With the end of the year fast approaching, now is the time to take action and resolve all your tax matters. Below, we have listed our year-end tax tips for 2025 to help you take advantage of all available opportunities while being compliant and avoiding tax problems. 

Review Your Income, Deductions, and Withholdings

Double Check Your W-2s, 1099s, and Income Sources

To avoid issues with the IRS, ensure you have all the necessary forms and information readily available. Forms like W-2s and 1099s are used to report your income sources, such as wages, freelance earnings, dividends, or other taxable income. 

Double-checking for details is one of our crucial tax tips for 2025. Besides confirming accurate personal information, such as name and Social Security number, check for other discrepancies. If any are discovered, contact your employer and resolve the issue as soon as possible.

Adjust Withholdings If Needed

Improper tax withholding can result in overpaying or underpaying taxes, potentially triggering tax audits or other tax issues. Review your withholdings, especially after major life changes such as marriage, the birth of a child, or a job change, as these can significantly impact your tax status and liability. 

Moreover, if you owe a large tax bill or received a substantial refund last year, adjusting your withholdings can help better align your payments with your tax obligation. 

Make use of the IRS Tax Withholding Estimator or consult a tax professional to fine-tune your W-4 forms for optimal results.

Maximize Retirement Contributions Before the Deadline

401(k) & Traditional IRA Contributions

Maximizing retirement contributions, such as those to 401(k) and IRA accounts, is a year-end tax tip that can help reduce your overall taxable income and boost your savings. 

Moreover, these retirement accounts have tax-deductible benefits. It’s essential to note, however, that there are certain eligibility restrictions and limitations, so please ensure you understand them. For example, individuals under the age of 50 can contribute $23,500 to both traditional and Roth 401(k) plans in 2025. 

Consider Roth Conversions Strategically

Unlike a traditional IRA, a Roth IRA allows you to withdraw tax-free in retirement. However, note that converting from a traditional to a Roth IRA, which involves transferring funds from a traditional account to a Roth, will result in taxable income in the year of conversion.

Lastly, take into account your overall tax brackets and consider future income predictions. This can help you determine the impact of your conversion. 

Don’t Miss Out on Tax-Advantaged Savings Accounts

Health Savings Accounts (HSA)

Having an HSA, or Health Savings Account, helps cover medical expenses while also growing your investments and taking advantage of tax breaks—an ideal combination for a retirement plan. 

HSA contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical purposes are also tax-exempt. Like most savings accounts, there are specific requirements that must be met. 

For example, applicants must be registered in a high-deductible health plan that meets the IRS’s deductible and out-of-pocket maximum requirements, and the status cannot be claimed as a dependent on someone else’s tax return, such as your parents. 

Flexible Spending Accounts (FSA)

FSAs are tax-advantaged retirement accounts, usually offered by employers, that allow you to set aside some funds from your paycheck to spend on eligible expenses. These FSA contributions are tax-free. 

Eligible expenses include healthcare costs, such as medical bills, as well as dependent care FSA expenses, such as childcare, preschool, or eldercare. Putting money into an FSA ensures that you have cash available in the event of an emergency, all of which is tax-free. 

Review and Harvest Capital Gains & Losses

Review and manage capital gains and losses from your investments to minimize your tax bill.

Review your portfolio and sell any investments that have lost value before the end of the year to offset gains and reduce your taxable income. Keep an eye out for trading fees and ensure your sales align with your long-term investment objectives. 

Make Strategic Charitable Donations

Donating to charity causes is one approach to save money on taxes while also helping important causes. Donations to eligible charities, such as 501(c)(3) organizations, can be deducted up to 60% of the taxpayer’s adjusted gross income (AGI) if itemized. 

Another strategy for donating while saving on taxes is to donate an investment that has increased in value. For example, if you have a $3,500 stock that you have held for a year and its value has increased to $7,000, donating it allows you to deduct the entire $7,000 without paying taxes on the $3,500 gain.

When making donations, ensure they are made by the December 31, 2025, deadline, and maintain accurate records of all documents. Also, ensure that the charities you want to donate to meet the IRS’s qualifications.

