Tag: Tax Filing


Understanding Notices From IRS

Sanjiv Gupta CPA - 9 years ago
Here you can learn more about the tax notices from Internal Revenue Services (IRS).  On the left side, you can see the notice number and you can find the description of the notice on right.   You can also contact our office to learn more about the notice you may receive.  We recommend you make an appointment and bring your notice along with any other records that you may have. Notice NumberDescriptionTopicCP02HYou owe a balance due as a result of amending your tax return to show receipt of a grant received as a result of Hurricane Katrina, Rita or Wilma.Balance DueCP03AYou received a tax credit (called the First-Time Homebuyer Credit) for a home you purchased. This notice informs you of how to repay it.CP03BYou received a tax credit (called the First-Time Homebuyer Credit) for a home you purchased. This notice informs you that you don’t have to repay the credit as long as the home remains your main home for at least three years after you purchase it. It also explains situations where a home stops being the main home.CP08You may qualify for the Additional Child Tax Credit and be entitled to some additional money.Additional Child Tax CreditCP10We made a change(s) to your return because we believe there’s a miscalculation. This change(s) affected the estimated tax payment you wanted to be applied to your taxes for next year.Change To Your Estimated Tax Credit AmountCP10AWe made a change(s) to your return because we believe there’s a miscalculation involving your Earned Income Credit. This change(s) affected the estimated tax payment you wanted to be applied to your taxes for next year.Change To Your Estimated Tax Credit AmountCP11We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes.Balance DueCP11AWe made changes to your return because we believe there’s a miscalculation involving your Earned Income Credit. You owe money on your taxes as a result of these changes.Balance DueCP11MWe made changes to your return involving the Making Work Pay and Government Retiree Credit. You owe money on your taxes as a result of these changes.Balance DueCP21AWe made the change(s) you requested for your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s).Balance DueCP21BWe made the change(s) you requested for your tax return for the tax year specified on the notice. You should receive your refund within 2-3 weeks of your notice.RefundCP21CWe made the change(s) you requested for your tax return for the tax year specified on the notice. You’re not due a refund nor do you owe any additional amount. Your account balance for this tax form and tax year is zero.Even BalanceCP21EAs a result of your recent audit, we made changes to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of these changes.Balance DueCP21IWe made changes to your tax return for the tax year specified on the notice for Individual Retirement Arrangement (IRA) taxes. You owe money on your taxes as a result of these changes.Balance DueCP22AWe made the change(s) you requested for your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s).Balance DueCP22EAs a result of your recent audit, we made changes to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of these changes.Balance DueCP22IWe made changes to your tax return for the tax year specified on the notice for Individual Retirement Arrangement (IRA) taxes. You owe money on your taxes as a result of these changes.Balance DueCP31Your refund check was returned to us, so you need to update your address.RefundCP45We were unable to apply your overpayment to your estimated tax as you requested.OverpaymentCP53We can’t provide your refund through direct deposit, so we’re sending you a refund check by mail.Direct DepositsCP120You need to send us documentation of your tax-exempt status.Tax ExemptionsCP130Your tax return filing requirements may have changed: You may no longer need to pay the Alternative Minimum Tax.Filing RequirementsCP139Your tax return filing requirements may have changed: You may no longer need to file Form 941 and Form 940.Filing RequirementsCP152We have received your return.Confirmation of Return ReceiptCP153We can’t provide you with your refund through a direct deposit, so we’re sending you a refund check/credit payment by mail.RefundCP166We were unable to process your monthly payment because there were insufficient funds in your bank account.Payment ProcessCP178Your tax return filing requirements may have changed: You may no longer owe excise tax.Filing RequirementsCP231Your refund or credit payment was returned to us and we need you to update your current address.Address Update NeededCP276AWe didn’t receive a correctly completed tax liability schedule. We normally charge a Federal Tax Deposit (FTD) penalty when this happens. We decided not to do so this time.FTD PenaltyCP276BWe didn’t receive the correct amount of tax deposits. We normally charge a Federal Tax Deposit penalty when this happens. We decided not to do so this time.FTD PenaltyOther Notices and LettersNotice or Letter NumberTitleCP 12Changes to Tax Return, OverpaymentCP 14Balance DueCP 23Estimated Tax Discrepancy, Balance