami might exempt a Income Tax Preparers Miami from having to take the RTRP test.