Friday, April 3, 2009

Today’s tax tip: Some relief for people with tax debt

Twice weekly on Tuesday and Friday from now until April 15, we will bring you tax tips from PBS Tax and Bookkeeping Service. Howard Abrams and PBS have been providing income tax and bookkeeping services to the trucking industry for more than 25 years. OOIDA features Howard’s column, “Tax Tips,” in each issue of Land Line Magazine.

Today’s tax tip is: Some relief for people with tax debt. If you were rejected for an “Offer in Compromise” – an agreement to settle your tax debt for less than you owe – because you had home equity, the IRS will review those rejected applications, because the equity may now be gone.

If you were on an installment payment plan with the IRS previously, all the debt was due if a payment was missed. Now you might stay on the payment program even if you skip a payment or send a reduced amount. Each case is different.

If you have suffered financial hardship, such as loss of work, the IRS may postpone collection action temporarily. Contact the IRS.

Previous tax tips
Net operating loss carryback. New Rule: In this horrible economic period, many of you will have losses (operating losses) that appear on your 1040 Schedule C where your net income usually is. Prior law allowed net operating losses (NOLs) to be carried back two years and carried forward 20 years. For 2008, a new law allows you to carry back up to five years. This allows you to possibly realize much-needed cash. An election must be made on your 2008 tax return or, if already filed, you must submit a new election by April 17, 2009.

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