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The IRS does not have unlimited time to collect back taxes. The law provides the agency 10 years to collect any tax debt. This collection period of 10 years is known as the statute of limitations.

Even though the IRS usually closes a tax debt case after the 10-year statute of limitations expires, it can, if it wishes to, collect back taxes even after that. However, that is rare.

Usually, after the expiry of the statute of limitations, the entire tax debt is forgiven and the case closed. There can be various reasons for the IRS’ inability to collect back taxes for 10 years, including inability to track down the taxpayer, and the taxpayer’s poor financial condition that doesn’t allow any payment.

The IRS is particularly strict with non-payment of income tax, but they are even more aggressive with non-payment of payroll taxes. The IRS closely watches small employers. The tax code places a 100% penalty on “responsible persons” who do not withhold employee taxes, or who withhold and do not transfer the tax money to the IRS. Employers and even employees that are required to withhold payroll taxes are required to pay payroll taxes on time.

If a taxpayer has the ability to pay and can be located, the IRS will usually collect back taxes well before the statute of limitations. Ability to pay includes income, equity in assets, and the ability to take loan.

Taxpayers that do not have the ability to pay any amount in back taxes may be assigned the status of Currently Not Collectible (CNC). This stops collection actions and allows the taxpayer more time to pay. If the financial condition of the taxpayer under CNC does not improve significantly by the expiry of the statute of limitations, the tax debt is forgiven and the case closed.

For help with any income tax question including unpaid taxes call one of our offices:      Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

With the severe storms that went through Michigan yesterday, the IRS wants you to know it stands ready to help. If you suffer damage to your home or personal property, you may be able to deduct the losses you incur on your federal income tax return. Here are 10 tips you should know about deducting casualty losses:

1. Casualty loss.  You may be able to deduct losses based on the damage done to your property during a disaster. A casualty is a sudden, unexpected or unusual event. This may include natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.
2. Normal wear and tear.  A casualty loss does not include losses from normal wear and tear. It does not include progressive deterioration from age or termite damage.
3. Covered by insurance.  If you insured your property, you must file a timely claim for reimbursement of your loss. If you don’t, you cannot deduct the loss as a casualty or theft. You must reduce your loss by the amount of the reimbursement you received or expect to receive.
4. When to deduct.  As a general rule, you must deduct a casualty loss in the year it occurred. However, if you have a loss from a federally declared disaster area, you may have a choice of when to deduct the loss. You can choose to deduct the loss on your return for the year the loss occurred or on an amended return for the immediately preceding tax year. Claiming a disaster loss on the prior year’s return may result in a lower tax for that year, often producing a refund.
5. Amount of loss.  You figure the amount of your loss using the following steps:
   • Determine your adjusted basis in the property before the casualty. For property you buy, your basis is usually its cost to you. For property you acquire in some other way, such as inheriting it or getting it as a gift, you must figure your basis in another way. For more see Publication 551, Basis of Assets.
   • Determine the decrease in fair market value, or FMV, of the property as a result of the casualty. FMV is the price for which you could sell your property to a willing buyer. The decrease in FMV is the difference between the property’s FMV immediately before and immediately after the casualty.
   • Subtract any insurance or other reimbursement you received or expect to receive from the smaller of those two amounts.
6. $100 rule.  After you have figured your casualty loss on personal-use property, you must reduce that loss by $100. This reduction applies to each casualty loss event during the year. It does not matter how many pieces of property are involved in an event.
7. 10 percent rule.  You must reduce the total of all your casualty or theft losses on personal-use property for the year by 10 percent of your adjusted gross income.
8. Future income.  Do not consider the loss of future profits or income due to the casualty as you figure your loss.
9. Form 4684.  Complete Form 4684, Casualties and Thefts, to report your casualty loss on your federal tax return. You claim the deductible amount on Schedule A, Itemized Deductions.
10. Business or income property.  Some of the casualty loss rules for business or income property are different than the rules for property held for personal use.

For help with any income tax question including disaster damage call one of our offices:  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

I filed under the incorrect filing status. I forgot to include a second income on my tax return. I forgot to add a dependent and missed out on a tax credit.

Did you prepare your own taxes this year and realize you made a mistake that may have affected your overall tax after it was submitted to the IRS? There’s still time if you need to amend, or revise, a tax return. FYI … if you made a simple mathematical error or forgot to include certain forms or schedules with your return, there’s no need to file an amendment! The IRS usually corrects miscalculations and sometimes lets returns with missing forms slide.