DueCP 49Overpaid Tax Applied to Other Taxes You OweCP 57Notice of Insufficient FundsCP 88Delinquent Return Refund HoldCP 90/CP 297Final Notice – Notice of Intent to Levy and Notice of Your Right to a HearingCP 297ANotice of Levy and Notice of Your Right to a HearingCP 91/CP 298Final Notice Before Levy on Social Security BenefitsCP 161Request for Payment or Notice of Unpaid Balance, Balance DueCP 501Reminder Notice – Balance DueCP 503Second Request Notice – Balance DueCP 504Final Notice – Balance DueCP 521Installment Agreement Reminder NoticeCP 523Notice of Default on Installment AgreementCP 2000Notice of Proposed Adjustment for Underpayment/OverpaymentLetter 0484CCollection Information Statement Requested (Form 433F/433D); Inability to Pay/TransferLetter 0549CBalance Due on Account is PaidLetter 668D(LP 68)We released the taxpayer’s levy.Letter 0681CProposal to Pay AcceptedLetter 0757CInstallment Privilege TerminatedLetter 1058 (LT 11)Final Notice prior to levy; your right to a hearingLetter 1615 (LT 18)Mail us your overdue tax returns.Letter 1731 (LP 64)Please help us locate a taxpayer.Letter 1737 (LT 27)Please complete and site Form 433F, Collection Information Statement.Letter 1961CInstallment Agreement for Direct Debit 433-GLetter 1962CInstallment Agreement Reply to TaxpayerLetter 2050 (LT 16)Please call us about your overdue taxes or tax return.Letter 2257CBalance Due Total to TaxpayerLetter 2271CInstallment Agreement for Direct Debit RevisionsLetter 2272CInstallment Agreement Cannot Be ConsideredLetter 2273CInstallment Agreement Accepted: Terms ExplainedLetter 2318CInstallment Agreement: Payroll Deduction (F2159) IncompleteLetter 2357CAbatement of Penalties and InterestLetter 2603CInstallment Agreement Accepted – Notice of Federal Tax Lien Will be FiledLetter 2604CPre-assessed Installment AgreementLetter 2761CRequest for Combat Zone Service DatesLetter 2789CTaxpayer Response to Reminder of Balance DueLetter 2840CCC IAPND Installment Agreement ConfirmationLetter 3030CBalance Due Explained: Tax/Interest Not PaidLetter 3127CRevision to Installment AgreementLetter 3217CInstallment Agreement Accepted: Terms ExplainedLetter 3228 (LT 39)Reminder notice.Letter 4903 (LT 26)We have no record of receiving your tax returns.Letter LP 47Address Information RequestLetter LP 59Please contact us about the taxpayer levy.

Dealing With Tax Liens

Sanjiv Gupta CPA - 8 years ago
Federal tax liens are documents that are filed in the county in which a business or a person is conducting his or her activities informing the public that the person or business n question has outstanding tax bills. This lien attaches to the property of the said individual or business allowing the IRS to recover the full value of the tax bill through the sale of the personal and business property of a person or business. In essence, it is a warrant that the IRS places on your pieces of the property allowing them to dispose of them off in the pursuit of tax arrears. Once a lien is filed, then during the period that the lien is effective the IRS can sell off any property and recover the amounts owed in tax before the balance of such a transaction is given to the individual. So what happens when you pay off your tax debt?Well, the major thing is that the lien is lifted. The statute requires that the lien is lifted within 30 days of the settlement of the bill that was due. That is the law that comes into operation once the balance is cleared. However, in reality, this does not always take place. In most cases, the IRS is normally reluctant to release the lien that it has placed on a piece of property. To make up for this oversight, the lien is often issued with the writing that if it is not refilled on the date of the expiry, then the owner of the piece of property should consider the lien released. This option means that at the end of the liens period, the ownership of the pieces of property that had been attached reverts back to the owner.Does the IRS inform your credit agencies of the release of any lien once it expires? The law requires that a Certificate of Release is filed at the courthouse where the original lien had been filed. Once it is filed, the owner of the piece of property can then use it. However, most people have made the proposal for the creation of at least three copies of the release certificate. These copies would then be sent to the credit bureau once they are filed therefore releasing the individual from doing the job himself or herself.Is it possible to have a tax lien on your credit file without your knowledge? The simple answer is yes. In this day and age when identity theft is at an all-time high, the probability of finding a lien in your credit reports when you have no idea of it is very likely. The next step that you should take is to notify the IRS and the court in which such a lien was filed to seek clarification. Often, the services of a lawyer will be required to make the follow up as the process may be tedious and time-consuming. In addition, it is important to keep legal counsel by your side during this process to mitigate the legal impact such a discovery may have on your affairs.

