A 401k retirement plan has many advantages such as tax advantage, investment customization and flexibility, employer match programs, portability, and loan and hardship withdrawals. However if funds in the account are retrieved or distributed prior to age of 59.5, a 401k tax penalty of up to 10% can apply. There are seven exceptions for early distribution penalty: the plan participant is permanently disabled or dies, plan participant retires, quit or is terminated and is over the age of 55, distribution is a part of “substantially equal payments” based upon your life expectancy, participant incurs medical expenses which surpass 7.5% of adjusted gross income, distribution is mandated by a court in divorce proceedings, certain distributions to qualified military reservists called to active duty. (more…)
Archive for September, 2011
401k Tax Penalty
Wednesday, September 28th, 2011IRS Procedures and Tax Debt Relief
Saturday, September 24th, 2011Do you have significant tax debt and wish you could hit the reset button to escape the nightmare? A free consultation with an expert tax consultant at US Tax Shield can get you on the road to tax debt relief.
The IRS will begin sending automatic notifications when they determine that you owe money to the government. A taxpayer typically has about four to six months to pay the debt or obtain tax debt relief before the IRS takes collection action (the actual time will depend on the amount and type of tax owed). If you need more time to pay, it is vital to file an extension request. If you are not responsive, the IRS will take action to collect.
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Are You Facing a Tax Evasion Penalty?
Tuesday, September 20th, 2011Three percent of taxpayers in the United States do not file tax returns and as a result, face a tax evasion penalty. It is also possible to face a tax evasion penalty if you underreport your income, overestimate deductions, or use various fraudulent accounts for tax evasion. This can result in serious consequences including steep fines and imprisonment. (more…)
Tax Resolution Cannot Help Tax Evaders
Sunday, September 18th, 2011The IRS is not interested in ruining lives and taking away everything from taxpayers who have simply made mistakes on their taxes. Their goal is to work out a tax resolution with taxpayers that owe money. But when taxpayers try to purposefully avoid paying taxes and cheat the government, the IRS will come after them with severe penalties. Examples of this run the spectrum from well known celebrities such as Wesley Snipes to average U. S. citizens. The following is but one example of a citizen who is suffering greatly for attempting to avoid his tax obligations. (more…)
Innocent Spouse Tax Relief
Friday, September 16th, 2011Married couples usually file taxes jointly, as 90% of the time this allows for more favorable tax rates rather than when filing separately. However when doing so, each spouse becomes responsible for each other’s taxes, this is called joint liability. Even if you are divorced and the IRS finds inadequately paid taxes, both of you will be responsible for them. However the IRS will ask for a payment from a party that is easiest to reach.
If you were unaware of your spouse’s mistake on the jointly filed taxes you are eligible for a tax relief called Innocent Spouse Tax Relief. This allows the “innocent spouse” to avoid paying for tax and tax penalties that were acquired due to mistakes made by the guilty party. However in order to qualify for this tax relief you have to comply with rules and regulations of the IRS.
If you were unaware of your spouse’s mistake on the jointly filed taxes you are eligible for a tax relief called Innocent Spouse Tax Relief. This allows the “innocent spouse” to avoid paying for tax and tax penalties that were acquired due to mistakes made by the guilty party. However in order to qualify for this tax relief you have to comply with rules and regulations of the IRS.
How to Stop a tax Wage Levy (Garnishment)
Monday, September 12th, 2011In this economy many of us are falling behind on paying for our debts and taxes, and one of the more serious consequences is wage levy (garnishment). Wage garnishment means that a portion of your paycheck is automatically sent to debtors (including tax authorities) before you get it.
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2011 Offshore Voluntary Disclosure Initiative (OVDI)
Friday, September 9th, 2011The IRS formed the 2011 Offshore Voluntary Disclosure Initiative (OVDI) to encourage taxpayers to disclose their hidden foreign accounts and entities, in order to get into compliance with US tax laws. With an original deadline of August 31, 2011, the IRS decided to extend the due date for OVDI requests to September 9, 2011, due to the potential impact of Hurricane Irene on many states. (more…)
Tips for Getting Through an IRS Tax Audit
Monday, September 5th, 2011Getting audited by the IRS can happen to anyone – whether or not they owe back taxes. Taxpayers can be audited through the mail or in person, when IRS agents visit them or they are required to go to the nearest IRS office. In person, audits are more detailed and take more time. (more…)
