Tax identity theft occurs when identity thieves obtain your Social Security number and file a fraudulent tax return on your behalf. According to the Federal Trade Commission, tax identity theft is the most common form of identity theft. The FTC estimates that it costs taxpayers over $5 billion a year. Consumer advocates believe that since Social Security numbers are so readily available on the dark web, a majority of Americans are at risk. Unfortunately, most tax identity fraud victims don't realize that they have fallen victim until they try to file their return. Luckily, there are some important tips that you can follow to reduce your chances of falling victim to tax identity theft.Keep reading for tips on how to protect yourself against identity theft.Vector Tax & Accounting speciali... 01/20/2021

The IRS released their formal guidance yesterday on tax deductions from expenses paid for with Paycheck Protection Program finds. In April 2020, the IRS made their position known; they would not allow any deductions for expenses paid with forgiven PPP funds.  During the year I’ve written about, and been on the radio to talk about, how the IRS is wrong about this.  In December, the IRS issued another statement where they dug in their heels, saying that the expenses are not deductible and if you expect to have the loan forgiven in 2021 then you shouldn’t include the deduction on your 2020 tax returns.  I, and many other tax practitioners, and professional organizations like the American Bar Association and AICPA all disagreed with this for several reasons.  With the new stimulus provision... 01/07/2021

If you’ve been at all following the news, you’ve likely heard that Congress has finally agreed to a new COVID relief package that was signed by President Trump.As we have been following the news this past week I have written, deleted, and rewritten this blog at least 4 times, trying to keep up with all the changes. Now that Trump has signed the bill I am posting this blog with the items that are most likely to affect you in 2021. Stimulus Checks: The main thing that everyone has been waiting to hear about.The eligibility guidelines appear the same, but the dollar amounts have changed. Instead of $1200 for an individual or $2400 for a married couple the stimulus will be $600 per person. The per person amount also covers children. So, while the $1200 people got initially has been cut in h... 12/28/2020

  As we wrap up the year the last thing most people are thinking about is their taxes. But planning ahead can have a serious impact on your tax bill next year, especially if you know you’ll owe taxes. In this article, we’ll talk about some steps you must take if you know you’ll be owing taxes to the IRS or state.  Note: If you already have tax troubles or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief, file years of unfiled tax returns, and sometimes settle their tax debt for a fraction of what’s owed www.VectorTax.com  Report All Your IncomeOne of the biggest reasons people get in trouble with the IRS is their failure to report income. Oftentimes it’s an honest mistake and they simply forget about income they’ve made... 12/16/2020

 If you owe back taxes you might think you need a tax attorney, but that’s not necessarily always the case. Just like hiring a traditional accountant to try to resolve your tax debt might not be the best choice, hiring a tax attorney, who doesn’t specialize in tax resolution might be the same thing.  When you owe the IRS back taxes, it’s best to have the right tax relief firm representing you so you can get the best result possible. Don’t try to face the most brutal collection agency on the planet alone. You’ll be sorry you did. In this article we talk about some of the differences between a tax attorney and someone who specializes in tax relief and IRS negotiation. Note: If you already have a tax problem and owe more than $10k to the IRS or state but can’t pay in full, contact our firm... 12/02/2020

 For early adopters of Bitcoin, Ethereum and other popular cryptocurrencies, the profit potential has been simply stunning. While there have been some heart stopping moments and frightening ups and downs, the clear long-term trajectory has been upward. If you are one of those early adopters who profited from the rise in cryptocurrency values, you are probably feeling pretty good about your decision. But your good fortune could soon take a dark turn, one that could leave you in hot water with the IRS. After many years of taking a hands-off approach to cryptocurrency investments, the IRS is now making up for lost time. At first, the tax agency seemed unsure how to calculate virtual profits or tax cryptocurrency gains, but now the rules are largely in place, and it is time for those who pr... 11/23/2020

 When you owe creditors money that you can't afford to repay, sometimes you may be able to get the debt forgiven or otherwise canceled. When this happens, you no longer owe your creditors the money that you used to owe them.  The IRS, however, usually treats such canceled debt as income that you've received. Income that you could owe taxes on. If you fail to report it or fail to pay your taxes on the cancelled debt, you’ll end up owing penalties and interest and over time, that could be just as big of a hassle as your original debt.  Note: If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief, file years of unfiled tax returns, and sometimes settle their tax debt for a fraction of what’s owed. ... 11/19/2020