Follow these steps to go about filing an amendment:

1. Print Form 1040X, Amended U.S. Individual Income Tax Return, and mail it to the IRS. This form cannot be electronically completed.
2. Attach all needed documentation, including W-2s.
3. Once the IRS receives the form, it can take up to 12 weeks for them to process it.
4. The status of your amended return can be checked using the IRS’s “Where’s My Amended Return?” tool or toll-free number 866-464-2050. You can start checking the status 3 weeks after you have mailed the form.

Keep in mind that Form 1040X must be filed within 3 years after the date in which your original return was due or 2 years after the date you paid the tax, whichever is greater. There is an exception for those who filed for extensions – the form is then due 3 years after the date you filed your return. See the IRS website for more information.

Do you have questions about filing an amendment or what should be attached? Call or stop into your local ATS Advisors office for assistance.

Remember, we’re here all year!

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Paperwork is normal part of life, school, work and taxes. Owning a home is no different. It’s important that you keep records of anything relating to your home.

• If you need to file a disaster, casualty, or theft loss, you’ll need paperwork.
• If you install energy-efficient appliances, you’ll need the receipts.
• Deducting mortgage interest? You’ll need a Form 1098 or other statement showing how much interest you paid.

All of these plus many other tax breaks and advantages require a paper trail, and having a way of keeping records is the first important step.

What Should You Keep?

Bank statements show both when and how much was withdrawn for mortgage payments.

Credit and debit card receipts can be your records for any renovations or upgrades you did to the home. Receipts are also a record for deducting the residential energy credit. If you installed medically required equipment or upgrades, the receipts are supporting documents when deducting the expenses. The receipts are also helpful in valuing property if you file a disaster, casualty, or theft loss.

Paperwork for selling a home: Any documents you receive or create while selling your home should be kept. This includes any appraisals, legal paperwork, mortgage documents, and receipts for improvement or repairs.

How Long Should You Keep Records?

The IRS recommends that you keep any records or documents used for deductions or credits at least seven years after filing the return. Keeping the records helps in case of a questionable return or even an audit.

How Should You Store Your Records?

This is the age of the Internet, there are lots of options here, such as Google Drive or Dropbox. As your paper documents and important papers come to you, just scan and upload to your storage. And if you receive bank and credit card statements by email, take the time to save those records to your storage.

No scanner? Do you have a digital camera, cellphone, or other device with a camera? The IRS will accept digital photographs as valid records. Just snap and upload.

If you have paper documents, at a minimum you should store them in a home fireproof safe. Keep it in a place where you can easily grab it if you need to evacuate your home quickly. Storage outside the home is a good idea, such as in a bank safe deposit box.

For more information about taxes or filing your 2015 return contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Mark your calendars: Next year, Tax Day falls on April 18. Taxpayers in most states will get an extra three days to file their federal returns. The deadline is being delayed because the District of Columbia will celebrate Emancipation Day on April 15.

By law, local holidays in the nation’s capital impact tax deadlines the same way federal holidays would. Emancipation Day marks the date President Abraham Lincoln signed into law a bill ending slavery in the District of Columbia.

Lincoln signed the bill on April 16, 1862, more than eight months before he signed the Emancipation Proclamation, which eventually led to all slaves being freed. Next year, April 16 falls on a Saturday, so the city is celebrating the holiday on April 15.

For more information about taxes or filing your 2015 return contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Now that your child has narrowed their choices of schools, it’s time to figure out what an education is really going to cost you. Unfortunately, that’s not as simple as just checking a college’s website for their “one size fits all” pricing.

Just like no two colleges will have the same pricing structure, it’s rare to find many students within a single college that are paying identical amounts. Ultimately, the costs of attending a certain school are dependent on a number of factors that reflect a student’s degree program, academic pace, and living arrangements.

The three major components that contribute to a student’s annual college bill are tuition, room, and board. Analyzing and discussing these factors in advance can help parents and students avoid sticker shock and save accordingly.

Tuition – The True Cost of Education

At the core of the college bill is tuition. It is the fee associated with actually taking a class, and is generally calculated “per unit”. For example, a college may charge $300 per unit for undergraduate students, which means that a three unit English class would cost $900 for the semester.

Often times, colleges and universities will provide a flat rate for tuition, which covers a minimum and maximum number of units per semester. This presents a unique challenge for parents and students in making sure they’re getting their money’s worth by taking enough classes each semester.

