Oakland, California (EastBayDaily) — As the economic malaise drags on for many, there is some good news for those who file taxes on time and communicate with the IRS, even if they can’t pay by the tax deadline. Oakland tax planning specialist, Liberty Tax Services would like explain and offer tips about these hardship tax measures that may apply to individuals or businesses.
“The IRS has reacted to the economic times by helping taxpayers and businesses with a ‘Fresh Start’ program that increases the lien thresholds for qualifying taxpayers and businesses. We urge those who have experienced a cut in their income to plan ahead on what the next step can be if you know you will have a tax liability that you can’t pay,” Malkeet Singh of Liberty Tax Service said.
Liberty Tax Service suggests tax payers consider the following options:
1) In addition to paying taxes through an installment payment plan, there may be other options, such as the “Offer in Compromise.” Under an OIC agreement, the IRS may agree to settle the taxpayer’s liability for less than the full amount of taxes owed. A taxpayer can request OIC consideration by filling out Form 656 or Form 656L. The IRS is not likely to approve an OIC if there’s evidence that the taxpayer could pay the full amount through the installment plan or another method.
2) Those who have been downsized and have been seeking employment should keep in mind that employment compensation is considered taxable income but reduced earned income for the year 2011 may mean that the taxpayer might claim the Earned Income Credit.
3) Another possible tax credit could be claiming the tax credit for child and dependent care expenses paid when looking for work. This is accomplished by filing Form 2441, Child and Dependent Care Expenses, with the tax return.
4) Documenting the costs of a job search may deliver a tax break whether it results in a new position or not. Job search expenses may be deductible when, totaled with employee expenses and other miscellaneous deductions, they exceed 2 percent of adjusted gross income. These are reported on Schedule A Itemized Deductions, which is filed with Form 1040. Also, if a taxpayer incurs legal expenses to fight a non-compete clause, these expenses may be claimed as a job-related expense.
5) Homeowners experiencing “short sales” and foreclosures will get an extended break for “debt-forgiveness” tax consequences. Instead of treating cancellation of debt as taxable income on the foreclosure of a principle home, no taxes will be levied on discharges of indebtedness of up to $2 million dollars for married taxpayers filing jointly and of up to $1 million dollars for a married taxpayer filing a separate return through tax year 2012.
“At Liberty Tax Service, you can count on us for computerized income tax preparation, electronic filing and refund loans,” Singh said. “Regardless of what kind of tax planning assistance you need, you can rely on Liberty Tax Service to provide nothing short of top-ranking customer experience.”
For more information about tax preparation or Liberty Tax Service, call 510-239-5284 or view the tax school on the web at http://www.libertytax.com. Liberty Tax Service is located at 3207 Grand Ave. in Oakland.
About Liberty Tax Service
Liberty Tax Service is the fastest-growing retail Oakland tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared more than 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service. Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.