Party Time!

Join us for beverages, appetizers & music 3rd Annual Holiday Party!

Host:   MB Tax Pro When:  Friday, December 6th from 5pm-9pm  Where: NW Production Center 2580 NW Upshur St. Portland, OR 97210 The businesses of NW Production Center have joined forces to create an event to remember including beverages, appetizers, music & so much more: * Photo booth + props to take your very own  Awkward Family Photos!   * Wine and beer tastings from local breweries!  * Delicious Food! * Family Friendly!     NW Production Center Businesses Include:  CineRent West  MB Tax Professionals, LLP     Red Door Designs Morinka Schworm Law Offices LLC RMG Sjobeck Integration Professionals Brewvana Chris Ryan Photography Studio Services NW Andrea Fisk Skin Care  Please RSVP by responding to this email with the number of guests that will be attending.  The more the merrier!   Sincerely, Erin & David

Uncomplicating The Healthcare Reform Issue

Healthcare Reform is a complicated issue. This diagram was prepared by the Joint

Economic Committee, and shows just how much consideration had to go into

developing a plan.

Fortunately, they made room for Physicians in the bottom left and Patients in the bottom

right. That they’re not directly connected might be a slight oversight.

 

There are four key provisions of the Patient Protection and Affordable Care Act, typically

referred to as the ACA, that will affect most people: Exchanges, Subsidies, Guaranteed
Insurability, and Individual Coverage Mandates.
 

Exchanges (also referred to as The Marketplace) are a place where people can go to

compare health insurance plans and premiums. In Oregon, it’s called Cover Oregon,
and in Washington, it’s called the Washington Healthplan Finder. As much as possible,
it’s an apples-to-apples comparison. Carriers now have to design their plans based on
Metal Tiers. You may see Platinum, Gold, Silver, and Bronze levels of benefits, although
carriers aren’t required to offer benefits within every tier. And with some minor variation,
a Gold Plan is a Gold Plan no matter which carrier you use. One critical issue now will
be the Provider Network. This will be the easiest way for carriers to affect their rates. So
expect carriers to tighten up their networks, and cut out expensive provider groups.
The primary reason that one would use an Exchange rather than going directly to a
carrier, is the subsidy.

Subsidies are determined by your Modified Adjusted Gross Income (MAGI). If your

MAGI is below 400% of the poverty level, you may qualify for a subsidy. The subsidy
can be used to reduce your premium, or as a tax credit when you file. There are subsidy
calculators available on the websites for all of the Exchanges. There’s also anindependent subsidy calculator created by the Kaiser Family Foundation.

As of January 1st, there is Guaranteed Insurability for everyone. Carriers can no

longer decline coverage to an individual based on previous or current medical issues.
This is critically important for a lot of people. Carriers will have to allow you onto their
plan regardless of your medical conditions. But there are open enrollments (discussed
below) and one must apply by the 15th of the month prior to the effective date. If you
want to have a plan on January 1st, you must apply for that plan (through the Exchange
or directly with the carrier) by December 15th.

In order to help the carriers keep premiums low, Individual Coverage Mandates are

implemented starting in 2014. That means everyone must have health insurance or pay
a penalty. In 2014, that penalty is the greater of $95 or 1% of household income. In
order to discourage people from going without insurance and just paying the penalty,
the ACA only allows individuals to start health insurance at one time during the year.

This year, that’s January through April. In following years, it will be January 1st. If

someone has a major medical issue, they may have to wait for several months until that
issue is covered by health insurance.

There is a lot more to the ACA, and we’re discovering more every day. Some of the

detail may change, but here are some important issues that will not change.

Become more engaged in choosing a plan

Make sure you understand your benefits. A broker can help you, and you won’t have
to pay anything for their services.

Know that provider networks will be shrinking

Verify that providers who are critical to your care are on the plan before you apply.

Consider increasing your deductible

 

Most of the out-of-pocket maximums will be the same now. Health insurance is risk

management. If your biggest risk is bankruptcy, and you can afford to pay the
smaller bills yourself, maybe a higher deductible plan with a lower premium is a
better fit for you.

Become a consumer of your care

Understand the costs. Check out websites like www.healthcarebluebook.com, where

you can see what a procedure should cost in your area. Go directly to the labs to getwork done. I’ve used www.healthcheckusa.com in the past and have been very
happy with them. A quick Google search will show labs in your area. In both Oregon
and Washington, there are free resources to get prescription discounts.



