As April 17, 2012 approaches; tax day for the 2011 Individual Income Tax, the question becomes, “file or don’t file my return?” Setting aside tax protest issues – sternly addressed by courts, this question often arises when a taxpayer does not have the money to pay their tax bill. This inability to pay is never acceptable to the IRS as “reasonable cause” not to file your return.

Failing to file your return on time results in some serious penalties and interest on any tax due. The “failure to file penalty” is 5% per month on the tax due, capped at 25% of the tax due. There is also interest charged each month on the tax due – and the penalty. Additionally, the interest never caps and continues to accrue until full payment is made. (more…)

Tags: failure to file, failure to pay, file on time, tax day, tax return

The news is full of talk about President Obama wanting to repeal “The Bush Tax Cuts” for the wealthy. Also, the compromise tax law that passed at the end of 2010 is scheduled to expire or “sunset” on December 31 of this year – sort of automatically repealing the tax cuts for everyone. But what are the tax cuts? How will the changes look basically? That is the key.

1.  Income Tax:

The personal income tax rates would revert to 2001 levels, so:

• Current rates – 10%, 15%, 25%, 28%, 33%, and 35%
• Revert to old rates – 15%, 28%, 31%, 36%, and 39.6%

Capital gains rates would also revert to 2001 levels as well. Short term capital gains (assets held less than one year) would continue to be taxed the same as the ordinary rate. Long term gains (assets held a year or more) would see higher capital gains taxes. (more…)

Tags: adoption credit, bush era tax cuts, capital gain, dependent care credit, dividends, Estate Tax, income tax, marriage penalty, state death tax credit

As we approach the year’s end, it is not too late to do some 2011 tax planning. Please consider the following suggestions from the IRS that may be helpful. If you have questions about how these issues might apply to your tax situation, please contact Carly Speyer or Stacy Bechakas at 716.636.7600 to discuss.

The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits.

Here are six tax-saving tips for you to consider before the calendar turns to 2012: (more…)

Tags: 2011 taxes, charitable contributions, lower taxes, portfolio adjustment, tax benefits

On June 9, the Consumer Assistance to Recycle and Save Act was passed by the US House of Representatives. The intent of the legislation is to reduce the number of inefficient vehicles on the road while, of course, spurring vehicle sales for the troubled auto industry. (more…)

Tags: Cash for Clunkers, Consumer Assistance to Recycle and Save Act, fuel efficiency program

In New York State Grievance Day is the opportunity for owners of Real Property to challenge their property’s assessment for real property tax purposes.

Each municipality has its own Grievance day. Generally towns hold Grievance Day in the spring – in Erie County towns it tends to be (more…)

Tags: equalization rate, grievance day, property assessment, real estate tax, tax

With the current bleak state of the economy, many taxpayers may find their ability to pay taxes has been negatively impacted by unemployment or corporate downsizing, loss on investments and reduced income. When in these circumstances, the reaction of many taxpayers is to ignore the problem and procrastinate in dealing with the IRS.

Not filing a tax return is NOT a good idea! (more…)

Tags: bankruptcy, installment agreements, IRS, offer-in-compromise, tax civil penalties, tax penalty abated, tax return, taxes, uncollectable tax