Final Thoughts: A Smart Finish for a Strong Start

Getting all your tax matters sorted out before the new year is the recipe for avoiding tax issues and starting the new year off strong. 

As you can see, there are numerous ways for you to save on taxes and critical expenses while increasing your savings and lowering your taxable income. All the choices presented here are viable, but they may not be suitable for everyone due to varying needs and goals. 

Therefore, the key is to choose the right options by considering your specific situation. Consult a tax professional to assist you in sorting out your taxes and devising the best approach for avoiding tax difficulties and maximizing your rewards.

Greenberg Law specializes in all aspects of tax law. We have a team ready to help you every step of the way!

A tax holiday provides a temporary reduction or elimination of specific taxes, providing significant opportunities for both businesses and consumers. Understanding tax holidays thoroughly can help you navigate these opportunities, maximize the benefits they offer, and ensure compliance. Continue reading to learn more.

What is a Tax Holiday?

A tax holiday is a temporary time during which the government reduces or removes specific taxes to relieve taxpayers’ burdens and stimulate economic activity, such as consumer spending, company investment, and job creation. 

A tax holiday is usually only for a few days or months. For example, the government may declare a tax holiday on weekends or during specific time periods, such as before the start of the school year or before storm season.

How Do Sales Tax Holidays Work?

A sales tax holiday aims to reduce costs for consumers, increase sales for retailers, and boost local economies overall. For example, a sales tax holiday is frequently used in many states for back-to-school shopping and disaster preparedness.

These tax breaks frequently apply to specific products under certain conditions. For example, a sales waiver applies to school supplies such as notebooks, calculators, backpacks, apparel, and footwear with a price limit. 

Batteries, generators, and flashlights are all examples of disaster preparedness items. 

Some states additionally provide a sales tax break for energy-efficient appliances such as Energy Star-rated air conditioners and refrigerators. The sales tax holiday may apply to both in-store and online purchases, subject to certain criteria, such as payment within the holiday period.

Retailer Responsibilities During a Tax Holiday

During a tax holiday, retailers are responsible for following the right implementation according to state-specific guidelines and ensuring accurate records to maintain compliance. 

Retailers must adjust their tax-collecting procedures, such as upgrading the system, to ensure that qualifying items are excluded during the tax holiday and that online platforms display exemptions for eligible products.

To comply with state guidelines, follow the specific regulations for qualifying items, price limitations, and holiday duration. Maintain thorough records of tax-exempt transactions and file accurate sales tax returns by separating taxable and exempt sales over the holiday season.

Examples of Tax Holidays in Florida

Florida’s Back-to-School Sales Tax Holiday

Florida has an annual back-to-school sales tax holiday that runs from August 1 to August 31. During this sales tax holiday, qualified items include: 

• Clothing, footwear, wallets, bags, handbags, backpacks, fanny packs, and diaper bags priced at $100 or less per item.  

• Specific school supplies priced at $50 or less per item. 
• Learning aids and jigsaw puzzles with a sales price of $30 or less.  
• Personal computers and computer-related accessories priced at $1,500 or less, purchased for noncommercial home or personal use. 

Disaster Preparedness Sales Tax Holiday

Florida’s disaster preparedness sales tax holiday, effective August 1, 2025, is a permanent, year-round sales tax holiday on selected supplies. Qualifying items such as batteries, generators, fire extinguishers, smoke detectors, and others are tax-free at any time of the year.   

Tool Time Sales Tax Holiday

Unlike previous years, Florida’s 2025 tax relief package does not include a tool time sales tax holiday, which is typically a tax-free purchase of equipment commonly used by skilled workers, such as power tools and work boots. 

However, the state has included other sales tax holidays, such as the fishing, hunting, and camping sales tax holiday, which runs from September 8 to December 31, as well as a sales tax exemption for admissions and gold, silver, or platinum.

Energy-Efficient Appliances or Gas Tax Holidays

Energy-efficient appliances that support sustainability, such as Energy Star-rated washers, dishwashers, and refrigerators, are tax-exempt. 

However, Florida currently does not offer an energy-efficient tax and gas exemption; instead, the state has transitioned to a permanent disaster preparedness exemption, with some qualified products overlapping with energy-efficient products.

