David Coffin PLLC Tax Law Attorney | Tarrant and Dallas Counties | David Coffin PLLC2024-03-25T11:57:34Zhttps://www.davidcoffinlaw.com/feed/atom/WordPress/wp-content/uploads/sites/1302223/2021/06/David-Coffin-PLLC-site-icon.jpgOn Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478462024-03-25T11:57:34Z2024-03-25T11:57:34ZMistakes that independent contractors should avoid when dealing with taxes
There are a lot of mistakes that can be made when you’re handling your own taxes. When you’re an independent contractor, this includes the following:
Simply forgetting the obligation to pay self-employment tax, which can lead to the accumulation of a significant amount of unpaid taxes.
Not making mandatory quarterly anticipated tax payments, unless your tax payments from other lines of work will fully cover your tax obligation.
Misusing the home office deduction, as this space needs to be used exclusively for your business.
Not fully utilizing retirement savings accounts to reduce tax obligations.
Failing to report independent contractor income.
Not writing off all business expenses.
Writing off expenses that aren’t related to your business.
Maintaining incomplete income records.
These are just some of the errors that you could make as an independent contractor and that could increase your chances of being audited. And if you are audited, then you could be hit with a massive tax bill if you’ve been mishandling your self-employment income and taxes.
Don’t let the tax system devastate your financial future
If you’re not careful, then your tax obligations can quickly eat away at your financial well-being. To try to sidestep that outcome, you need a handle on tax law and how it applies to your set of circumstances. If you need assistance with that, then please read through our website and consider what else you need to address the issues you’re facing.
]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478412024-03-14T15:59:09Z2024-03-12T15:56:51Ztax law disputes can be very complex. Thus, it can be challenging and feel like it is impossible to navigate.
The good news is that there are options to work through tax law matters, and if tax litigation is necessary, you do not need to do it by yourself.
Resolving tax law disputes
By devoting our practice exclusively for tax law disputes, the law firm of David Coffin PLLC has experience resolving tax controversies at all stages of the matter. Our legal team has helped countless individuals, families and business owners gain a better sense of their situation while guiding them through their tax dispute.
If you are being audited or seek to appeal an audit, a legal professional can help you navigate this matter and ensure you take the proper steps to protect your rights and interests. Similarly, if the IRS has initiated collection activities, you have legal options to address wage garnishment, imposed levies or liens filed against your property.
Tax litigation
For some tax law disputes, a resolution can only be reached through litigation. These matters could be litigated in Tax Court, federal district court, bankruptcy court or in the U.S. Court of Federal Claims. Each venue could provide specific benefits; therefore, it is important to understand your options and how you can reach the most favorable outcome.
Being involved in a tax law dispute can be challenging and can present many obstacles for you. Thus, it is imperative that you consider your legal rights and what steps you could take to ensure they are protected when seeking a resolution.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478392024-02-27T18:02:04Z2024-02-27T18:02:04ZTax debt refers to an individual’s or entity’s unpaid taxes.
Causes of tax debt
There are many reasons why a person may find themselves with tax debt. Generally, major life changes can keep people out of work, and prevent them from earning enough to pay off their debts. These life changes may include:
Losing a job
Developing a serious physical or mental illness
Starting a new business that was not profitable
Divorce
Loss of a loved one
In addition to major life changes, a person might find themselves with tax debt if they fail to complete their taxes or fail to complete their taxes accurately. Filing taxes is not always easy, particularly if you have a more complex financial situation. As a result, even with the help of software and other resources, it is possible to make mistakes. Many people fail to properly calculate the amount of taxes owed, and therefore end up owing the government money.
If you are experiencing tax debt, you are not alone. There are many potential ways to resolve this issue, so that you are not dragged down by this debt for years to come. For example, you may be able to reach an agreement with the IRS to pay off your debt in installments or settle your debts by paying a reduced amount.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478372024-02-12T16:07:19Z2024-02-12T16:07:19ZRead the letter
Read the letter carefully and make sure you understand what it says. It might simply be asking you to provide additional information, verify your identity or notify you about delays in the processing of your tax return.
Unfortunately, sometimes the letter may tell you that you owe money. This could be because the IRS discovered information about your income or deductions that changes the outcome of a previously filed return and shows you owe additional money.
Respond within any deadlines
Whatever the reason, you must respond to the letter if it gives a deadline to respond. Not responding could have serious consequences.
If you owe money, not responding could tack on interest and penalty fees to the owed amount. The IRS offers various options for paying back tax debt, including offers in compromise and payment plans.