JR Hinds, Health Insurance Broker

http://www.hindsandassociates.net/

How Will The Affordable Care Act Affect My Taxes? (Obamacare)

KEY PART OF HEALTH REFORM TAKES EFFECT JAN 1:

 

Individuals without insurance will owe a tax.

 

Although the Obama administration delayed to 2015 the rule that firms with 50 or more full-time employees must provide affordable health insurance to workers or pay a stiff fine, the individual mandate’s start date wasn’t deferred, despite a push for this by the GOP.

 

 

 

Now IRS has issued rules on when this tax applies.

 

Folks must have minimum essential coverage for themselves and their dependents to avoid the tax.

 

This includes coverage provided by an employer that meets minimum federal requirements, coverage purchased through an exchange and federal coverage such as Medicare, Medicaid, Tricare and veterans coverage.

 

Several groups of people are exempted from the individual mandate:

1) Individuals for whom coverage is too expensive.

 

If an employee is eligible for coverage but his or her share of the premium exceeds 8% of the household’s AGI, the penalty tax doesn’t apply. Ditto for folks who are  eligible for employer coverage if the cost of a basic bronze-level plan in an exchange, less any federal tax credit for buying insurance, exceeds 8% of the household’s AGI. Members of households where total income is below the level needed to file a tax return also are exempted.

2) Filers who go without coverage for periods of less than three months.

3) People who can show that a hardship forced them to go without coverage.

4) And members of religious groups opposed to private or public insurance.

 

The tax for being uninsured is normally the higher of two amounts:

The basic penalty or an income-based levy.

 

The basic penalty is $95 a person for 2014 ($47.50 for each family member under the age of 18), with a $285 ceiling. The income-based penalty is 1% of the excess of the  taxpayer’s household’s AGI over the minimum level of AGI needed to trigger filing a tax return. In either case, the tax is reduced proportionally for any months that the taxpayer had coverage.

Both of these levies are scheduled to be significantly higher in 2015 and 2016.

 

 

But in no case can the tax exceed the cost of a bronze-level exchange plan

 

For the taxpayer and family members, also adjusted for months with health coverage.

 

The tax is paid annually on the 1040. So 2014’s levy is paid in early 2015.

 

The Service is going to have a hard time policing the tax penalty for 2014.

Employers are supposed to send IRS a report with details about employee coverage so the agency can determine who is uninsured and check whether the penalty is paid. But when the administration delayed the start date of the employer mandate to 2015, it also made employer reporting voluntary for 2014. As a result, the Revenue Service will not have completely accurate data on people who are going without coverage.

And IRS’ enforcement remedies are limited to collect the tax. It is barred from filing a lien or levying a person’s assets, so it’s allowed only to offset tax refunds to collect the penalty. Nor can it charge interest on the unpaid balance of the tax.

 

*taken from www.kiplinger.com

Small Business Health Care Tax Credit

If you employ less than 25 employees, pay an average wage of less than $50,000 and pay at least half of your employee health insurance premiums then you can qualify for the Small Business Health Care Tax Credit.  Just realize that starting in 2014 you must purchase your employee health insurance through a Small Business Health Options program (SHOP) to qualify.  

Here in Oregon you will go to www.coveroregon.com to purchase your coverage.  Enrollment for 2014 closes March 31st so be sure to make changes soon so you don't miss out.

New Healthcare Tax Credit Facts

David and I spent all day in class learning about the new healthcare laws and credits.  One of the most important things everyone needs to know- to qualify for the Healthcare Credits you must have purchased your health insurance through an exchange.  Luckily here in Oregon we have our own marketplace so who cares if the Federal website works or not.  Just go to www.coveroregon.com to see if you qualify for the tax credit.

Qualification is based on the number of people in your household and total household income.  If you do qualify just choose the insurance you want and purchase it right from the website.  It's easy and the Oregon website didn't cost $125 million to build.  We are so lucky to live here in this great state.  You can choose to get the credit each month, paid directly to your insurance provider, or get it as a credit against your taxes when you file your 1040.  

Offers in Compromise for Free

Did you know that you may be able to settle your debt with the IRS for less than you owe?  Don't spend more money hiring one of those big companies who say they can do it for you but cost thousands of dollars.  Simply go to the IRS website, www.IRS.gov and use the Offers in Compromise pre-qualifier tool.  It asks you a series of questions and then tells you if you qualify for an offer based on your financial information, all for free.  If you do qualify it will then allow you to proceed with the Offer application.