Are Tax Holidays Effective?

Pros of Sales Tax Holidays

Sales tax holidays help boost local economies, benefiting both consumers and businesses. Sales tax holidays provide immediate relief to customers by lowering the prices of highly sought-after essentials, such as those for back-to-school qualified items, resulting in savings and a temporary ease in expenses for families, particularly those low-income families.

Moreover, sales tax holidays help strengthen local economies, benefiting both consumers and shops. 

The disaster preparedness sales tax also encourages the community to stock up on crucial supplies, such as generators and batteries, ahead of extreme weather events like hurricane season, which improves public safety. 

Cons of Sales Tax Holidays

As beneficial as it seems, the sales tax holiday also has its drawbacks. 

For starters, it can create potential confusion in its rules, such as price caps and item definitions, resulting in misunderstandings between consumers and retailers and potentially causing compliance issues. 

Second, studies have found that, while tax breaks increase spending, they change the timing of purchases rather than creating additional demand. For example, consumers may postpone purchases until the tax-free period, impeding long-term economic growth. 

Lastly, temporary revenue dips as a result of tax exemptions can make it difficult for state and municipal governments to estimate accurately, complicating budgeting and adding additional uncertainty. 

Legal Implications of Tax Holidays

During the period of tax holidays, it’s crucial for businesses to stay in compliance with the current regulations to prevent penalties and other tax issues, such as back taxes and audits.

In Florida, the sales tax holidays are governed by Chapter 212 of the Florida Statutes and administered by the Department of Revenue, which requires businesses to ensure proper application of exemptions.

This includes properly identifying qualifying items, correctly advertising tax holidays to consumers, and accurately reporting sales tax returns. Non-compliance with the rules may result in civil and criminal penalties, depending on the severity of the violations, such as those between negligence and willful intent. 

Final Thoughts from Greenberg Law

Tax holidays are no doubt helpful for both consumers and retailers. Consumers can buy essentials at a lower cost, allowing them to save more, while retailers benefit from increased sales during this temporary period. 

Although these exemptions provide temporary assistance, they are not a replacement for a comprehensive tax plan. Tax holidays are temporary, limited in scope, and don’t offer long-term financial benefits for managing taxes year-round. 

For more about tax planning, guidance, or resolution, reach out to Greenberg Law Group. Our expertise can simplify your tax journey and help you achieve optimal results.

IRS jurisdictions of monitoring and ensuring tax compliance among US taxpayers extend not only to accounts on US territory, but also to financial accounts held abroad. 

To ensure that these requirements are met, the government requires FBAR submissions from all qualified taxpayers with foreign accounts to comply with the country’s tax laws. 

Continue reading to learn more about unreported foreign accounts, FBAR filing, and the consequences for violating the law. 

What Is FBAR Filing and Who Needs to File?

FBAR Basics (Report of Foreign Bank and Financial Accounts)

The Foreign Bank Account Report (FBAR), also known as FinCEN Form 114, is an annual report required to be filed by U.S. taxpayers with a foreign financial account. 

The FBAR is mandated by the Bank Secrecy Act (BSA) to monitor overseas account transactions held by US citizens. The FBAR is designed to prevent financial crimes, such as money laundering, tax evasion, and other financial offenses. 

Who Must File an FBAR

Those who must file FBAR include those who meet the following criteria:

• Citizens, alien residents, or U.S. entities such as corporations, partnerships, trusts, or limited liability companies.
• Have a financial stake in, or signature authority over, one or more overseas financial accounts. These accounts may include bank accounts, securities, mutual funds, cash-value insurance policies, and accounts held in foreign branches of U.S. banks or U.S. branches of foreign banks.
• With a threshold exceeding $10,000 at any time during the calendar year.

Reporting Foreign Income: IRS Filing Obligations Beyond FBAR

IRS Form 8938 (FATCA Reporting)

FATCA, commonly known as IRS Form 8938 or Statement of Specified Foreign Financial Assets, is another tax form that U.S. taxpayers must file along with their annual income tax return (Form 1040). FATCA complements the FBAR by requiring the reporting of any foreign assets and accounts owned. 