Benefits of Sanjiv CPA’s Payroll Services

Sanjiv Gupta CPA - 6 years ago
When you use Sanjiv Gupta CPA Payroll Services, you can avoid the complexity of calculating your payroll and tax withholdings. This will let you spend time focusing on your business’ success.If you are like most businesses, you are constantly struggling to keep up with complex employee-related issues and ever-changing tax legislation. It is time to consider outsourcing your payroll to Sanjiv Gupta. This will help you mitigate your risk and remain focused on your business.You can rely on Sanjiv Gupta CPA Payroll Service’s tax expertise and comprehensive payroll services to manage your business’s payroll. At Sanjiv CPA, you can choose a standalone payroll tax solution or you can bundle the payroll tax services with a complete payroll solution.Benefits Of Sanjiv CPA’s Payroll ServicesConvenience: Submit payroll easily by phone, fax or online.Eliminate Time Consuming Manual Processes: Our payroll service provides automated tax services with payroll integration.Reduce Potential IRS Penalties: Approximately 40% of small businesses get hit with IRS penalties on their payroll tax filings because they filed inaccurate or late returns or they were found in non-compliance. When you outsource your payroll to Sanjiv CPA, you can eliminate the risk of IRS penalties.Peace of Mind: Outsourcing your payroll to Sanjiv CPA provides peace of mind. Your payroll taxes will be filled accurately and on-time by certified public accountants you can trust.Customize Your Business’ Tax Strategy: Sanjiv Certified Public Accountants can help you customize your business’ tax strategy with a wide variety of related tax services and add-ons.Personal Service: Sanjiv Gupta CPA Payroll Services are always only a phone call away. If you have any questions about your payroll account, you can talk to a live payroll advisor and receive immediate attention.Health Care Reform Compliance: We will ensure that you are in compliance with the Health Care Reform so you can prevent issues and penalties.Expertise: When you outsource your payroll to Sanjiv Gupta CPA, you can rest assured that you are putting one of the most important accounting processes in the hands of experts. We have expertise in payroll tax filing, employment-related tax, and all other business-related tax issues.Reduced Payroll Administration Costs: When we handle your payroll tax filings and payroll services, you will find a huge reduction in administration costs. Your staff can spend their time and efforts on business functions that will increase your overall revenue.Sanjiv Gupta CPA provides innovative payroll features and reliable expertise that you can trust. Your staff will be able to stay focused on your core business. We will handle your payroll, tax filings, 1099s, workers comp, and withholdings.We guarantee our cost-effective and timely payroll tax filing services. You can rest easy because you will no longer be stressed over filing deadlines and tax calculations. You will not have any more IRS penalties or interest charges because you accidentally filed late. Sanjiv Gupta CPA Payroll Service advisors are experts in government regulations. We can help you reduce hidden payroll costs, reduce potential risk and start focusing on your bottom line.