 

On the main page of the website just click on the word "Tools" and it will take you to a list of handy helpful tools that include the Offer in a Compromise pre-qualifier Tool.  

Inflation Adjustments for Various Tax Provisions

 

 

In 2014, Various Tax Benefits Increase Due to Inflation Adjustments

WASHINGTON — For tax year 2014, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2013-35 provides details about these annual adjustments.

 

The tax items for tax year 2014 of greatest interest to most taxpayers include the following dollar amounts.

• The tax rate of 39.6 percent affects singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return), up from $400,000 and $450,000, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
• The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly, up from $6,100 and $12,200, respectively, for tax year 2013. The standard deduction for heads of household rises to $9,100, up from $8,950.
• The limitation for itemized deductions claimed on tax year 2014 returns of individuals begins with incomes of $254,200 or more ($305,050 for married couples filing jointly).
• The personal exemption rises to $3,950, up from the 2013 exemption of $3,900. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $254,200 ($305,050 for married couples filing jointly). It phases out completely at $376,700 ($427,550 for married couples filing jointly.)
• The Alternative Minimum Tax exemption amount for tax year 2014 is $52,800 ($82,100, for married couples filing jointly). The 2013 exemption amount was $51,900 ($80,800 for married couples filing jointly).
• The maximum Earned Income Credit amount is $6,143 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,044 for tax year 2013. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
• Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who died in 2013.
• The annual exclusion for gifts remains at $14,000 for 2014.
• The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains unchanged at $2,500.
• The foreign earned income exclusion rises to $99,200 for tax year 2014, up from $97,600, for 2013.
• The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,400 for tax year 2014, up from $25,000 for 2013.

Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2013-35, which will be published in Internal Revenue Bulletin 2013-47 on Nov. 18, 2013.

Late Start to 2014 Filing Season Because of Government Shutdown

2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations Resume

 

 

WASHINGTON–The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure. 

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4. 

The government closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core systems is a complex, year-round process with the majority of the work beginning in the fall of each year. 

About 90 percent of IRS operations were closed during the shutdown, with some major workstreams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS systems this year in order to provide additional refund fraud and identity theft detection and prevention.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” Werfel said. “The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation’s taxpayers. We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season.”

The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS processes, applications and databases must be updated annually to reflect tax law updates, business process changes, and programming updates in time for the start of the filing season. 

The IRS continues resuming and assessing operations following the 16-day closure. The IRS is seeing heavy demand on its toll-free telephone lines, walk-in sites and other services from taxpayers and tax practitioners.

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown. 

The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to continue to use automated applications on IRS.gov whenever possible.

“In the days ahead, we will continue assessing the impact of the shutdown on IRS operations, and we will do everything we can to work through the backlog and pent-up demand,” Werfel said. “We greatly appreciate the patience of taxpayers and the tax professional community during this period.”

IRS Is Not Open But You Better File Your Taxes by October 15th

October 15th Deadline Remains in Effect for Taxpayers Who Requested a Six-month Extension to File Tax Return

---

           

The Internal Revenue Service today reminded taxpayers that the Oct. 15 deadline remains in effect for people who requested a six-month extension to file their tax return.

The current lapse in federal appropriations does not affect the federal tax law, and all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as required by law.

Many of the more than 12 million individuals who requested an automatic six-month extension earlier this year have yet to file their Form 1040 for 2012.

Though Oct. 15 is the last day for most people to file, some groups still have more time, including members of the military and others serving in Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. People with extensions in parts of Colorado affected by severe storms, flooding, landslides and mudslides also have more time, until Dec. 2, 2013, to file and pay.

The IRS offered several reminders for taxpayers during the current appropriations lapse:

Taxpayers are encouraged to file their returns electronically using IRS e-file or the Free File system to reduce the chance of errors.

Taxpayers can file their tax returns electronically or on paper.  Payments accompanying paper and e-filed tax returns will be accepted and processed as the IRS receives them.  Tax refunds will not be issued until normal government operations resume.

IRS operations are limited during the appropriations lapse, with live assistors on the phones and at Taxpayer Assistance Centers unavailable. However, IRS.gov and most automated toll-free telephone applications remain operational.