Similar to the FBAR, U.S. citizens who own financial accounts in foreign financial institutions and other foreign financial assets and interests (such as stocks, securities, partnerships, corporations, and mutual funds) are required to file FATCA. 

Taxpayers who have a total value of foreign financial assets exceeding the following amounts are bound to FATCA regulations:

• $50,000 on the last day of the tax year or $75,000 at any time during the year (for unmarried individuals living in the United States)
• $100,000 on the last day of the tax year or $150,000 at any time (for married filing jointly residing in the United States)
• $200,000 on the last day of the tax year or $300,000 at any time (for unmarried individuals living outside the United States) 
• $400,000 on the last day of the tax year or $600,000 at any time (for married individuals residing outside the country) 

Other Common Forms

In addition to the FBAR and FATCA, US taxpayers with foreign income or assets may be required to file additional IRS forms (3520, 5471, 8621) to record specific foreign financial activities or interests.

Form 3520 is used to report transactions involving foreign trusts (such as distributions and donations) and substantial gifts from overseas corporations or persons.

Form 5471 reports ownership or control of certain foreign firms to guarantee income and transaction transparency, especially for Controlled Foreign Corporations (CFCs).

Form 8621 reports direct or indirect distributions and gains from a Passive Foreign Investment Company (PFIC) or Qualified Electing Fund (QEF). 

Consequences of Unreported Foreign Accounts and Income

Unreported overseas accounts and income can result in significant issues, including penalties and even imprisonment. Non-willful violations, which include failing to report a financial account due to negligence, misunderstanding, or other reasons without intent to evade taxes, can result in penalties of up to $10,000 per violation. 

Wilful violation, which occurs when a taxpayer knowingly or recklessly fails to report foreign accounts or income—indicating intent to evade taxes—is punishable by the greater of $100,000 (adjusted for inflation, approximately $160,944 for 2025) or 50% of the account balance at the time of the violation per violation.

Criminal FBAR applies when non-compliance results from intentional tax evasion, fraud, or other illegal activities. The penalties can include fines of up to $250,000 and/or imprisonment for up to 5 years. 

If taxpayers are part of a conspiracy or a pattern of illegal activity (e.g., money laundering or hiding income), penalties can increase by $500,000 or more, and imprisonment can be up to 7 years. 

Additional IRS Penalties

Other penalties that may be imposed for failing to comply with IRS foreign reporting requirements include accuracy-related penalties of up to 20% of the underpayment and 40% of the underpaid tax for underpayments related to undisclosed foreign financial assets.

Failure to file a tax return that includes foreign income or Form 8938 may result in both the failure-to-file penalty and the form-specific penalty. 

Late tax returns are subject to a monthly penalty of 5% of the unpaid tax, up to a maximum of 25% of the total tax amount. Similarly, undeclared foreign income that results in underpaid taxes can lead to a failure-to-pay penalty of 0.5% per month of the unpaid tax, up to a maximum of 25%.

Furthermore, failure to meet your tax requirements, including the disclosure of foreign accounts, may result in an audit and potentially lead to long-term tax consequences. 

What Triggers IRS Scrutiny?

Non-compliance or inconsistencies in these filings are the main trigger for an IRS audit or scrutiny. 

The IRS cross-references data, for instance, FATCA disclosure, with U.S. taxpayers’ filings (e.g., FBAR, Form 8938, or Form 1040) and checks for accuracy. Large international or frequent transfers, or those with suspicious patterns, are more likely to get more scrutiny from the authorities. 

Minimize scrutiny by taking the necessary steps, such as filing on time and accurately, disclosing all accounts and assets, and paying taxes in a timely manner. 

How to Correct Unreported Foreign Accounts or Income

Just like with filing taxes or paying taxes late, taxpayers are given opportunities to fix unreported foreign accounts or income. This is possible through:

IRS Voluntary Disclosure Programs (VDP): Allows taxpayers who willfully failed to report foreign accounts or income to disclose their non-compliance proactively, potentially avoiding criminal prosecution while resolving tax and penalty obligations. 

To qualify, one must be a U.S. taxpayer with unreported foreign accounts or income and have a valid Taxpayer Identification Number (TIN). Moreover, it is essential to apply for VDP promptly, before the IRS initiates an audit or investigation. 

