If you are one of the millions of individuals who need to make a payment with your tax return this year, these tips will help the process go more smoothly.

1. Do not send cash to the IRS.

2. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.

2. If you file electronically, you can file and pay in one step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.

4. Electronic payment options provide an alternative to checks or money orders. You can pay taxes or user fees 24 hours a day, seven days a week. Visit the IRS website at www.irs.gov and search e-pay, or refer to Publication 3611, Electronic Payments for more details.

5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.

6. If you file on paper, don’t staple your payment to your form.

7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”

8. Always provide on the front of your check or money order your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number.

9. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently.

10.  For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Daniel Stoica Accounting Professional

You may be one of the many taxpayers who realize that they owe more in taxes than they have available right now.  If that’s the case, here are some tips that will help you keep your penalties and interest to a minimum.

1. Even if you can’t pay everything you owe right now, go ahead and file your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. You may mail a check payable to the United States Treasury or check out the electronic and credit card options for paying. IRS.gov.

2. You may want to consider obtaining a loan or even paying by credit card. The interest and penalties that are imposed by the IRS may actually be lower than the interest rate and fees charged by a bank or credit card company.

3. Ask for an installment payment agreement. You do not need to wait for the IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
• Using the Online Payment Agreement application and
• Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return. The IRS does charge a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.

4. As part of the IRS Fresh Start Initiative for tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived. To see if you qualify visit www.irs.gov and get form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.

5. If you receive a bill from the IRS, please contact them right away to discuss payment options. The worst thing you can do is simply ignore the bill.

If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can.

Daniel Stoica Accounting Professional

My guest blogger today is Dagny Kight.  She just completed a step-by-step guide to help people through the process of determining on their own if they can settle their tax debt for a lower amount.

Will the IRS lower your tax debt through “negotiation”? Tax resolution firms would like you to believe they can talk the IRS down on your behalf.

But the IRS likes to talk about just two things: Dollars and cents.

Under new IRS guidelines introduced in 2011, the IRS has a program that is designed to calculate your ability to pay your back tax debt. There is no “negotiation.” The forms for this program will take you through a detailed Financial Disclosure, documenting your income, expenses, assets, and debts. No matter how you ultimately settle your IRS tax debt, you will have to provide a full financial disclosure. This will involve gathering up all your bank and account statements, documentation for all your sources of income, monthly bills, loans, mortgage or lease paperwork, and even documentation for the market value of your assets including vehicles and valuables.

When I settled my own IRS debt for $1, I worked directly with the IRS examiners themselves. They weren’t intimidating; they were actually a pleasure to deal with! They told me what information they wanted and how they wanted it sent in with the IRS forms. I put everything I learned into my ebook, Lower Your IRS Debt with step by step, easy to follow instructions based on my own successful experience with this IRS program.

I owed $42, 564.25 but I settled for $1! Start gathering up your financial paperwork and grab a calculator. Follow along with my ebook to fill out the forms for yourself and find out if YOU could Lower Your IRS Debt!

Daniel Stoica Accounting Professional

Did you know that past due financial obligations can affect your current federal tax refund? The Department of Treasury’s Financial Management Service (FMS), which issues IRS tax refunds, can use part or all of your federal tax refund to satisfy certain unpaid debts.

Here are the facts about how your tax refund may be used to offset certain types of debts:

1. If you owe federal or state income taxes, your refund will be offset to pay those taxes. If you had other debt such as student loan debt or child support debt, the FMS will apply as much of your refund as is needed to pay off the debt and then issue any remaining refund to you. This won’t be a surprise to you, because you will receive a notice if an offset occurs. The notice will include the original refund amount, your offset amount, the agency receiving the payment and its contact information.

2. Contact the agency shown on the notice, not the IRS, if you believe you do not owe the debt or you are disputing the amount taken from your refund.

3. You’ll need to file IRS Form 8379, Injured Spouse Allocation, if you filed a joint return and you’re not responsible for the debt but you are entitled to a portion of the refund. You’ll need to attach Form 8379 to your original Form 1040, Form 1040A, or Form 1040EZ or file it by itself after you are notified of an offset. Form 8379 can be downloaded from the IRS website at www.irs.gov.  You can file Form 8379 electronically. If you file a paper tax return you can include Form 8379 with your return, write “INJURED SPOUSE” at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs.

4. If you are filing Form 8379 by itself, it must show both spouses’ Social Security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the IRS Service Center where you filed your original return.

5. The IRS will compute the injured spouse’s share of the joint return. Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.

6. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. If you don’t receive a notice, contact the Financial Management Service at 800-304-3107, Monday through Friday from 7:30 a.m. to 5 p.m. (Central Time).