Understanding Depreciation For Tax Filings

Sanjiv Gupta CPA - 6 years ago
The field of commerce is vast and people tend to analyze every single monetary attribute by using the definition used in this field. Depreciation is a market term used to signify the fall in the value of a commodity or a market in a bigger context. Generally, depreciation is observed of a period of time and in a commercial aspect, we use it to represent the fall in the price of an asset over a fiscal. It also signifies the fall in a company’s revenue or in other things related to the business of the company. There are various reasons which foster this kind of situation in the market and false inflation is one among them. Various market commodities like real estate, oil, and precious metals can face a steep fall in their market price during the recession.Factors behind value depreciation in the market:A recession is an economic scenario where a local or global market suffers from a fall in the value of different commodities, and there are multiple situations that can trigger this. In the US law book, section 167 deals with depreciation for commodities. If you are purchasing a property that you are going to use in some form of business activity or to make money from it, it is possible that you fail to subtract the complete business expense in the same year of acquiring the property. You need to spread the cost over a fiscal and then deduct part of the cost every year. According to the countries law book, this fall in the cost of business property is called Depreciation.Repairs are immune to depreciation.Investments made on the property to increase its lifetime are immune to depreciation. If you are spending some more money on repairs and adding new things to the property to increase its usefulness, then you can slow down the rate of depreciation.The procedure for DepreciationIn order to depreciate, the investment property and other business matters should be placed for the Modified Accelerated Cost Recovery System (MARCS). This method allows a deduction for a larger amount during initial years and during later years, a lower amount of deductions are done and both are compared through straight-line methods. Brief description of DepreciationDepreciation is a method that allows an income tax deduction for the taxpayer in order to claim the cost based on a specific property. This acts as an annual allowance for devaluation, wear, and tear or uselessness of a property.The properties that can be categorized as tangible property, furniture, buildings, machinery, vehicles and other equipment other than land, all these properties are depreciable. Similarly, patents, computer software programs and copyrights are also depreciable.Conditions required for allowing deduction and depreciation for any propertyThe legal taxpayer must be the owner of the property. Taxpayers also have the right to deduct tax regarding capital improvements for any property that he/she has taken on lease.The property must be used by the taxpayer for business or any other activity that can produce income. In case of using any property for business and personal use,  the taxpayer may reduce the depreciation depending upon the use of the property only for business purposes.The property for which depreciation and tax deduction is applied must be useful for at least more than a year or two.Under the following circumstances, a taxpayer cannot depreciate his or her property, in case of property being disposed of within the same year.  When equipment is used for building capital advancements, a taxpayer is only allowed to do so for equipment used during construction depending on the improvements. And certain terms and interests are also an issue.Depreciation initiates only when the taxpayer provides the property for trade or for business, after using it for the production or as a source of income. When the taxpayer fully recovers the cost of the property, then the property becomes invalid for depreciation. Even if the taxpayer takes voluntary retirement from service, the above-mentioned scenario is applicable! Identifying proper items for apt depreciationKnowing the absolute method for depreciating your property.Knowing your asset details well.If the property falls under the listed property category.If the taxpayer is electing for the expense for any part regarding the assets.How depreciation is possible, based on the property.179 deductions for deprecationAs per this section, one can deduct a cost for the limited account for a certain amount of depreciable property, only if you have placed it for service.  This kind of deduction is called section 179.  In 2013, the most amounts that could be deducted were $500,000. But higher limits can also be applicable but it depends upon the asset.The limitation is reduced depending upon the amount, and the cost of property offered for the service during the tax year goes above $2 million. Publication 946 clearly states about regulations and details about properties that are applicable for the deduction, its limitation, and how one can place the deduction at the right time.Traditionally, the capital assets and their deduction are based upon the casual fact that vehicles, buildings, roads and similar improvements have a life for more than one year. But relying on the theory and facts, they are getting paid out of the savings brought together for several years. The taxpayer should keep in mind that the land property does not fall under the category of depreciation, simply because it never wears out! The bookkeeping method is mainly used for reflecting the operations, which are an on-going procedure and for the current year.  Specifically for this obvious reason, inflows about capital investments and depreciation are not reflected, same for income as well. With the proper guidance and knowledge about depreciation, one can save a good deal of money from tax. But it should be kept in mind that, there are also some limitations in it and it comes under the Internal Revenue Service, which specifies properties and how they can be depreciated. Several methods are available for calculating depreciation based on the property.

How to deal with US Taxes if you are living abroad?