For example, a college charging $300 per unit may charge a flat rate of $4,500 per semester for anything in between 12-18 units. If you do the math, you’ll see that the student only taking 12 units is actually paying $375

Likewise, the student that is taking a full load of classes is only paying $250 per unit.

Room – Where is Your Student Going to Sleep?

While your child might insist that they won’t actually sleep during their college years, the need is as inevitable as it can be surprising. Many times, colleges require a student to live in the on-campus dorms their first year or two to help them get acclimated to college life.

Living on-campus is usually not the cheapest of options but does offer the convenience of a single, predictable cost for parents. Living off-campus, while often cheaper, can be filled with financial surprises such as security deposits, flaky roommates, and paying rent during summer vacation.

On-campus room fees, if arranged through the college or university, are usually quoted on a quarter or semester basis. If arranged for off-campus, they should be estimated on a monthly basis, with an allowance or set-aside for those unusual costs.

Board – How Much is Food Going to Cost?

Even if your student lives on-campus, accounting for food costs is usually a separate line item in the college budget. Most schools offer a variety of meal plans for their on-campus dining establishments. These can range from a certain number of pre-paid meals to unlimited dining plans.

School meal plans offer the same cost and convenience trade-off as room plans. While it will generally cost more for a student to dine regularly on-campus, it is also a predictable amount. Further, it helps to ensure that the money you gave them for food didn’t end up funding a spring break road trip.

If your student is going to live off-campus, it will be important to track their unique grocery expenses for a few months while they are still living under your roof. This will give you a better idea of how much grocery money you should entrust them with each month.

Get an Estimate of Your Expenses

Most colleges provide a breakdown of estimated expenses on their websites. This information can usually be found under the “Financial Aid” section of their page. If you are considering an off-campus living arrangement and do not see an estimate, try giving the university a call.

For more information about filing, taxes and your 529 college savings plan                                    call one of our offices:                                                                                                                          Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Credit cards can be extremely helpful if used responsibly, but they can also hurt you if you don’t use them right. Wondering how you can use your credit card better? Check out this list of mistakes to avoid and what to do instead.

1. Not reading the fine print.

A lot of issues stem from not reading or understanding your credit card agreement. For example, if you try transferring you balance to another card without understanding the rules, you could end up owing more.

Instead: Resist the urge to automatically scroll to the bottom of the page and agree to your card’s terms. Make sure you know what you’re getting yourself into, from your card’s rewards program to fees.

2. Not using it.

Credit card companies don’t make as much money if consumers don’t use their cards. If you haven’t used your credit card in awhile, your credit card issuer could deem your card inactive and close your account, which could negatively impact your credit.

Instead: If you are reluctant to use credit but want to keep your card open, try placing a small recurring fee on it and paying it off immediately each time. Alternatively, swipe it every few months for an item you need to buy, like groceries.

3. Not paying on time.

Not paying your bills on time doesn’t just severely lower your credit score – it could also cost you monetarily, as your credit card provider may penalize you by charging a late fee and raising your interest rates.

Instead: If you keep forgetting to make payments, set up as many reminders as necessary to ensure your bills get paid. If you can’t pay on time because you don’t have enough money, try scrutinizing your budget to see where you can cut back and asking for a grace period, changing the due date or reduced minimum payment. Your credit card company may understand if you demonstrate that you’re working to remedy the situation.

4. Only making the minimum payment.

Simply put, paying the minimum each month could cost you a lot of money and take forever to pay off. Say you have a credit card with a $1,000 balance and a 14.95% interest rate. According to Credit Karma’s debt repayment calculator, if you only paid $25 a month, it could cost you an estimated $393 in interest and take you an astonishing 56 months to pay off.

Instead: Rethink what you pay monthly. If you need convincing to pay more, just take a look at your credit card statement – it should tell you how much it will cost you if you only pay the minimum.

5. Using all the credit you’re granted.

Excessively swiping your card isn’t just bad news for your wallet – it could also hurt your credit score. Many scoring models factor in how much of your credit limit you’re using because the more credit you use, the more likely you may not be able to pay everything off.

Instead: Monitor your utilization rate and make sure it never gets too high. A good rule of thumb is to aim for a rate under 30 percent. However, note that this doesn’t mean you have to keep a balance on your cards!