 Working from home can be a dream come true, especially if you also work for yourself. Opportunities for freelancers, gig workers and other self-employed men and women have exploded in recent years, giving people the freedom they crave without sacrificing the income they need. This is far more evident with the current COVID situation where millions of Americans are now commuting from their bedroom to the dining room table for a Zoom call. That freedom and flexibility can be intoxicating, but there is an unwelcome hangover as well. Tax issues can make working from home less attractive, and more expensive, leaving many gig workers, new freelancers, and small business owners frustrated. But if you plan carefully and know what to do, you can reduce the tax headache and enjoy the perks of wo... 11/16/2020

If you don't have money to pay what you owe the IRS, you have a few options to work with. Whatever you do, don’t ignore the letters from the IRS and don’t let your back tax problem go unattended. The IRS has a great deal of power when it comes to recovering money they think is theirs.  When you owe the IRS money, they can garnish your wages, levy your bank accounts, put a lien on your home and seize other assets.  Here's what you can do if you find yourself not being able to pay your taxes. Note, we always recommend getting in touch with a specialized tax resolution professional to help avoid the harsh penalties and interest that accrued on your back taxes. It’s far easier to navigate towards tax resolution, if you have a professional working with you. If you’d like to schedule a no-cos... 11/12/2020

 Filing for bankruptcy is a difficult and draining process. People often feel ashamed, scared, or confused. If you find yourself with no other options, bankruptcy can be a good way to clear out old debts, change financial patterns, and most importantly get a fresh start. Here is everything you need to know about filing for bankruptcy. Note: Depending on what type of taxes you owe, you might not be able to wipe out your back taxes in bankruptcy proceedings. Our firm specializes in tax resolution and back tax debt settlements with the IRS. So if you’re considering bankruptcy in part because of your back tax burdens, reach out to us today for more information on how you can get tax relief.  Who Should File for Bankruptcy? If you owe money to a creditor and cannot repay it, you can file for... 11/09/2020

 Until recently, cryptocurrency investors have mostly flown under the radar as far as taxes are concerned. Now those days are coming to an end, and many holders of virtual currency are scrambling to understand what they owe and how their investments may impact their finances.  The IRS has already requested the identities of those who hold substantial amounts of cryptocurrency, and it is only a matter of time until the tax agency broadens its scope. Just as with overseas bank accounts, the days of free riding in the cryptocurrency market are quickly coming to an end. When the veil of secrecy got pierced for holders of Swiss bank accounts, wealthy individuals all over the world were shocked -- and suddenly a lot poorer. And while cryptocurrency fans have primarily relied on the supposed a... 11/05/2020

 COVID-19 has caused many tax problems, but some taxpayers received a reprieve from the IRS when they released their “People’s First Initiative” back in March. Basically, the IRS realized businesses were shutting down and millions of people were losing their jobs. If people are not working, they don’t have money to pay the IRS. As a result, the IRS decided to step back and hold off on most new collection activities. That means that most people who were on track to have their wages garnished in April or have a lien attached to their home in May did not actually have anything happen. This program officially ended on July 15th but the IRS didn’t actually start back up right away. Recently, we were notified that the IRS has turned their printers back on and the letters are starting to go ou... 11/02/2020

 Falling behind on your debts is never a fun place to be. It’s less fun when a levy is placed on your assets. In this article, we look at what an IRS levy is, why it happens, and what you can do about it. Note: If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief. Often, we can resolve your IRS levy without you having to talk to the IRS. Call today. (860) 580-5183 What is an IRS Levy? Simply put, if you owe back taxes and you ignore the IRS, the IRS can seize your property, take money from your bank accounts, or sell your assets in order to satisfy the balance due. The IRS will give you plenty of notices via mail before they take this step. If you do not satisfy the debt or make payment arrang... 10/30/2020