Sanjiv Gupta CPA - 3 years ago
 US citizens or green card holders who live somewhere outside the USA are still required to file their taxes. They are required to do this if they have personal income like wages, commissions, consultancy fees, alimony, interest, capital gains, farm income, inheritance, salary, tips, pension fund, US and foreign social security interest, dividends, and rental property.It is important to note that they have US tax filing obligations even if they have been outside the United States for several years and all income accumulated is from foreign sources. They may also have some tax filing obligations even if some or all of the income has already been taxed or will be taxed by a foreign country. They are also required to file even if they are not accumulating any money and are married to an individual who does have income.Basically, they have to file an IRS form 1040 for the previous year that the income was above the threshold. These are the same as US residents. Filing 1040 is due on April 17, 2018. There is an automatic extension for those living abroad. For them, it is on June 15. However, if there are taxes that are due, then the interest is calculated. This starts on April 15 and ends on the payment date.How Does Living Abroad Mitigate US Tax?There are two methods that can reduce US tax by substantial amounts. These are the FEIE or the Foreign Earned Income Exclusion and the FTC or the Foreign Tax Credit. Neither can excuse the taxpayer abroad from filing their income especially when it is above the filing threshold.The FEIE or the Foreign Earned Income Exclusion lets the taxpayer exclude a certain amount of the Foreign Earned Income from the US tax. The exclusion also applies only to income that has been earned outside the United States. There are other incomes like pensions, dividends, US-sourced income, capital gains, and interest. They are also liable for the full US tax on this kind of income.The other method that is used to reduce the US tax bill uses IRS Form 1116. The FTC or Foreign Tax Credit use IRS Form 1116. If the income has been taxed by the foreign country, then the tax from the US is subtracted. It also substantially reduces the tax bill. However, Foreign Tax Credits for Foreign Taxes on Income cannot be claimed when it is excluded on Form 2555. To put it simply, taxpayers outside the United States can claim foreign tax credits for foreign taxes on a similar income that the US is taxing. The fraction of the foreign taxes that are taken as the tax credit is also determined by the ratio of the excluded income from the total income.With that being said, taxpayers outside the United States are better off by simply using the foreign tax credit and also not claiming the FEIE. If this is done, then there is no need to pay US taxes. In addition, the FTC or Foreign Tax Credit can also be applied against the tax on the unearned income. Therefore, by judiciously combining FEIE along with the FTC and also applying the FTC substantially reduces and even decreases the tax bill down to zero. This is merely an approximate calculation that also serves as an example of how the system operates.Taxpayers outside the United States must be reminded that even if the calculated tax bill amounts to zero then applying for the foreign tax credit and/or the FEIE is zero. In summary, the foreign earned income reduces US tax to zero. However, if the foreign income is above $102,100 then it is suggested for the taxpayer to explore every possibility using the foreign taxes in the form of credit alongside US taxes that are due.Taxpayers must remember that if they are claiming the FEIE from the previous years, then they can use the Form 2555 and then decide that this is the very year they can use the FTC or Foreign Tax Credit. However, once this is done, then they cannot go back to using the FEIE for the following six years unless they receive their permission from the Internal Revenue Services or IRS.In some cases, they can also exclude the qualified housing expenses from the taxable income. This can be calculated on Form 2555 which is found under Part VI. There are also other aspects that are considered when calculating the US taxes of a taxpayer outside the United States. One is the AMT or the Alternate Minimum Tax. This handles the unearned and passive income, specifically the capital gains and interest. There are also exclusions on foreign housing if lodgings are rented. Other examples are business expenses, state taxes in the specific US states that the taxpayer has lived in, itemizing deductions instead of applying the deduction that is standard on specific taxes and earnings of a spouse that is not an American citizen.Self-employment taxes such as Medicare and Social Security apply when the net annual earnings are more than $400 and they live in countries that do not have totalization of a social security agreement in the United States. If these elements are to be considered, they have to be well-advised to and consult an international tax expert.Social Security Number and ITINEvery tax return must have a Social Security Number and ITIN. Social Security Number is required for US citizens or residents. SSNs are valid for the individual and is theirs for a long time. For non-resident aliens spouses and dependents, they must have an ITIN.Passport RevocationThe IRS is also required to notify the State Department if the taxpayers as delinquents in tax debt. The State Department is also prohibited in issuing as well as renewing the passport to taxpayers with tax debt (usually over $51,000).The Affordable Care ActThis impacts US taxpayers in fiscal