6. Taking cash advances.

Strapped for cash? Avoid using your credit card for cash advances unless it’s an emergency – with sky-high interest rates, upfront fees and no grace period, it could be a costly mistake. While it could be a better option than taking out a dangerous loan, like a payday, pawnshop or car title loan it’s still best to avoid if possible.

Instead: Consider other options, like applying for a short-term loan product, asking for a payday advance or borrowing from a loved one.

7. Closing it (for no good reason).

As mentioned earlier, closing an account, whether done by you or your credit card provider, could negatively impact your score. Unless you dramatically reduce your spending, closing a card (and saying goodbye to that credit limit) will probably increase your credit utilization rate. It could also lower your average age of accounts when the card falls off your credit report.

Instead: Exercise caution when considering closing any cards, as doing so could cause more harm than good.

8. Spending just to earn rewards.

If you have a rewards card, it can be tempting to spend just to earn that 5 percent cash back or those airline miles. However, if you end up buying things you don’t need just for the perks, it could cause you to spend more than you can afford.

Instead: When shopping, question why you’re buying each item and whether you really need everything you’re purchasing. If you don’t have a good reason, consider delaying your purchase. This could help prevent both impulse buys and faulty justification for shopping.

9. Ignoring your monthly statement.

We’re inundated with information these days, but one thing you don’t want to ignore is your monthly statement. Looking over it regularly can help you learn about changes to your interest rates and fees, remind you of your payment due date, help you spot erroneous charges quickly and more.

Instead: Regularly check your accounts, and make sure you know the state of each card you own. It could save you a world of trouble in the future.

10. Carrying a balance to improve your credit.

Carrying a balance on your credit cards because you can’t afford to pay off the entire amount is understandable. Carrying a balance in hopes that it will improve your credit score is a huge mistake and one of the biggest credit myths out there. You don’t need to carry a balance to build credit – the balance reported to the credit bureaus is from your last statement, not what is carried over to the next statement.

Instead: Pay your bills in full as often as possible. You don’t need to pay interest to have a good credit score.

For more information about taxes and your 401k plan contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Each year, the IRS sends millions of notices and letters to taxpayers for a variety of reasons. Here are ten things to know in case one shows up in your mailbox.

1. Don’t panic. You often only need to respond to take care of a notice.

2. There are many reasons why the IRS may send a letter or notice. It typically is about a specific issue on your federal tax return or tax account. A notice may tell you about changes to your account or ask you for more information. It could also tell you that you must make a payment.

3. Each notice has specific instructions about what you need to do.

4. You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

5. If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.

6. If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice. Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You shouldn’t have to call or visit an IRS office for most notices. If you do have questions, call the phone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your questions.

8. Keep copies of any notices you receive with your other tax records.

9. The IRS sends letters and notices by mail. We do not contact people by email or social media to ask for personal or financial information.

10. For more on this topic visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

For more information about taxes or help with the IRS contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

You can celebrate your mom even on a tight budget. 

This Mother’s Day, there are plenty of opportunities to wow your mom, wife or grandmother without breaking the bank. The point isn’t how much you spend, but how much thought you put into making her feel special.

In case you need a few ideas, here are 11 activities that don’t cost much (or cost nothing at all!) to consider:

Breakfast in Bed

This classic idea has spanned the decades for good reason. It’s a thoughtful way to wake up Mom and let her know how much she means to you. Plus, it’s impossible not to feel pampered when someone brings you breakfast in bed, even if it’s just cereal or toast. The fact that she didn’t have to make it is the best part!

Cook Together

If you’re sharing brunch, lunch or dinner at home on Mother’s Day, cooking it together is a fun way to spend the holiday. Or, you can bake a special dessert together. Let her pick the menu! As long as you plan everything, then she will love the gesture.

Gardening

Plants and flowers are a traditional gift to give on Mother’s Day. This year, take it a step further by spending the day with her in the garden. You can help her with some of the more grueling tasks like weeding or spreading mulch. Another frugal idea is to give her seeds instead of flowers and then plant them together. It’s much cheaper and can be a more meaningful gesture because it’s a shared experience.

Spa Day for Her, Cleaning for You

If the mom in your life is in desperate need of some rest and relaxation, search on a daily deals website like Groupon or Living Social for a discounted spa package. Send her off to get pampered, and then while she’s out of the house spend a few hours helping out. Maybe it’s just watching the kids while doing a few loads of laundry or the dishes, but to have those items checked off her list when she gets back from the spa will make her day even more restful.