Streamlined Filing Compliance Procedures: The Streamlined Filing Compliance Procedures allow non-willful taxpayers to correct unreported foreign accounts or income with reduced or no penalties. 

U.S. taxpayers must certify non-willful conduct with a signed statement under penalty of perjury, be free of IRS audits or criminal investigations, and have a valid TIN.

Delinquent FBAR or Informational Return Submissions: This option allows for filing delinquent forms accompanied by a reasonable cause statement to avoid penalties, for individuals with no unreported income (no tax liability) who failed to file their FBAR.

Eligibility includes no underreported income or unpaid taxes, being neither under IRS audit nor investigation, and not having committed a non-willful failure to file (e.g., due to ignorance or oversight).

Why You Need To Hire an Expert Tax Attorney for FBAR Issues

Unreported foreign accounts and income are a severe tax issue that should not be overlooked. 

Therefore, if you wish to take any action, such as filing an FBAR, resolving a problem, or communicating with the IRS, we strongly advise you to seek expert assistance. A tax attorney has familiarity with all aspects of the tax system, including determining the best answer for your unique case.

Contact Greenberg Law today and let us help you avoid tax difficulties!

Tax issues arise for various reasons, and their implications range from mild to severe. Liens and levies are two severe problems that all taxpayers want to avoid. These types of tax issues will affect not only your finances but also your assets. 

So, what are the differences between a tax lien vs tax levy? Let’s explore these topics today. 

What Is a Tax Lien?

Definition and Purpose

A tax lien is a tool employed by the IRS to secure outstanding debts by legally placing a claim against taxpayers’ assets. A tax lien entails filing a legal document that informs the public of the government’s legal claim against the taxpayer’s assets. 

What a Lien Affects 

Once a tax lien has been filed, the IRS has precedence over other parties in claiming your assets, which include real estate, personal property, and financial assets.

When Is a Tax Lien Filed?

A tax lien is filed after several notices to the debtor have been sent, informing the taxpayer of outstanding tax liabilities. 

If taxpayers neglect these notices, the IRS can issue a Notice of Federal Tax Lien, a public notice informing them that they have claimed the assets of the concerned persons or businesses.  

What Is a Tax Levy?

Definition and Purpose

A tax levy is the legal seizure of property and assets to repay outstanding obligations. Levies can occur when taxpayers continually ignore IRS letters or notices. In contrast to a tax lien, which is a legal claim on the taxpayer’s assets, a levy is the actual collection action. 

What the IRS Can Levy? 

The IRS has the authority to levy everything from bank accounts to wages, real estate, automobiles, and retirement savings.

When Does a Tax Levy Occur?

A tax levy is imposed when individuals and businesses continue to fail to pay their tax bills. 

The IRS sends multiple notices, including a Notice of Federal Tax Lien and a Final Notice of Intent to Levy, to notify taxpayers of the tax issue and provide them with the opportunity to resolve the issue using the various available options.

Key Differences Between a Tax Lien vs Tax Levy

How Liens and Levies Affect You

Financial Consequences

When it comes to the financial consequences of liens vs levies, both will have a significant impact on your finances. 

These two actions can restrict your access to your finances and assets, such as being unable to withdraw money due to a bank freeze, having accessible funds decreased due to wage garnishment, or being unable to sell or refinance your property. 

This can all result in financial difficulty, not to mention the mounting penalties and interest that accrue from unpaid debts.  

Legal Consequences

Liens and levies also carry the same legal implications. 

As the IRS is a legal entity supported by the country’s laws, it takes efforts to ensure taxpayers fulfill their tax obligations. Any requests that are not met will result in legal ramifications. For instance, ignoring these notices can result in asset seizure and the creation of a public record, which will notify others of the claim on your property, potentially complicating any subsequent legal issues.  

Can a Lien or Levy Be Removed?

Removing a Tax Lien

There are various options for removing a tax lien. The first step is to settle all tax debts in full, including fines and interest. 

Once paid, you must still request a withdrawal using Form 12777. The IRS will typically remove the lien within 30 days and provide the taxpayer with a Certificate of Release of Federal Tax Lien. 