A prompt response to the letter could help you solve the problem with one of these methods that much quicker.
What if I don’t agree or don’t understand the letter?
You may not agree with the amount of tax debt the letter states you owe. You can generally appeal these types of decisions if you file the appeal by a certain date. Missing the appeal deadline could mean you lose your chance to appeal.
Perhaps you are not sure what exactly the letter means or how the IRS arrived at the amount of tax debt you owe. Speaking with a professional can help you learn the reason for the letter and the best next steps to take.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478362024-02-07T03:45:08Z2024-02-07T03:45:08ZDebts forgiven before 2026
Typically, forgiven student loan debt is considered taxable income by the IRS. However, debts discharged before the first day of 2026 are exempt from taxation at the federal level. Whether or not you will be eligible by that time depends on what program you enrolled in.
Those participating in the Public Service Loan Forgiveness (PSLF) program are eligible for relief after 10 years of payments. Those participating in other income-dependent repayment (IDR) programs are eligible for relief after 20 or 25 years of payments.
Debts forgiven before the end of 2025
If you participate in the PSLF program, you will not owe income taxes on any portion of a forgiven balance. However, you must generally pay taxes on the state and federal levels if you participate in any of the federal government's four IDR plans. However, it is possible that Congress could take action to extend the exemption timeline beyond the end of 2025.
State taxes may apply
Texas does not have a state income tax, so you would be safe if you earned most or all of your income within its borders. However, if you earn money in Indiana or North Carolina, forgiven student loan debt could be taxable income.
Any debt forgiven after the end of a repayment period may be seen as ordinary income by the IRS. However, this doesn't mean that you would necessarily owe tax. This would depend on how much you made in the past year and if you have any other available deductions or credits. The IRS or state agency may answer any questions you might have about your tax situation.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478332024-01-29T21:12:35Z2024-01-29T21:12:35ZHow a payment plan works
A payment plan allows you to make smaller payments on the full tax debt for a certain time until the debt is paid in full. Before agreeing to a payment plan, you should make sure that you can afford the payments and get the debt paid within the agreed upon time.
There are several benefits to a payment plan. The IRS cannot try to collect the debt while the payment plan is in effect. This means they cannot levy property, garnish wages or attempt any other collection efforts.
There are short and long-term payment plans available and you will likely be charged a cost for setting up the plan. The specific payment plan depends on your tax situation.
If you are approved for a payment plan, the process works the same as paying off any other debt. You must make a minimum monthly payment before a certain due date.
Future tax refunds are applied to the payment plan
You are still required to file tax returns on time and pay any future taxes when due. Unfortunately, you may have to go without tax refunds while your payment plan is in effect, since all future refunds are applied to the outstanding balance. You must still make your next scheduled payment even if a refund is applied to the balance.
A payment plan can be the answer to your tax debt, but qualifying for one, setting it up and maintaining it can get complicated. It is best to have professional guidance through the process.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478322024-01-17T10:55:10Z2024-01-17T10:55:10Zpayroll tax liabilities and the legal options available to address them.
Payroll tax liabilities
At David Coffin, PLLC, our law firm understands the complexities payroll tax liabilities can bring to the table. That is why our attorneys take the time to work personally and diligently with our clients, so they fully understand their situation, options and resolutions.
Payroll taxes include both an employer’s portion of the taxes as well as the taxes an employer collects on behalf of their employees. Businesses are required to pay these to the IRS; however, some fall behind on this obligation. And if a business is having difficulty catching up, this could result in payroll tax liabilities.
Penalties
Payroll tax liabilities differ from income tax liabilities. While both can result in penalties for the failure to pay, the penalties for payroll tax liabilities are more severe. Thus, if you have received an IRS Letter 1153, which is a notice that a trust fund recovery penalty has been proposed against you, it is imperative that you take immediate action to protect yourself.
It is important to note that these penalties could be imposed against the company officers as well as anyone who has check signing authority on behalf of the company. Additionally, if this penalty has been assessed, it is often very difficult to avoid the collections efforts by the IRS.
In effort to avoid negative financial and personal consequences, it is vital that you take timely action to protect yourself and your business from payroll tax liabilities. These matters can be complex and time sensitive, making it important to seek guidance from a legal professional.
]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478302024-01-03T22:42:26Z2024-01-02T22:13:59Ztax debt, you will want to watch your mailbox carefully over the next few months. The IRS is starting to send out reminder letters to taxpayers who owe back taxes.