Tax software companies, tax practitioners and Free File remain available to assist with taxes during this period.

Same-Sex Marriage Recognized for Federal Tax Filing Regardless of Where You Live

All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes
8/29/2013

Page Content

 Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

The ruling implements federal tax aspects of the June 26^th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.

“Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve,” said Secretary Jacob J. Lew. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”

Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.

Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.

Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.  

Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.

Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.

 

How to File a Claim for Refund

Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.

Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement.

 

For information on filing an amended return, go to Tax Topic 308, Amended Returns at http://www.irs.gov/taxtopics/tc308.html or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.    

 

Future Guidance

Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.

 

Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.

 

For Revenue Ruling 2013-17, click here.

 

For Frequently Asked Questions, click here.

 

For registered domestic partners who live in community property states, click here for Publication 555, Community Property.

 

Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).

DOMA Repael and Affordable Care Act

Book and Website We Love Breaking the Time Barrier - Book "Spectacularly simple, remarkably true for every small business owner who's determined to grow, Breaking the Time Barrier will work for you!" ~Michael E. Gerber (The E-Myth) How to unlock your true earning potential, FREE download of this book. FreshBooks.com - Website FreshBooks is simple and intuitive, so accounting isn't intimidating. Hello cloud, goodbye desk. With FreshBooks, your business is accessible everywhere, from your iPhone/iPad to your desktop, and your data is secure and backed up in the cloud.   "FreshBooks is one of the best accounting software for small business, Mac/Apple users that we have seen." ~MB Tax Pro

 

Supreme Court Keeps IRS Busy (DOMA repeal)    As if the IRS has not been busy enough lately trying to clean up after the scandals, now the Supreme Court's ruling on DOMA has them hopping.  With the Supreme Court striking down DOMA this  means that same sex couples will now be eligible for the thousands of federal benefits including filing their tax returns jointly.  IRS will now have to write guidance as to how this will be handled.  It's a messy situation with only 13 states recognizing same sex marriage.  For example, how will a couple legally married in California but living in Oregon be allowed to file?  Since Oregon does not currently allow same sex marriage would these taxpayers still have to file separately?  Right now this is how it looks.  I foresee more court cases in the future as this all plays out.  We will keep you posted as things become more clear over the next few months.       Affordable Care Act and Cover Oregon    Two upcoming things to be aware of. First, the Patient Protection and Affordable Care Act is starting January 1st, 2014 and will give people more insurance options. Second, you will be required to have insurance or pay an additional fine. Cover Oregon will be open for business in October 2013 to give everyone time to shop for coverage before the new health care benefits begin in January. CoverOregon.com

Fantastic Article On Gratitude and Reprogramming Your Brain For Success

SALES SOURCE | Geoffrey James

True Secret to Success (It's Not What You Think)

If you're not exercising this emotional muscle, you're probably setting yourself up for failure.

  

I'm utterly convinced that the key to lifelong success is the regular exercise of a single emotional muscle: gratitude.
People who approach life with a sense of gratitude are constantly aware of what's wonderful in their life. Because they enjoy the fruits of their successes, they seek out more success. And when things don't go as planned, people who are grateful can put failure into perspective.
By contrast, people who lack gratitude are never truly happy. If they succeed at a task, they don't enjoy it. For them, a string of successes is like trying to fill a bucket with a huge leak in the bottom. And failure invariably makes them bitter, angry, and discouraged.
Therefore, if you want to be successful, you need to feel more gratitude. Fortunately, gratitude, like most emotions, is like a muscle: The more you use it, the stronger and more resilient it becomes.
Practice Nightly
The best time to exercise gratitude is just before bed. Take out your tablet (electronic or otherwise) and record the events of the day that created positive emotions, either in you or in those around you.
Did you help somebody solve a problem? Write it down. Did you connect with a colleague or friend? Write it down. Did you make somebody smile? Write it down.
What you're doing is "programming your brain" to view your day more positively. You're throwing mental focus on what worked well, and shrugging off what didn't. As a result, you'll sleep better, and you'll wake up more refreshed.
Reprogramming Your Brain
More important, you're also programming your brain to notice even more reasons to feel gratitude. You'll quickly discover that even a "bad day" is full of moments that are worthy of gratitude. Success becomes sweeter; failure, less sour.
The more regularly you practice this exercise, the stronger its effects.
Over time, your "gratitude muscle" will become so strong that you'll attract more success into your life, not to mention greater numbers of successful (i.e., grateful) people. You'll also find yourself thanking people more often. That's good for you and for them, too.
This method works. If you don't believe me, try it for at least a week. You'll be amazed at what a huge difference it makes.
If you like this post, sign up for the free Sales Source newsletter.

Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

I Can't Pay, Now What?

 

What If I Can't Pay My Tax Bill?

 

 

 

So you owe taxes--you owe big time--and you can't possibly pay the balance. You aren't alone: The number of Americans who are behind on their taxes is estimated to be anywhere from 8 to 20 million.
So what do you do if you can't pay your tax bill? You have a mix of options, depending on your situation, and the IRS would certainly recommend that you reevaluate whether you can pay or not.
"The IRS will encourage an individual to borrow on their credit cards or take out a home equity line of credit. The IRS wants to be paid, and paid first," says Mary Lou Gervie, director of forensic accounting and dispute services at Watkins Meegan, a CPA firm based in Bethesda, Md.
But if you absolutely can't pay, there are two main approaches the IRS suggests. Since everyone's situation is different and there's no one-size-fits-all strategy, it's best to consult a tax preparer or professional for advice before proceeding. Here are your options:

The monthly installment. If you're behind on your taxes but feel you can pay eventually, this is probably your most appealing option.
The national media office at the Internal Revenue Service was unable to produce anyone for an interview, but the IRS did send information recommending that taxpayers who are behind either attach a letter with their tax return or fill out Form 9465--or better yet, simply go to www.irs.gov and fill out an online payment agreement application (www.irs.gov/Individuals/Online-Payment-Agreement-Application).
If you fill out the form online, you'll find out right away if you're eligible; going the snail-mail route generally takes 30 days or longer. If you owe $50,000 or less and can pay what you owe within six years, you can get a payment agreement, according to the IRS.

Why you might want to do this: Pretty obvious. You can pay the IRS monthly and no longer worry about what you owe the government.

What may be problematic: You still have plenty to worry about.
"Interest continues to accrue on the tax debt until paid in full," says Scott Estill, a former IRS senior trial attorney who is now in private practice in Littleton, Co., and specializes in helping taxpayers resolve issues with the IRS. He is also the author of "Tax This! An Insider's Guide to Standing up to the IRS" and several other tax publications.
Other than accruing interest, what's so bad about it continuing to add up? It may not end up being so dire, but it depends on the size of your debt, says Estill. "Depending upon the amount of the debt and the amount of the monthly payment, there may be situations in which negative amortization occurs, which is when the balance increases every month because the payment does not cover all of the interest on the debt," says Estill.
There are other negatives, he adds, explaining that the IRS can still file a federal tax lien against you and your property even with a payment plan in place, which can make it challenging to get a decent loan.
Estill also notes: "The IRS may require full financial disclosure of assets and liabilities, thus providing them with a road map to your assets if the installment agreement falls through by default." That is, due to missing payments.
Another concern, especially if you're self-employed and not seeing taxes removed from each paycheck: While you're paying your back taxes in a monthly installment plan, you still need to make payments on the current year so you don't fall behind. "It can be very stressful for people to come up with a fairly large amount every month," says Gervie. "It squeezes them."
In fact, if you make your monthly payment too high and fail to budget for taxes on the current year you need to pay, you might start a vicious cycle of owing the IRS indefinitely.

An offer in compromise. This is the second approach the IRS recommends if a taxpayer simply cannot pay what they owe.
In the words of the IRS, and the following is wordy but worth reading for anyone who might need to do this: "An offer in compromise allows you to settle your tax debt for less than the full amount you owe, if you meet strict requirements. This may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances: ability to pay; income; expenses; and asset equity. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. Before we can consider your offer, you must be current with all filing and payment requirements. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal: http://irs.treasury.gov/oic_pre_qualifier/"

Why you might want to do this: Again, pretty obvious. You don't want to have this problem hanging over your head forever.

What may be problematic: You're spilling your financial guts to the IRS, says Estill. "Thus, the IRS will have an excellent road map to assets if the offer does not succeed," he says.
But there is also a statute of limitations the IRS has to collect a debt, and an offer in compromise extends that for an extra year, plus the time the offer was being reviewed, says Estill.
As Estill puts it, if you have a tax return for 2005 that was filed on April 15, 2006, your statute of limitations currently ends on April 15, 2016. But if your offer in compromise is rejected and it took the IRS six months to review the offer and reject it, it now has until Oct. 15, 2017, to collect the debt. So that's something to think about.
And yet another concern: "There is a five-year period of compliance required after the offer is accepted, and if the taxpayer has problems with paying a tax debt in the five years following the acceptance of the offer, it can cause the offer to be revoked and the taxpayer ends up back in the same position as pre-offer," says Estill.