Discharge or subordination are other options to stop a tax lien temporarily. 

A discharge is an option if you need to sell or transfer a specific property; you can request a discharge  (Form 14135) to remove the lien from that property. The IRS may approve if the property’s worth exceeds the tax liability and the IRS receives an equivalent amount (for example, sale proceeds).

A subordination permits other creditors to take precedence over the IRS lien (Form 14134), facilitating loans or refinancing. The IRS may agree if it facilitates debt repayment without removing the lien.

Releasing a Tax Levy 

Levies, like tax liens, can be removed by paying the entire amount owed. Settling with the IRS through an agreement, such as an Offer in Compromise or Installment Agreement, also halts any collection activities as long as the individual or business adheres to the arrangement. 

Another way to release a tax levy is to prove that the levy causes immediate economic hardship (e.g., inability to pay for basic living expenses). Request for relief by filing Form 1127. 

Lastly, if you believe there was an error that resulted in the levy, you can file an appeal (Form 12153) within 30 days of receiving the IRS levy notice. The levy may be suspended until the validity of the challenged levy is determined. 

What Should You Do If You Receive a Lien or Levy Notice?

Receiving a notice of lien or levy is understandably distressing. However, if you have reached this point, you should take precautions to prevent further complicating the situation. As we covered in this article, there are steps you can take to avoid the problem from escalating, such as paying off all debts or getting into a payment agreement with the IRS. 

Your choice should also be based on your specific situation. That is why you should be diligent and informed while making a decision. Consult with a professional to ensure the best potential outcome for your situation.   

How Greenberg Law Group, P.A. Can Help

Greenberg Law’s team of tax professionals has extensive experience managing a variety of tax matters, including liens and levies. We understand the process and know how to devise the best resolutions for your specific circumstance. 

It is of utmost importance that if you are experiencing tax issues, you should not delay taking action. The more you delay, the more problems will come your way. 

Contact us immediately, and let’s develop a specific approach to prevent the issues from escalating.

We all want to avoid tax problems. However, on some occasions, tax problems arise due to a lack of understanding of tax obligations or how to respond to various tax situations. In this article, we’ll examine the various tax issues that can arise and answer the central question: How do I fix my tax problems? 

Understanding Your Tax Problems

One of the most critical aspects of navigating taxes in the United States is understanding federal and state tax regulations, including the various taxes that exist, which ones apply to you, the tax deadline, and, if there is an issue, identifying the problem and resolving it effectively. 

Common Tax Issues

Below, we’ve listed the most common tax issues:

Unfiled tax returns: An unfiled tax return occurs when an individual fails to meet the deadline for filing their tax returns. The good news is that the IRS offers opportunities for taxpayers in various challenging situations to extend deadlines or make payments on their debts over time. 

Back taxes owed to the IRS: Back taxes refer to tax debts from previous years that are typically caused by underreporting income, underpaying estimated taxes, and failing to file tax returns on time. Back taxes mean you will be charged interest and penalties until the debt is paid. 

IRS notices and collection letters: The IRS sends notices to taxpayers about outstanding tax issues. The IRS will send several notices to individuals, allowing them to acknowledge and communicate to resolve the issue. Failure to respond to the notices may result in more complex tax issues, such as liens and levies. 

Tax liens and levies: If taxpayers fail to respond after receiving multiple notices, the IRS will take action, including the issuance of tax liens and levies. This is a serious problem that can lead to various issues, including asset seizure. 

Wage garnishment or bank account seizures: When a taxpayer fails to pay their tax debts, the IRS can garnish wages or seize funds from bank accounts to collect the unpaid taxes. This usually occurs after multiple notices and a failure to resolve the debt.

IRS audits or audit appeal: An IRS audit entails the IRS reviewing your tax returns. It’s important to note that being audited doesn’t always mean you’re in trouble. Some audits are performed as part of a routine to ensure that individuals meet their tax obligations, so anyone can be audited. If you are audited and have issues as a result, you can still file an appeal if you believe the findings are incorrect. 

Why It’s Critical Not to Ignore Tax Problems

The most important aspect of avoiding trouble with the IRS is to file your taxes correctly and on time. Ignoring IRS letters and other communications will only exacerbate the problem, potentially leading to more complex situations that can cause financial disruption. 

