Knowing what you want in life is truly a bliss one can only hope to find. Knowing what you need, is even better. When it comes to your business needs, it’s really important to learn how to distinguish between your needs to hire different professionals. Even if an accountant surely comes to you as a logical solution certain business problems, perhaps what you need is a really good tax attorney. Then we will be discussing on how you can distinguish between your needs to hire one or the other between the two professionals.
Finances And Taxes
When it comes to your financial issues, the majority of people are well aware of all the situations when they need to hire an accountant. An accountant is simply there to provide you with support and expertise when dealing with your taxes, as well as when filling out tax forms and dealing with similar rather simple paperwork.
On the other hand, when it comes to your financial issues that are also related to legal matters, it is advisable that you hire a tax attorney or a tax lawyer. Not only that they have the sufficient knowledge required to deal with your situation, but they will also be the best provider for any advice. In addition to that, when hiring a tax lawyer or a tax attorney you also get another privilege that you do not get when you hire an accountant, and that is the privileged relationship between a client and an attorney. In other words, your relationship will be confidential just like it is when you are dealing with any other type of lawyer. Essentially, tax lawyers are lawyers; they are there to practice the law and help you out with legal matters. Many people seem to forget the option of hiring a tax lawyer and instinctively turn to accountants for legal advice.
Lawsuits And The Law
Whenever you are dealing with a lawsuit regarding your taxes, an IRS lawsuit or anything similar, you should call a tax lawyer. A tax lawyer will also be able to represent you in court, give you legal advice and solve your case. A tax lawyer is essentially going through a lot of training to become tax lawyers. First of all, they have to finish law school, then they have to go through an internship, and of course pass the bar.
On top of all that, they also need to have an IRS certificate which allows them to practice tax law. Once IRS certificates are seen, they need to go through 72 hours of education every three years to be able to maintain their IRS certificate. As you can see, it has a whole lot to do with law, and they need much more experience and education as opposed to accountants. In addition to that, if you are dwelling whether you should hire a tax attorney or a general lawyer, it is certainly advisable that you hire a tax attorney or anything that has to do with your taxes or financial matters.
If you want to learn how to become better at dealing with your taxes, you can soul by implementing these tips and making them your routine. We have talked to some leading tax attorneys and experts on your behalf to learn more about all the ways in which you can prepare your taxes without going through too much ordeal.
Certainly, one of the easiest ways to deal with your taxes is to hire a tax attorney. Of course, you can do that, but to make it easier for all of you, you can also use some or all of these tips as well.
A Year Is A Long Time
First of all, when you do your taxes all year long, it can become increasingly easy to misplace them. It’s in your best interest to save all your taxes in one place all year long, and this will allow you to prepare your taxes in a more efficient way. It will also prevent you from losing your taxes or are spending vast amounts of money looking for your taxes. Choose a particular drawer, a file or a box where are you will collect all your taxes, and you will soon realize that this strategy is the best!
Have A Checklist!
Also, that experts and tax lawyers recommend that you use a tax preparation checklist. At that preparation, checklist will allow you to see whether you have all the documents prepared for your taxes. It will also remind you of a document you may have forgotten. It will make it increasingly easier for you to prepare your taxes with a simple checklist. There is also numerous software prepared to checklists that you can find online, but of course, you can also always make the checklist on your own.
Organization Is The Key
Organizing your documents is one of the most important things you will ever learn in life, and more particularly tax attorneys and tax experts recommend that you will prepare your taxes by organizing your documents in an efficient way. There are numerous ways in which you can organize your documents, but it is probably the best strategy to find something that works for you. You can organize them according to types, names, or dates, whatever works for you the best, just make sure you are aware of this strategy where you are using.
Which Software To Use?
As it has been previously mentioned there are many tax software is which you can use. That software is are usually very cheap, and they will calculate your numbers for you. In addition to that, they will also print and even file your taxes on your behalf. However, that doesn’t mean to say that they are incredibly good. In fact, most of the time you cannot rely on software taxes because software is prone to making mistakes. It is always a much better strategy to be well aware of everything you need to do to handle your taxes and so on your own, or with the help of a tax attorney.
April 15 every year is the deadline for filing your annual tax. Although this is not the most joyful event of the year, it is good to know that there are ways to legally reduce the amount of tax you are paying. You can achieve this through tax deductions, but also through three different kinds of tax credits.