  Whether you file the simple 1040EZ or a complex 1040 and a raft of schedules, making a mistake on your tax form could lead to big tax trouble. Something as simple as a math error or unsigned form could invite extra attention from the IRS.   The tax agency sees those mistakes every year, and IRS representatives warn taxpayers to be careful when filling out their forms. Even if you think you have everything filled out perfectly, it never hurts to double-check and look for these common Tax Day errors.   #1 - Assuming Your Tax Pro Prepared Your Taxes Properly Blindly trusting your accountant or tax preparer to file your taxes correctly can be costly. Of course, you want to assume they do a great job, and most tax professionals do, but letting them file without your thorough review is a m... 10/27/2020

The Treasury Department announced that the tax-filing deadline for 2019 will not be extended beyond July 15, 2020. If you have questions about what this means for you, keep reading!   What if I won’t be ready to file in less than two weeks? You will still have the option of filing for an extension that would allow you to file on, or before, October 15. However, “(t)he IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest”.  COVID-19 has hit us hard financially, what happens if we can’t pay what we owe by July 15th? So, there’s good news and bad news here. The good news is that there are options you may qualify for such as an installment agreement, a request to temporarily... 07/09/2020

It’s the Final Countdown! Earlier this week the Treasury Department announced that the tax-filing deadline for 2019 will not be extended beyond July 15, 2020. If you have questions about what this means for you, keep reading! What if I won’t be ready to file in less than two weeks?You will still have the option of filing for an extension that would allow you to file on, or before, October 15. However, “(t)he IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest”. COVID-19 has hit us hard financially, what happens if we can’t pay what we owe by July 15th?So, there’s good news and bad news here. The good news is that there are options you may qualify for such as an  install... 07/02/2020

Each year a few of our bookkeeping clients will have grown to a size where it makes sense for me to recommend that they file as an S Corp. Filing an election to have your LLC or Corporation taxed as an S Corp is a move that can have a lot of benefits, but you may cause problems for yourself by making that election too early and not running it properly.  S Corps, Payroll, and Reasonable Compensation The most common issues I find with new clients coming to me as S Corps involve payroll. Many S Corp owners have not been paying themselves a salary. This decision has left their businesses ineligible for a Payroll Protection Program loan and left them open to the risk of a Reasonable Compensation Audit.  What business owners often do not know before speaking with me is that you are required t... 06/18/2020

People stop filing their taxes for many reasons, and at this point I’ve probably heard just about every reason. Someone once told me that they prepare their taxes by hand (don’t do that) and their dog ate it before they could mail it in. As someone who specializes in Taxpayer Representation here in Hartford County, Connecticut, I will meet with many people each year who are ready to come back into compliance. Some of the more common reasons involve challenges from being self-employed or divorced, coping with the death of a spouse or loved one, or other mental or physical health challenges. Those reasons can become relevant later in the process. Whatever your reason may be, it’s time to get this taken care of. When one of our local clients comes in to see me, or I speak to one of our rem... 04/13/2020

Calls from the IRS I’d be surprised if someone told me they haven’t gotten a scam call from “The IRS”. Some people found these calls annoying, others found them laughable, but enough people found them convincing for scammers to collect millions of dollars.While many people made fun of the calls, there were also many news stories about how to protect yourself from scammers. One point I heard many times was that “the IRS never makes phone calls”. The IRS’s favorite method of communication is by mail, but saying that the IRS never makes calls is an oversimplification.A call will never be their initial contact to you, but if you don’t get your mail it may seem like their initial contact. Our office in Windsor Locks, Connecticut, received about a half dozen calls from IRS employees last mont... 04/06/2020

While in college my mother shared a memory about her father sitting at their kitchen table doing their taxes on paper with a pen (using a pencil with an eraser meant that you were planning on making a mistake).The concept of using a computer to prepare a tax return only really became common practice in the late 90s. Today over 90% of returns are filed electronically. Of that remaining 10%, the majority are still done using a computer, they’re just mailed in rather than being e-filed. Just because it’s a relatively new concept, doesn’t mean it’s a good idea to still be sitting at your table with a pen and paper. Fortunately, this isn’t a problem for most but, for the ones that it is, it’s a big enough problem for me to want to write about it. While I’ll meet with a few hundred clients ea... 03/30/2020