When contacted by the IRS, respond promptly and accurately. For the best results, seek professional assistance to ensure effective communication and that any necessary negotiations are conducted with best practices.  

How Do I Fix My Tax Problems? 

Step 1: Understand What You Owe

The first important step in resolving your tax problem is to fully understand your tax debt. This is because if you don’t know what you owe, it will be challenging to plan effectively and find the best solution to your problem. 

In this step, you should gather all necessary documents (such as IRS notices and other correspondence) and review their content. Look for information such as the amount you owe and any applicable penalties or returns. 

You should also identify the tax years for which you owe money or the tax returns that you have yet to file. Typically, the IRS prioritizes debts incurred within the last three to six years, but it may also collect older debts. 

If you do not already have an IRS account, you can create one through their website. Once that is completed, check your account. It will display your tax balance, payment history, and any penalties and interest owed. 

Step 2: File Any Missing Returns

If you have not filed your tax returns, do so as soon as possible. Filing prevents the failure-to-file penalty and demonstrates good faith. 

However, before proceeding, you should ensure that you have all required documents, such as W-2s, 1099s, receipts, and other income or deduction records. If any records are missing, you can request wage and income transcripts from the IRS or contact your employers or banks. 

Once you have all of the supporting documents, file your information correctly. This is critical because errors can lead to further problems. 

Step 3: Evaluate Your Options for Tax Relief

The next step in resolving your tax issues is to determine the most suitable option for your specific tax situation. Once you have determined how much you owe and filed all of your returns, select one of the options available to you as a taxpayer. 

Depending on your circumstances, this option could be a payment plan, such as an Installment Agreement (IA), an Offer in Compromise, a Currently Not Collectible option, or Penalty Abatement. Ensure you select a resolution that is within your means and puts you in the best possible position for the future. This is when a tax attorney can be extremely helpful.

Step 4: Respond to IRS Collection Actions

If you have received a notice from the IRS regarding collection actions, time is of the essence, and you must make a decision promptly. Understand what is on the notice (for example, an action to levy or lien) and be aware of your rights. 

Another option available to you is to request a Collection Due Process (CDP) Hearing. This allows you to challenge the action or propose alternative resolutions. 

When to Contact a Tax Attorney

Having a tax attorney on your side is the best course of action when dealing with various tax issues. This is especially critical if you have received an IRS notice or summons, owe more than $10,000 in taxes, or are unsure or overwhelmed by your current situation and don’t know where to start.

A tax attorney can assist you in understanding the issue at hand, presenting the options available to you, determining the best resolution for your case, and negotiating on your behalf. Having an expert by your side will make the entire process less stressful and more effective in terms of achieving the best results. 

End Note

So, how do I fix my tax problems? The most important thing is understanding the tax issue you are dealing with, what it entails, what options you have, and what the best course of action is. Finding yourself with tax issues can be a stressful experience. If you have tax issues, contact Greenberg Law Group. Our team will help you find the best strategy to resolve your issues and prevent future problems!

Receiving the news that your tax return is being audited can be a concerning development. However, understand that being audited doesn’t always mean something is wrong. Audits are a regular part of ensuring taxpayers meet their tax obligations. Read on to learn more about IRS audits. 

What Is a Tax Return Audit?

An IRS tax audit is a formal review of your tax return and supporting documents to ensure that income, deductions, and credits are reported accurately and correctly. 

While having your tax return audited may appear alarming, this critical step can happen to anyone and shouldn’t worry you, especially if you have done nothing wrong.

Common IRS Audit Misconceptions

“Only people who did something wrong get audited.” The IRS can conduct audits at random, even of law-abiding citizens.

“Getting audited means I’m going to owe a lot of money.” IRS audits will examine the accuracy of the information reported. This doesn’t necessarily imply that you will owe more money to the authority. 

Even if discrepancies are discovered, you have the opportunity to correct them. In fact, many audits yield no changes or even a refund. If you missed a calculation and ended up paying more taxes than you should, you can be notified by an audit and receive a refund.

Why Is My Tax Return Being Audited?