Difference between tax deduction and tax credit
First of all, let us make the distinction between tax deduction and tax credit. With tax deduction, you do not reduce the tax you are paying. Instead, you reduce the amount of money which is taxable in the first place. It is usually calculated by subtracting the expenses which are used for making additional income. The remaining sum of money is the one for which you pay the tax.
Tax credit is the sum which reduces the amount of tax you are paying. This means that the same amount of money is taxable, but you will pay less tax due to credits you have.
Types of tax credits
When it comes to tax credits, they come in three forms: Non-refundable tax credit, refundable tax credit and partially refundable tax credit. They all serve to reduce the amount of tax you will pay, but there are certain differences between them.
Non-refundable tax credit
Non-refundable credits are a great way to reduce your tax bill. What’s more, in some cases this type of credit can bring your tax amount up to zero. In other words, you may be free from paying tax. This type of credit includes adoption, child and foreign tax credit and mortgage interest tax credit.
Even though it can reduce the amount of tax you pay, it does not entitle you to tax refund. For example, if you are eligible for $500 non-refundable credit and your tax is $300, you will not have to pay the $300, but you will not get the refund for the remaining $200.
Refundable tax credit
Unlike non-refundable type, the refundable tax credits entitle you to a refund in case the amount of credit is larger than the amount of tax. We will illustrate it with the same example as above. If you are eligible for $500 refundable credit and your tax is $300 – you will be free from paying tax and also get a $200 refund from the IRS. Refundable tax credit includes health coverage tax for individuals, small business health care, earned income tax credit and additional child tax credit, to name a few. If you are entitled to some of these credits, then your tax liability may go beyond zero.
Partially refundable tax credit
In addition to the previous two, there is the third category of tax credits as well – partially refundable credits. They cannot be placed in neither of the previous two categories, because only a part of the credit is refundable. They are a bit more complicated to calculate, and their amount depends on the credit’s type. For example, The American Opportunity Tax Credit falls within this category. If this credit reduces your tax liability to zero, you are entitled to a refund that may reach up to 40%.
Since there are tax deductions and all sorts of credits, make sure to check if you are eligible for them. It can significantly reduce your tax payment and save you money for other purposes.
Since we live in the digital era, with any information just a click away, it is no wonder that scammers have become more creative in their attempts to trick us. Among other types of scams, tax-related ones are very common and they hit thousands of people every year. Calling people on the phone is one of the most common tax-related scam, and you should know how to react if you receive such phone call.
How a phone tax scam can affect you
There are two ways this tax scam can affect you. First, some of them are aimed at making you pay a certain amount of money. These scams usually involve threatening phone calls that require immediate tax payments. This way the scammers can frighten people, and they pay the requested amount to someone that turns out to be a complete stranger and fraud.
Another way tax frauds work is stealing your personal information. The scammers can get your personal information such as name, address, social security and credit card numbers and so on. These frauds can be even more dangerous, because they are not aimed only at getting a certain amount of money. This way, you can lose everything you have on your bank accounts, and have even more trouble because of identity theft.
Even if you do not fall for the scam, it is still not very pleasant to receive a phone call where someone threats you and blackmails you. In addition to potential loss of money or identity theft, you are also exposed to stress.
How to recognize and avoid phone tax scams
As we mentioned above, a phone call where you are required to pay tax is one of the most common tax scams. You get a call from a person who claims to be the IRS employee. He or she tells you that you have an outstanding amount of tax debt to pay, and that you need to do it immediately if you want to avoid tax audit, severe penalties or even arrest. They usually sound hostile and aggressive in order to intimidate you, and they give you the options of paying via wire transfer or payment card.
Sometimes, phone scams are directed toward getting your private information. The person on the other side of the phone can trick you into providing your credit card or social security number instead of asking you to pay tax immediately. This way, you can experience identity theft and the frauds can do you even more damage.
In order to avoid a scam like this, keep in mind that the IRS never contacts taxpayers over the phone. It is even less likely that the IRS employees will threaten you in any way. If you have a certain amount of tax to pay, the IRS will send you the check via mail. Furthermore, the IRS employees are not allowed to ask for your credit card or social security number over the phone. Therefore, if you receive a call like this, it is perfectly legit to simply hang up. If your phone identifies the number of the caller, make sure to report it to the IRS.