Entries in Income Taxes (25)


Tax Tip: Online Payment Agreements for Taxes You Owe

Photo Courtesy - IRS [dot] gov(NEW YORK) -- If you owe money to the Internal Revenue Service, you may be able to pay it back over time.

Eric Smith, who's with the IRS, says you can go on the agency's website to set up a payment plan.

"The online payment agreement option on allows you to find out in a matter of a few minutes whether you qualify for a payment agreement with the IRS," says Smith.

Once qualified, you can agree to pay a certain amount of your debt each month.  Smith says a "monthly payment agreement is the best way to take care of a tax debt that you can't pay all at one time."

He says the IRS knows "many people are facing very severe financial difficulties" and the agency understands that.

Ignoring your taxes can lead to penalties, but Smith says if you contact the IRS it will listen.

"Anybody for any reason can get in a tough spot from time to time.  We're willing to work with people to try to work out those tax debts, those tax obligations," he said.

Copyright 2011 ABC News Radio


Tax Tip: Taking Advantage of Health Savings Accounts

Photo Courtesy - Getty Images(NEW YORK) -- It's been around for about a decade now, but many people still don't understand how a health savings account works.

As one person decribes it, think of it as an IRA for your health care expenses, with triple tax savings.

"You put your money into the health savings account tax free, and then it grows tax free.  The interest you earn on it is tax free, and when you take money out for qualified medical expenses, that's tax free as well," says Kathy Pickering with H&R Block.

Pickering says health savings accounts can no longer be used for over-the-counter medication, but many doctors will write prescriptions for those drugs.  And unlike a flexible savings account, the health savings account money rolls over year to year.

"If you can hold on to your health savings account, say as you lose your job, if you move to a new job, you can still use those funds and then if you can hold onto it until retirement.  That's just additional money that you can use later when you need it," she says.

Copyright 2011 ABC News Radio


Tax Tip: An Unwelcome Tax Bill for the Unemployed

Photo Courtesy - Getty Images(NEW YORK) -- Millions of Americans received unemployment benefits in 2010, and for many of them, there's going to be a tax surprise.

In 2009, the first $2,400 of unemployment was untaxed, but that break was not extended last year.

"There's no taxes withheld from unemployment income when you register for it," said Kathy Pickering with H&R Block.  "You need to request that they withhold taxes on your behalf from that income."

Pickering said that means you will get a tax bill this year for that income.  And you might owe more than that, according to accountant Janie Hayman.

"They may have had debt forgiveness with credit cards and this could be an area of concern as well.  It could be taxable," Hayman said.

It's a hard pill to swallow for some who are barely scraping by, but Eric Smith with the Internal Revenue Service says the agency will work with you.

"Contact the IRS if you're having financial difficulties and let's see what may be possible to make sure the taxes aren't an undue burden," Smith said.

Copyright 2011 ABC News Radio


IRS to Begin Processing Delayed Tax Returns

Photo Courtesy - Getty Images(WASHINGTON) -- The IRS has announced it will begin processing delayed tax returns on Feb. 14.

The start date applies to tax returns that were delayed by tax law changes that took place on Dec. 17, 2010.  The IRS said it will process "both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction."

People unaffected by the delay can start filing their returns immediately, including those who will claim the Earned Income Tax Credit and education and child tax credits.

The delay was a result of the enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended several expiring provisions.

Copyright 2011 ABC News Radio


Google, US Companies Dodge Billions in Taxes

Photo Courtesy - ABC News(NEW YORK) -- Google and other U.S. companies are using legal corporate tax loopholes to avoid paying the U.S. Treasury billions of dollars in corporate income taxes every year, according to a new report by Bloomberg News.

"Over the last three years, Google has saved over $3 billion," said Bloomberg reporter Jesse Drucker, who broke the story.

Google, with its informal corporate motto of "don't be evil," employs a strategy called the "Double Irish" to help it pay a tax rate of just 2.4 percent on overseas profits, according to Bloomberg.  The corporate income tax rate in the U.S. is 35 percent.

Even though the company is headquartered in Northern California, it licenses some of its intellectual property overseas.  Any profits made outside of the U.S. never get taxed in this country.

Thanks to its lenient tax law, Ireland is one of the top places for Google and other companies to license their intellectual property.  Profits from the licensed property go to a Google subsidiary in Ireland, but they're not getting taxed in that country, either.

Instead, according to Bloomberg News, Google uses Ireland's lax laws to send the subsidiary's profits on a quick detour through the Netherlands to avoid taxes in the European Union.  The money eventually ends up in Bermuda, where the corporate tax rate is zero percent.

Copyright 2010 ABC News Radio

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