Common Triggers for a Tax Audit

The IRS selects returns for audits using both manual and automated processes. The following are some red flags that may trigger an audit:

Math errors or inconsistencies in reported income: Even simple mistakes, such as typos and miscalculations, can alert the IRS. 

The reported income must also match the forms employers or clients submit, such as W-2s. Ensure there are no discrepancies between the income you declare and what your employer has reported. 

Unusually high deductions or charitable donations: If the amount you deduct or donate seems disproportionate, this will raise a red flag. 

For example, claiming $30,000 in charitable donations on a $60,000 income may appear suspicious, particularly if you don’t have clear documentation, such as receipts or letters from the charity. 

Large business losses or self-employment income: The IRS may audit self-employed individuals or business owners who have reported significant business losses year after year, as this could indicate underreporting income or inflating expenses. 

The IRS may verify the figures to ensure they’re legitimate, not personal expenses disguised as business deductions.

Random selection by IRS algorithms (DIF score system): The IRS uses a Discriminant Inventory Function (DIF) system to assist in selecting returns based on the likelihood of errors. While high DIF scores may trigger an audit, individuals can still be selected using algorithms even if there are no apparent errors.

Types of Audits

There are three types of audits, each with a specific purpose and level of severity.

Correspondence

A correspondence audit is conducted entirely by mail, including resolution. The IRS will request documentation or clarification on some items listed on your returns.

Office

As the name implies, office audits are conducted in person at the local IRS office. The auditor will review the items in question and may request additional documentation or explanation. 

Field

This type of audit is the most in-depth and usually occurs in more serious cases or with high-income earners. IRS agents conduct these audits at the taxpayer’s home or at their place of business. 

What Should I Do If I’m Being Audited?

1. Read the IRS Letter Carefully

If you’re selected for an audit, you’ll be notified by letter from the IRS. The letter will include the tax year under review, the items being examined, and the type of audit being conducted. 

It’s critical that you read the IRS letter carefully and understand what it’s asking. Misinterpretation of information can result in the provision of incorrect documents and irrelevant information, which can lead to further problems. 

2. Gather Supporting Documentation

If errors or discrepancies are found, you’ll be prompted to provide supporting documentation. Depending on the items being reviewed, this may include bank statements, receipts, employment records, acknowledgment letters for charitable donations, and other relevant documents.

 Make sure the documentation you provide is relevant to the issue at hand, as it will be used as evidence to prove your case. 

3. Respond Promptly and Accurately

When dealing with the IRS, time is of the essence. Timely and precise responses demonstrate cooperation and can help prevent the audit from being escalated. 

Whether the audit is conducted by mail, in an IRS office, or at your location, make sure your submission addresses the IRS’s concerns directly.

Possible Tax Return Audit Outcomes

Tax audits can have various outcomes, depending on the findings and resolution of discrepancies.

No changes: 

This means that your tax returns have been determined to be accurate or that the documents you provided to resolve the discrepancies are sufficient to prove your case. In these cases, no additional action is required. This would be the best possible outcome of the audit. 

Agreed change: 

Occurs when errors are discovered, but you and the IRS have agreed on a resolution, and adjustments have been made. For example, if you fail to report some of your income, you agree to pay the remaining taxes and any penalties and interest. 

Disagreed change: 

This occurs when disagreements arise with the IRS regarding the audit results, and a resolution is not reached. The following steps may include filing an appeal, meeting with an auditor to discuss the differences, or taking other actions, such as bringing the case to tax court. This outcome is complex, so professional assistance is strongly advised. 

Conclusion

If your tax return is being audited, it can be nerve-wracking because most of us believe it results from doing something wrong and will lead to serious trouble. 

While it’s true that breaking tax laws can result in an audit and additional problems, the IRS conducts audits through random selection, such as using algorithms, which can also target law-abiding citizens. However, if you’ve fulfilled all of your tax obligations by the regulations, you shouldn’t be concerned. In some cases, an audit may even result in a tax refund. Even if discrepancies are found, you have opportunities to correct them during the process. 

Contact Greenberg Law Group to help you accurately report your tax returns and identify any errors or discrepancies before it’s too late, preventing dealing with the authorities.