Help! I Owe Tax and Can’t Pay!

Help I owe Tax and Cant Pay

So you’ve finished your 2016 tax return just before the April 18th deadline and have a list of how you are going to spend your tax refund, but it turns out that you owe money. What should you do if you can’t afford to pay the tax now? Here are our suggestions:

1. Minimize penalties. There are separate penalties for filing your tax return late (5% per month) and paying your taxes late (0.5% per month). So you should still file your tax return or extension by April 18th, otherwise your problems will be much worse. If you are unable to file your tax return by April 18th, use Form 4868 to request an extension until October 16th.

2. Request an installment agreement. If you owe $50,000 or less, you can file an online application to pay your tax bill for up to 72 months. You will need to have filed your 2016 tax return to request the agreement and it is important that you stay current with the payment schedule. Click here for the online application.

3. Request an Offer-in-Compromise. This is an option for taxpayers who the IRS believes don’t have the assets or income potential to pay their tax bill. For these taxpayers, the IRS actually reduces the tax that is due. A deal like this is tough to get. The IRS has a Pre-Qualifier tool on their website.

It is also important to understand why you owe tax and take steps to plan for future tax payments so that you are not in the same position next year. Consider increasing your withholding or making estimated tax payments for 2017 to prepay the tax due over time or set the money aside in a savings account to fund the payment next April.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Are you Taking Advantage of the Child and Dependent Care Tax Credit

Are you Taking Advantage of the Child and Dependent Care Tax Credit

The IRS issued Tax Tip 2017-28 to remind taxpayers of an often overlooked tax benefit, the child and dependent care tax credit. This credit is available to those who were required to incur expenses for the care of their dependents so they could work or look for work. In order to claim the credit both spouses must either work, be looking for work, be a full-time student or disabled. Common types of expenses which could qualify are day care, preschool and summer camps.

In order for the expenses to qualify they must be incurred for a “qualifying person”. The IRS defines this to be a child under age 13 or a spouse or dependent who is physically or mentally incapable of self-care. Additionally, the taxpayer claiming the credit must have earned income (wages or self-employment income).

The credit was calculated to be between 20 and 35 percent of the qualifying expenses. Qualifying expenses are capped at $3,000 for a single dependent or $6,000 for multiple dependents. It’s important to note that if the taxpayer is utilizing a cafeteria plan to pay for these care expenses pre-tax, they will not be entitled to claim the credit.

This tax credit is claimed by filing Form 2441 with their individual tax return. The form requires certain information such as tax identification numbers and addresses of the dependent and care provider.
The IRS has created a tax assistance to for this credit which can be found here.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

2017 Healthcare Reform Update

Update on 2017 Healthcare Reform

Earlier this month we had provided a summary of the potential tax provisions in the Republican sponsored healthcare legislation. Surprisingly, this legislation has been removed from the agenda signaling there will not be an immediate change to healthcare laws leaving the Affordable Care Act (Obamacare) in place. The healthcare reform bill was removed at the direction of President Trump as it appears that it was unlikely to pass in the House of Representatives.

This will leave many business owners unhappy as there was hope that some of the penalties and compliance requirements imposed by Obamacare would be removed going forward. Additionally, many individual taxpayers will be required to continue to pay the Medicare surcharge if they are single with earnings greater than $200,000 ($250,000 if married filing joint) and the net investment income tax if they are single with adjusted gross income greater than $200,000 ($250,000 if married filing joint).

It is unclear at this time if there will be new legislation focusing on healthcare reform will be introduced. We will keep you informed if there are any other developments in this area.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Common Filing Errors for Individual Tax Returns

Common Filing Errors for Individual Tax Returns

The IRS recently released Tax Tip 2017-24 which discusses the nine most common error if finds with individual tax returns. Taxpayers who make these mistakes will result in their tax return taking longer to process and refunds being delayed. Taxpayers preparing their own returns should be careful to double check all items included in their return to ensure their accuracy. The common errors identified by the IRS are listed below.

• Missing or inaccurate Social Security Numbers

• Misspelled names – Names need to be spelled exactly as they are listed on your Social Security Card. This error frequently happens when a taxpayer uses their married name on their tax return but never formally changed it with Social Security

• Filing status errors – The IRS finds that single individuals erroneously file with the head of household status. This status is only available for single individuals who have dependents

• Math mistakes

• Errors in calculating credits or deductions

• Incorrect bank account numbers

• Forms are not signed

• Electronic filing PIN errors – In order to electronically file a tax return an individual must select a Personal Identification Number or enter their Adjusted Gross Income from 2015

• Filing with an expired ITIN – Taxpayers who do not have a Social Security Number must obtain an Individual Tax Identification Number in order to file returns. These ITIN’s must be renewed periodically or certain exemptions and tax credits will be disallowed

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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