The IRS Solution If You Cannot Pay Your Taxes

The Internal Revenue Service wants you to pay taxes on time. That being said, it understands this is not always possible and has created a program for such situations.

The Internal Revenue Service is very upfront about its goal in dealing with taxpayers. While it obviously wants to collect all taxes due, it is also focused on keeping you in the system. This attitude is a relatively recent change undertaken in the 1990s. The IRS essentially determined it made better financial sense to have you in the system versus spending hundreds of man hours hunting you down. In practical terms, this means you need not have a panic attack if you do not have sufficient funds to meet your tax obligation. If you panicked this past tax deadline, there was no need.

The IRS will put you on a payment plan if you cannot pay your taxes on time. The plan calls for monthly payments like a car loan, to wit, they are an equal amount each month so you know what you are obligated to pay.

You are only eligible for a payment plan if you file a tax return. Once you file, you want to use form 9465 to request the payment plan. It costs $43 to file the application. The IRS will then get back to you on what it is willing to do. The payment plan process is not an audit. Millions of people apply each year and the IRS considers it standard operating procedure. No red flags are raised when you file the application. To the contrary, the IRS tends to view you as an honest tax payer since you are acknowledging the full amount due and trying to find a way to pay.

Importantly, the payment plan should be viewed as a means to buy time. Making the monthly payments will eventually pay off the debt, but it will take years. Interest on the amount you owe will also continue to accrue. The best strategy for using the plan is to make the monthly payments while saving up money to make a lump sum payment to satisfy the debt.

If you cannot pay the taxes you owe, do not panic. The payment plan option will keep you out of trouble with Uncle Sam.

How to Determine If Your Activity Is a Business Or a Hobby For Tax Purposes?

IRS usually allows 5 years of business activity before they question if your activity is a business or a hobby. You must show a profit during at least three of the last five years, including the current year. There are exceptions to the basic rules.

If your business activity does not show a profit then, it is considered; not for profit and the losses from your activity may not be used to offset your income.

In order to make this determination if your activity is a hobby or a business, ask yourself the following questions:

1. Is the time and effort you put into the activity indicate your intention to make a profit?

2. Do depend upon the income from the activity?

3. If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

4. Have you changed methods of operation to improve profitability?

5. Are you qualified to run/operate the activity, or do you have advisors who have the knowledge needed to carry on the activity as a successful business?

6. Have you made a profit in similar activities in the past?

7. Does your activity make a profit in some years?

8. Can expect to make a profit in the future from the appreciation of assets used in your activity?

If you answer "yes" to the above questions, then you more then likely have a valid business and not a hobby. If you are not sure, you should contact your tax professional. Each of these points have additional legal jargon attached to them, for legal tax codes, go to: irs.gov and read Publication 535, Business Expenses.

If you have a valid business, you report your income on Schedule C. If you have a hobby, you report your activities on Schedule A, with limitations.

There are companies out there selling home business as a legal tax deduction. Before you make such an investment, remember question number five. Are you qualified to run/operate the activity or do you have advisors who have the knowledge needed to carry on the activity as a successful business?

Again, IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year.

Tax Deduction Checklist For 2009, 2010

Tax Deduction Checklist

The best tax deductions checklists are found in three places:

Your past years' tax returns; With your tax professional; and Through an online tax website

Past Years' Returns

Just by looking at the deductions you have been able to take in the past, you will get a good idea of what deductions you can take this year. If you had mortgage interest, real estate taxes, IRA contributions, and charitable contributions last year - you probably have them this year as well. The same is true of medical expenses, various taxes, that safe deposit box you keep, and if you are required to pay certain expenses, like alimony. Finally, any business deductions you have taken in the past, for a home office, travel, mileage, etc. is likely to follow a pattern you have created and budgeted consistently.

Tax Advisors

Tax professionals are great at helping you identify deductions for one time occurrences and helping you organize your records and thoughts on how to approach the deductions that are available. You may need advice on issues that you have never faced before and those that run the risk of gaining or losing large sums of money. If so, your tax advisor is a great resource for addressing these issues.

Online Help

TurboTax Online, for example, has exceptional checklists for going over everything you need to consider before preparing your return and making sure you don't miss anything important. It asks interactive questions, points out possible deductions you may forget, and reminds of the things you need to have or consider when taking a specific deduction.

Who Regulates Big Trucks

Truck accidents are generally defined as accidents involving 18- wheelers or tractor trailers. Truck accidents generally are more devastating than car accidents and victims experience serious injury or even death. Lawyers who specialize in these types of accidents understand the unique needs that victims have and the laws that govern commercial truck drivers and their employers.

Commercial trucking companies are governed by Federal laws which dictate the standards they must follow. Federal law requires that these companies keep strict time and mileage logs. Under these Federal statutes, truck drivers can only drive for a certain amount of hours per day. Federal laws also establish liability standards and require commercial truckers to carry sufficient insurance to cover bodily injury and property damage.

Truck accidents can be caused in a variety of ways. Due to their size and huge amounts of cargo, trucks take much longer to stop than a regular car. If a truck driver is speeding or tailgating he may be unable to avoid a collision during sudden stops. Other driver error may occur if a driver is fatigued, distracted or sleepy. Defective or faulty equipment may also result in an accident. Your attorney's investigator will study the driver's logs and driving record, the trucking equipment, and the accident scene to determine what precipitated the accident and establish liability.

Truck accidents can result in serious bodily injury or even death. In a personal injury suit, the victim is entitled to recover money for any physical injury suffered as a result of the accident. Damages awarded may include reimbursement or payment of medical bills, pain and suffering, and compensation for lost wages. Plaintiffs may also recover for future wages if their injuries will affect future employment. If the victim of the truck accident dies from the injuries sustained, then his/her estate may be allowed to recover on behalf of the deceased. It is imperative that a truck accident victim receive proper medical diagnosis and treatment because the legal principal of res judicata usually bars a plaintiff from suing more than once for injuries sustained during the accident.

Accident litigation can be time consuming and confusing, choosing the right attorney can ease the process and ensure your rights are protected.

Who Knew - Is the Penny Going on the Chopping Block?

I'm a bit amazed at this development but can certainly understand what is causing this problem. The United States Mint recently acknowledged it is costing more than one cent to produce a penny coin. Apparently the rising cost of metal has put the penny in jeopardy.

According to Jeff Gore, founder of Citizens for Retiring the Penny, it is currently costing 1.2 cents to put the penny into play. The group considers this ridiculous. I must admit, I too, see the hilarity in this situation.

The Gallup poll shows that two-thirds of Americans want to keep the penny coin. Of course they have not considered the rising cost to produce coins. Historically coins have cost less to produce than the value paid by the banks who receive them. This made the process a money- maker for the government.

Since 1989 there have been efforts to cease penny production. A bill was introduced in Congress to round off purchases to the nearest nickel. In 2002, the Gallup poll found that fifty-eight percent of Americas save the pennies rather than spending them. Two percent of the people polled stated they threw the pennies away.

Edmond Knowles of Alabama saved his pennies for forty years. He actually collected 1.3 million of them. This weights 4.5 tons. He had a very hard time getting rid of them. His banks said no to this. He requested Coinstar, a coin-counting company, take the pennies. They sent an armored truck to his home and removed the pennies. Of course, they enjoyed the publicity. Edmond received $13,084.59 for 4.5 tons of pennies!

Personally I enjoyed this story. It certainly fits my theme - Who Knew???