Whatever you decide to do, file. It can be scary dealing with the IRS because, well, it's all-powerful. Nevertheless, file--even if you can't pay.
"It doesn't get better by hiding your head in the sand just because you don't have the money," says Benson Goldstein, senior technical manager of taxation for the American Institute of CPAs, which is headquartered in New York.

Goldstein adds that if for no other reason, you should file to get that decade-long statute of limitations started.
Not that you want to drag out the experience of owing the IRS for 10 years, but if you don't file, it will take longer to resolve your tax issues. What you likely won't do is go to jail or lose your house from owing the IRS, says Estill. That is, as long as you're on the up and up when working with the agency.
"There has to be some intention to deceive or defraud the IRS before criminal elements come into play," says Estill.



By Geoff Williams | U.S.News & World Report LP – Thu, Apr 4, 2013 3:24 PM EDT

Relief For Late-Paying Penalty For A Lot of Filers

Relief Available To Many Extension Requesters Claiming Tax Benefits

 

WASHINGTON —The Internal Revenue Service today provided late-payment penalty relief to individuals and businesses requesting a tax-filing extension because they are attaching to their returns any of the forms that couldn’t be filed until after January.

The relief applies to the late-payment penalty, normally 0.5 percent per month, charged on tax payments made after the regular filing deadline. This relief applies to any of the forms delayed until February or March, primarily due to the January enactment of the American Taxpayer Relief Act.

Taxpayers using forms claiming such tax benefits as depreciation deductions and a variety of business credits qualify for this relief. A complete list of eligible forms can be found in Notice 2013-24, posted today on IRS.gov.

Individuals and businesses qualify for this relief if they properly request an extension to file their 2012 returns. Eligible taxpayers need not make any special notation on their extension request, but as usual, they must properly estimate their expected tax liability and pay the estimated amount by the original due date of the return.

The return must be filed and payment for any additional amount due must be made by the extended dud date. Interest still applies to any tax payment made after the original deadline.
  
A complete list of qualifying forms here: http://www.irs.gov/pub/irs-drop/n-13-24.pdf

Show Me The Money!

Where's My Refund?

IRS:

If you already filed your federal tax return and are due a refund, you have several options to check on your refund. Here are some things the IRS wants you to know about checking the status of your refund. "Where’s My Refund?" is an interactive tool on http://www.irs.gov and is the fastest, easiest way to get information about your federal income tax refund. Whether you split your refund among several accounts, opted for direct deposit into one account, used part of your refund to buy U.S. Savings Bonds or asked the IRS to mail you a check, Where’s My Refund? gives you online access to your refund information, 24 hours a day, 7 days a week. It’s quick, easy and secure. If you e-file, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you file a paper return, refund information will generally be available three to four weeks after mailing your return. When checking the status of your refund, have your federal tax return handy. To get your personalized refund information you must enter your Social Security Number or Individual Taxpayer Identification Number, your filing status which will be Single, Married Filing Joint Return, Married, Filing Separate Return, Head of Household, or Qualifying Widow(er), AND the exact whole dollar refund amount shown on your tax return. IRS2Go is is the IRS’ first smartphone application that lets taxpayers check on the status of their tax refund. Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

 

OREGON:

Want to check on the status of your 2011 Oregon personal income tax refund? With just your name, your Social Security number, and last year's Oregon Taxable Income, you can look up your status online! It's safe, it's secure, and it's really easy, just go to "Where's My Refund?" and follow the steps online.

 

CALIFORNIA:

You will need the following to check the status of your 2011 California personal income tax refund:
Your social security number, your mailing address, and the refund amount shown on your tax return. For more information and to check on your refund, see "Where's My Refund California?"

NEW YORK:

Generally, you'll get your refund in six to eight weeks from the date we receive your return. You'll get it faster if you e-file your return and have your refund deposited directly into your bank account. If we identify an issue with a tax return, our review may take longer than six to eight weeks.

To check the status of your refund, see Income Tax Refund Status.