Guiding You Through The Legal Process
View Our Practice Areas

Atlanta Tax Law Blog

An overview of the new IRS tax form

Georgia taxpayers will need to get ready for the new W-4 form that the IRS is rolling out for next year. The government agency says that the goal of the new form is to make sure that taxpayers owe as little as possible at the end of they year. Ideally, neither the government or a taxpayer will owe the other any money at tax time. However, the new form will require taxpayers to provide more information.

For instance, they will be asked to include a dollar amount for itemized deductions and interest income. Itemized deductions include mortgage interest, charitable giving, and state or local taxes paid. They will also have to include any income tax credits that they expect to receive in a given year. Currently, the IRS has only released a draft version of the form, and a revised version is expected on May 31.

What happens if a tax bill goes unpaid

Taxpayers in Georgia and anywhere else who don't pay their federal income taxes on time could be subject to IRS collection activities. The first step in the process is to send a letter detailing how much the government thinks is owed. Typically, the balance will include penalties and interest in addition to the principal balance. The next step in the process may be to file a lien, garnish wages or seize other assets to satisfy the debt.

In some cases, the government will garnish future tax refunds until a previously unpaid balance is repaid. State income tax refunds may also be garnished. While the government has many different ways to collect what it is owed, there are ways to keep the IRS at bay. Taxpayers can ask to enter into an installment agreement that allows them to pay what they owe in monthly installments.

Actions that may lead to an audit

It is unlikely that an individual in Georgia or anywhere else will have his or her tax return selected for audit. Overall, just 0.6% of returns will face further scrutiny after they are sent to the IRS. The odds of an audit are influenced by how much money a person makes. Those who make $10 million or more have an audit rate of 14.4%, but money is not the only factor in determining whether a return will be reviewed.

If a person files a Schedule C, it could pique the interest of the IRS. This is because a self-employed individual may have a greater chance of overstating expenses or not reporting all of his or her income. Those who claim charitable deductions that seem high in relation to their income could also be more likely to hear from the federal tax agency.

4 ways you may be inadvertently cheating on your taxes

Benjamin Franklin famously remarked, “…nothing can be said to be certain, except death and taxes.” While death is often a serious subject, you cannot take your tax obligations lightly. If you mess up your tax filing, you could find yourself in significant financial or legal jeopardy. 

Like most of your Atlanta-area neighbors, you do your best to comply with the law. As you know, though, tax rules can be extraordinarily complex. Even with diligence, you may not always follow the law. Here are four ways you may inadvertently cheat on your taxes: 

Wealthier taxpayers may face more frequent audits

Taxpayers in Georgia may fear an IRS audit as one of their worst nightmares. These detailed overviews of tax filings may leave even honest taxpayers worried. That's why filers should be aware that the agency announced that it may be changing its methods to determine which returns to audit. In testimony before Congress, the IRS Commissioner said that the agency would work to increase its focus on wealthier taxpayers. This came in response to questions from members of Congress about why people with low incomes were disproportionately targeted for audits, particularly applicants for the Earned Income Tax Credit.

According to research, filers who claimed this tax credit designed for workers with low to middle incomes were audited twice as often as people with incomes between $200,000 and $500,000 annually. In fact, these low-income taxpayers were the targets of 36% of all tax audits in 2017. The commissioner said that these claims were more frequently audited due to the complex regulations governing who is considered an eligible child for a family receiving the tax credit. However, he also said that he was willing to work with lawmakers to increase the number of audits for wealthier taxpayers.

Even college students pay income taxes

College students who participate in a paid internship in Georgia or any other state may owe federal taxes on their earnings. This could be true even if participation in the internship is required by the school. In some cases, individuals are paid as independent contractors, which means that they will receive a Form 1099 as opposed to a traditional W-2. The difference is important as it determines how much in FICA taxes an individual is required to pay.

It also will determine whether that money is withheld from a paycheck or if the worker is required to pay it during the course of the year. Those who owe more than $1,000 in taxes are generally required to make estimated payments quarterly. Self-employment taxes are equal to 15.3 percent of a person's paycheck. Of that amount, 12.4 percent goes toward the Social Security system while the other 2.9 percent goes to the Medicare system.

Fewer audits, best practices mean less tax hassle

Georgia residents might be happy to know that their chances of being audited are fairly low. While it is still important to turn one's taxes in on time, an individual has a 1 in 160 chance of being audited. In 2010, about 1 in 90 people were audited. A tighter budget led to a smaller IRS, which means fewer audits.

The likelihood of being audited increases when making more money. Earning more than $1 million means there is a 1 in 23 chance of being singled out by the IRS while those who make less than $200,000 are more unlikely to gain the attention of the IRS. Tax returns that typically catch the attention of the IRS are those that contain questionable or missing information and involve large sums of money.

Strategies for confronting tax debt

Tax time can be particularly challenging for people in Georgia who are dealing with the burden of tax debt. People may find themselves with tax bills that they are unable to pay, and they may not be sure how they can find a way out of the situation. As 2018 opened, there were over 14 million open cases involving tax debts for individuals and businesses, even though the IRS has cut its tax liens filed each year by over 50 percent since 2010. The American economy has grown in the past 10 years, but many people still face significant tax debt.

There are steps that people can take to help to mitigate the problem and find a way forward. In the first place, it can be important to confront the problem. Even if it is not possible to pay all the taxes owed, it is important to file a tax return on time or ask for an extension. People should note that the IRS can impose onerous terms for late payments, especially when a tax return is not filed at all. This means that the IRS should often come first when dealing with debts.

Understanding the value of an estate

Gross estate refers to the value of all the assets in an estate. It may include real property both in and outside the country, bank accounts, annuities, stocks and more. Even property that is not necessarily owned by the estate is included, such as property a person possesses a general power over, gifts and some life insurance proceeds. For a person in Georgia, if the total of all this is under the federal estate tax exemption, it is not necessary to pay estate taxes.

The Tax Cuts and Jobs Act doubled the estate tax exemption to more than $11 million for individuals and $22 million for couples. This means that in most families, federal estate tax will not be a concern. The executor for the estate must file tax form 706 if the gross estate is higher than the federal exemption whether tax is due. Executors for estates of nonresidents and noncitizens may be required to file a tax form as well if the person had assets above a certain amount in the United States.

Can you bring your dispute to the Georgia Tax Tribunal?

Sometimes a dispute arises about a tax payment you have made. Sometimes you have a problem with an existing regulation.

Tax issues are sometimes about state rather than federal matters. What, you might ask, is the Georgia Tax Tribunal and what kind of cases does the GTT hear?

EMAIL US FOR A RESPONSE

Contact Us Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office

100 Galleria Parkway SE
Suite #480
Atlanta, Georgia 30339

Toll Free: 800-765-2779
Phone: 404-841-6561
Map & Directions

600 University Park Place
Suite 100
Birmingham, AL 35209

Phone: 205-401-1229
Map & Directions