California Tax Legal Questions

Good Afternoon, It sounds like the IRS made changes to your return through their Automated Underreporter Unit or a related department.   There could be many different causes so I won't speculate as to the exact problem, but usually these changes are the result of the IRS having information that wasn't reported in the return.   As an example, if you received a taxable distribution from your retirement account, but the proceeds were not reported on the return, then the IRS would issue several notices regarding the proposed changes and then ultimately assess and attempt to collect the balance due. Based on the above example, the cause could be failure of the preparer to accurately report the distribution, failure of the taxpayer to provide the information to the preparer, or failure of the retirement account custodian to issue the taxpayer a copy of Form 1098-R.  It is hard to pinpoint who, if anybody, is at fault until all the facts are known. In any event, you or a tax professional should immediately reach out to the IRS and attempt to resolve the balance due.  If you truly owe the money to the IRS, then you can either pay the full amount or attempt to resolve the balance through an installment agreement or other program. Best regards, Adam Brewer, Esq. AB Tax Law APC... Read More

Good Afternoon, The first step in these type of tax cases is to reach out to the IRS and CA Franchise Tax Board (FTB).  The IRS and FTB will be able to provide information about your filing compliance, any balance due on your account, and wage and income transcripts that will show reported income including unemployment compensation. From there, it will likely be necessary to use the information obtained from the IRS and FTB to prepare your returns going back to 2010.  If there are any resulting liabilities, then those can be put into an installment agreement, currently not collectible/hardship status, or perhaps an offer in compromise. I hope this information helps.  Please let me know if you require any additional assistance with you tax case. Best regards, Adam Brewer, Esq. AB Tax Law APC... Read More

Ms. Ivanov, It's a scam.  Whenever you receive a call like this never provide any information and never provide any money to them.   The IRS will never make initial contact by telephone, email, or text.  The IRS will always mail you a letter regarding any balance due.   To confirm your suspicions that the call is a scam, first try Googling the number that appears on your caller ID.  Often, other people will have reported that they received a call from the same number threating arrest.   Second, you can call IRS collections directly at 1-800-829-3903.   I hope this helps. Best regards, Adam Brewer, Esq. AB Tax Law APC... Read More

Filing your taxes jointly will, in almost every situation, reduce the total tax bill for a married couple over married filing separately. There are several differences, many credits and deductions are limited for married filing separately. he main advantage of filing separately is that one spouse isn't liable for the other spouse's taxes. This could be a significant issue if the other spouse is hiding income, inflating deductions or simply not paying the taxes.... Read More

It's easy to confuse state citizenship with USA citizenship. A USA citizen remains a USA citizen regardless of where they live. You cease to be a state citizen when you move out of the state. If you move out of state in July, you'll have to file a part year income tax return on the income you earned while living there but you're not liable for taxes on the income you earned after you left (except California, which has a penalty on part year residents using a complex calculation). As a USA citizen living and working in a foreign country, you MUST file Form 8938 reporting foreign bank accounts. If you don't the penalties are EXTREME. With their typical bungling, Congress enacted a law to catch drug dealers, Hillary and other felons who hide their wealth in foreign countries but forgot that many law abiding USA citizens live and work abroad, maintaining normal, legal pension funds and bank accounts.... Read More

There are three requirements to take the home office deduction on a self employed project:1/ A particular area of your home must be regularly used for the business.2/ the particular area must be exclusively used for the business3/it must be the principal place of your business. Most often the exclusive use part is the problem. Most people don't have a place that isn't used both for the business and personally?... Read More

There are something like 2 or 3 million Americans working overseas. ?Generally, they all have to file US tax returns. ?There are two provisions in the US tax law that reduce or eliminate how much taxes you'll have to pay. First is the Foreign Earned Income Exclusion. ?Basically, you don't have to pay taxes on the first $100,000 you make as a resident of a foreign country. ?YOU STILL HAVE TO FILE YOUR RETURN and YOU HAVE TO REPORT ANY FOREIGN BANK ACCOUNTS. ?The penalties for non-filing are EXTREME. ?Right now is a good time because with Russia attacking in Europe and Muslims attacking everywhere else, the US dollar is high so $100,000 US covers a lot of ringgets, euros and yen these days (warning: with an election coming up a new president who cares about foreign policy more than special interests bucks might try to strengthen human rights and democracy throughout the world - on the other hand Hillary is running so special interests are looking forward to another eight years). The second is the Foreign Tax Credit. ?If you make more than US$100,000. ?You get credit against your US taxes for foreign income taxes. ?The US has the highest tax rates in the world but since you get a $100,000 credit it means you'll be taxed in, say France on your whole $150,000 income but your US tax will only be on $50,000, ?So, you'll probably not pay any US taxes until you make about $200,000 or so. ? It's 2015, with the internet it's easy to find a US accountant who'll do your taxes and communicate online.... Read More

The penalty for failure to file a return is 5% a month of the tax owed max of 50%. There is also a late payment penalty of 5% a month max of 50%. Of course, there is interest (3% a year currently) on any unpaid taxes. Possibly your brother can get with the IRS to eliminate the penalties, if he voluntarily files the returns and requests a waiver. Interest is never waived. Unless you're an attorney, CPA or enrolled agent, you can't represent your brother with the IRS. Of course, you can help him file the returns.... Read More