Learn Together

Daily deals websites also frequently have coupons for classes and they might even have specials for Mother’s Day. Check out cooking classes or paint nights for fun, low-cost activities that will make for a memorable holiday together.

Visit a Museum

Museums often have free admission or require only a donation of your choosing. Spend the day exploring and learning together, or checking out an exhibit she has been eyeing. For pricier institutions, check their online calendar for “free admission” days and nights.

Picnic

If the weather is in your favor, pack your mom a surprise picnic and spend the day outdoors enjoying the spring weather. Check to see what you have in your kitchen already, and then splurge on her favorite beverage. Don’t forget a large blanket that is outdoor-friendly. Handling all of the logistics is a gift in itself.

Photos

Make sure your mom has the most recent photos of you and your family, especially if you have young children who are growing quickly. Whether it’s framing a nice photo for her house or helping her print photos and put together an album, this is a gift that can keep on giving all year long. It’s even nicer if she’s in the shots, too!

Game Night

Host a game night on Mother’s Day weekend with your family. Gather plenty of games and her favorite snacks and beverages. You could even create your own trivia game with fun facts about mom!

Volunteer for Her Favorite Cause

Does your mom have an organization that means the world to her? Organize a day to volunteer and help the cause. It won’t cost anything at all, and giving back is a great way to bring families together.

Take a Walk

Lastly, the simple act of taking a walk or a hike together is a completely free option for you to spend time with the mother figure in your life. Make sure to put your phones away and focus on talking to each other for a few hours. For $10 or less, treat yourselves to ice cream afterwards!

Spend time with your special lady, today!

Tomorrow, for more information about filing taxes, tax questions and your 401k plan         contact one of our offices:                                                                                                                     Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Too many people cash out their 401k plan without fully understanding the consequences. This can be an expensive mistake. Here’s what you need to know before you cash out.

First, Are You Eligible to Cash Out of Your 401k Plan?

If you are still employed by the company that sponsors your 401k plan then you will not be eligible to cash out of the plan. Instead, you can see if your plan offers either a 401k plan loan, or a 401k plan hardship withdrawal (not all 401k plans allow hardship withdrawals so you need to ask your plan administrator if your plan has this feature.)

If you are no longer employed by the company that sponsors your 401k plan, then you are eligible to get your money out of your 401k plan. You can cash out of the plan, or rollover your 401k plan balance to an IRA. If you choose to rollover your 401k plan instead of cashing out, then you will not have to pay taxes or penalty taxes: rollovers to IRAs are not taxable transactions if you do them the right way.

The One Reason Why You May Not Want to Cash Out of Your 401k Plan – Creditor Protection

Money in a 401k plan is creditor protected, and it is protected from bankruptcy. It is foolish to cash out a 401k plan to pay down debt if it is likely you may end up filing bankruptcy. The bankruptcy court cannot touch your 401k plan and creditors cannot attach the assets in your 401k plan.

Taxes on Cashing Out of Your 401k Plan

If you must cash out of your 401k plan and you have not yet reached age 59 ½ then the dollar amount you cash out will be subject to ordinary income taxes and a 10% penalty tax.

If you are not yet age 59 ½ it is usually required that 20% in taxes is withheld from any balance that you cash in, so for every $1,000 you cash in, you would receive about $800. The other $200 would be sent to the IRS. At the end of the year the 401k plan will send you a tax form called a 1099R that shows the amount of taxes withheld on your behalf.

When you file your tax return, you will include the amount of the 401k plan that is cashed in as income, along with other sources of income. It flows into your tax return on the first page, and based on your total income and deductions you will either owe additional tax or get a refund.

Check on 401k Retirement Age Rules Before You Cash Out

If you are between age 55 and 59 ½ you may be able to avoid the 10% penalty tax if you terminated employment no earlier than the year you turned 55.

If you are over age 59 ½ any amounts you withdraw from your 401k plan will be subject to income taxes, but not penalty taxes.

How to Cash Out of a 401k Plan

The first step to cash out of a 401k plan is to call the phone number that appears on your 401k plan statement and ask them to send you the paperwork to cash out of your plan. In some cases you may be able to do this online or over the phone, but most of the time you must fill out paperwork.

Sometimes a signature from a HR person or plan administrator at the firm that sponsored your 401k plan will be required. If you worked for a smaller company you may have to take this paperwork to them, or contact them yourself to get this done. If you worked for a large company this is often handled by the investment company that manages the 401k plan.

For more information about filing, taxes and your 401k plan  contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600