If you receive one of these letters, you may have as little as 21 days to submit payment or request alternative arrangements. if you do not respond, you may find yourself in legal trouble.
After the confusion and policy changes of the global health emergency, the IRS was left with a severe backlog of tax debt cases. As a result, the agency mostly stopped sending out reminder letters for the past two years. It began sending reminders to some taxpayers last fall, but it is now gearing up to start sending tens of thousands of these letters to individuals, businesses, trusts and estates that have tax debts dating back before 2023.
Intent to levy
Reminder letters typically come in a series, but most sources agree that it is a bad idea to delay responding.
Typically, the process begins with a first reminder letter telling the taxpayer to submit payment or contact the IRS within 21 days. If the person or organization does not respond within that time period, the IRS sends a second notice. If the taxpayer does not respond to the second notice, they can expect a third letter, sometimes known as an "Intent to Levy" notice.
This third notice demands that the taxpayer either pay their outstanding balance or file an appeal within 90 days. At this point, the IRS can put a lien on a taxpayer's home, garnish their wages or even take money directly out of a taxpayer's bank account.
Be prepared
Because the IRS paused many of these cases for so long, many taxpayers may be surprised to receive these letters in the coming months. It's important for them to start figuring out now how they are going to respond.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478282023-12-18T04:54:26Z2023-12-18T04:54:26ZThe IRS has programs that can help
When natural disasters strike and you face some challenges in paying your taxes, the IRS may grant tax deadline extensions to give you more time to file and pay what you owe. These programs include:
Tax credits: The IRS may offer tax credits to individuals and businesses suffering losses due to natural disasters. These credits can help reduce the amount of taxes owed or increase the amount of tax refunds.
Deductions: The IRS may allow individuals and businesses to deduct the cost of repairs, equipment replacement and other related expenses incurred due to the natural disaster.
The IRS may also offer other forms of relief, such as deferral of tax payments or waiving of penalties and interest.
There are available loans and grants
In addition to tax relief programs, the government and other organizations may offer loans and grants that can help you cover the cost of repairs, replacement of equipment and other related expenses. These loans and grants can help you get back on track and recover from the effects of a natural disaster.
Consulting an attorney or tax professional can be helpful in navigating the tax relief options available to you. They can help you understand what each option requires, prepare the necessary documents and ensure that you are taking advantage of all the tax credits and deductions for which you are eligible.
Natural disasters can have a devastating impact on an individual's or business's ability to pay taxes. The destruction and chaos caused by these events can leave you feeling overwhelmed and unsure of how to move forward. By understanding the options available to you and seeking help when needed, you can recover from the effects of a natural disaster and get back on track.]]>On Behalf of David Coffin PLLChttps://www.davidcoffinlaw.com/?p=478262023-12-07T09:36:40Z2023-12-07T09:36:40ZPayroll tax liabilities
Payroll taxes are levied on the wages and salaries paid by employers to their employees. These taxes are from the employee's paycheck and their employer remits them to the government. The primary purpose of payroll taxes is to fund social security, Medicare and other benefits. Employers are responsible for paying a portion of these taxes as well.
Income tax liabilities
On the other hand, the government levies income tax on an individual's or business's income. This may come in the form of:
Wages
Salaries
Profits
Other forms of earnings
The basis of income tax calculation is the taxpayer's tax bracket, which depends on their income level. The government uses income tax revenue to fund various public services, such as education, infrastructure and defense.
Key distinctions of penalties and violations
Payroll and income tax liability violations can result in severe consequences, including penalties, fines, tax liens and even criminal charges. Employers who fail to pay payroll taxes or file payroll tax returns on time may face penalties ranging from 5% to 15% of the unpaid taxes. Similarly, individuals and businesses who fail to file income tax returns or pay income taxes on time may face penalties ranging from 5% to 25% of the unpaid taxes. Both may also be subject to a tax lien on their assets.
Here are some key differences:
Payroll tax liability violations are typically more severe for employers. This is because of their responsibility for paying taxes on behalf of their employees.
Income tax liability violations can be more severe for individuals and businesses with higher incomes. This is because they pay a higher percentage of their income in taxes.
Payroll tax violations can lead to criminal charges faster than income tax violations, because the IRS sees payroll taxes as a trust fund and a higher priority.
In conclusion, violating payroll and income tax liabilities can have severe consequences. You can avoid financial and legal repercussions by understanding the differences between these two types of taxes and their penalties. Doing this can also help you manage your tax obligations wisely.]]>