years for which the US income tax returns have been filed for the year 2018. Americans who live outside the United States must know how important it is to declare that they are not subject to the Affordable Care Act. This is a shared responsibility provision that indicates that they benefit from a status specifically obtaining a foreign health plan without the need to be part of the US plan or even pay the penalty fee.Foreign Bank AccountsNote that the US government is not there to tax wealth. On the other hand, the Internal Revenue System still requires to get to the nitty-gritty regarding money in bank accounts overseas especially the fact how it got there and if it has produced income like capital gains and interests. The downside to this is that because of the recent legislation, there are two different requirements for bank accounts that are overseas. These are the FATCA and the FBAR.The FATCA or the Foreign Account Tax Compliance is filed on Form 1040 if the foreign assets exceed the following limits:Married filing jointly and also residing in the United States. Obtain Form 8939 if the foreign holdings are around $100,000 or above these on the very last day of the tax year. This is also applicable when it is more than $150,000 at a time during tax years.Married filing jointly and residing abroad. This should be filed in Form 8938 if the foreign holdings are over $400,000 and even more than this amount on the last day of the applicable tax year or above $600,000 at any given time during the tax year.Unmarried or married filing as separate residing in the United States. This should be filed in Form 8938 if this aggregates the foreign holdings and are even more than $50,000 or above this amount on the very last day of the tax year or more than $75,000 at any given time during that tax year.Unmarried or those married that filed separately and also living abroad. This should then be filed in Form 8938 if there are foreign holdings that are more than $200,000 and even more than the last day of the tax year or more than $300,000 during that tax year.Foreign banks under FATCA have been reporting indirectly or directly to the IRS so it is very important to file form 8938 correctly. This has been the case since January 1, 2015.The Foreign Bank Account Report or the FBAR has been in existence since 1972 and this would have been filed if the foreign holdings are more than $10,000 or above this amount at any time during the mentioned tax year. There is a signature authority over one or even more than the foreign accounts. Since 2014, the FBAR is also filed electronically on Form 114 with the Department of Treasury. It should also be filed on April 15 every year and on the separate form 1040. Those who live abroad have an extension until October 15 if they are living abroad.FAQsShould I file a US Income Tax Return if I live and/or work abroad?In general, if you have resided and/or worked overseas during a specific Tax Year and you have accumulated the gross income from various worldwide sources, then at least the amount that is shown for filing the status must be filed as a tax return.For all US citizens and resident aliens, there are factors that determine whether a tax return must be filed:Filing StatusAgeIncome that has been earned when working for another country What Should I report on My US Income Tax Return if I Live And/Or Work Abroad? If you are a resident alien or a US citizen who has resided abroad during that given tax year, then here are the following items that must be filed on the tax return:Gross Income. This includes all the income that has been received through the Tax Year This includes goods, self-employment earnings, money and property that is not exempted from the taxes. This is reported on the Gross Income line found in Schedule C, Gross Receipt from Schedule C-EZ, Loss from the Business and the Net Profit from the Business. This also includes the income that has been excluded when the foreigner has earned income along with foreign housing amounts. Foreign Income. Foreign currency must be converted in US dollars if the taxpayer has either received part of it or paid some of the expenses. What is Foreign Earned Income? Foreign earned income is the income that has been received for services performed in foreign countries during the period of the income tax. This is usually the main place of business, a post of duty or employment where the taxpayer is indefinitely engaged to work or permanently assigned to work. This is qualified if it is done in foreign countries and the bona fide residence or physical presence test has been met. However, there are items that the IRS does not count when looking into foreign earned income:The income received as an employee in the US government.Annuity or pension payments also includes Social Security benefits.Amounts that are included in the income because of the contributions of the employer to the trust of the non-exempt employee or to the annuity contract that does not qualify.Previously excluded the value of lodging and meals that have been furnished for the convenience of the employer.Recaptured and allowable moving expenses.The payment that has been received at the end of the Tax Year which also follows the Tax Year that this has been performed in the services which resulted in the income that has been earned.In order to not be regarded as a tax delinquent, US citizens and permanent residents must be upon their toes when it comes to filing tax returns. They may not be in the United States but that is not enough reason to do a responsibility as an American.
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