Insurance World

The time is drawing near. April 15th (April 18th for 2010 returns) is right around the corner. What do you need to do before you file your income tax return?

Don't panic...the return is due on April 15th. If you can't get your return completed and filed by April 15th, request an extension. This is done on IRS Form 4868. A state extension return will also likely need to be filed depending on the state you live in. The federal extension will allow you until October 15th to file your return. Keep in mind that filing an extension only extends the time to file a return. It does not extend the time to pay. If you owe tax, this should be paid by April 15th.Married couples should review if married filing jointly or married filing separately is better for them. This is one where you need to "run the numbers" to see which is a better deal.Compare your return to last year's. This will allow you to see if you have all of the items of income and expenses from last year that are applicable to this year.Check the math. I know-everything is done on computers now. It still makes sense to review the returns for accuracy.Fund your IRA's. If you are deducting an IRA or funding a Roth IRA, make sure they are funded by April 15th. The Roth is not income tax deductible and, therefore, will not change the tax. An IRA or Roth IRA must be funded by April 15th as there is no extension. An IRA or a Roth can be funded up to $5,000 per year. Taxpayers age 50 and older can make an additional "catch-up" contribution of $1,000.If you have your returns prepared by a professional and they file electronically, you must sign and forward Form 8879, IRS E-File Signature Authorization, to your preparer. This authorizes the preparer to file the returns. The preparer cannot file the returns electronically without this authorization. If you are getting a refund, consider direct deposit. You will receive your refund quicker than by mail.If you do not file electronically and instead paper file, make sure to send them certified mail, return receipt requested. This will provide you with proof of filing your return and the date mailed.

ACTION ITEM: Don't rush to file your return. Take these seven practical steps before filing. If you can't get it completed by April 15th, file for an extension. Thomas F. Scanlon, CPA, CFP®

Thomas F. Scanlon, CPA, CFP® is the President of Borgida & Company P.C., CPA's in Manchester, CT and can be reached at http://borgidacpas.com/

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When you're facing a tax liability and you can't resolve it within a reasonable amount of time, the authorities will file liens (or tax warrants for some states) as an escalating step in the collections process. A lien notifies the public that you have a tax liability. It secures their interest in your property, receivables, tangible and intangible assets. Recent reports show the IRS has been increasing the use of Federal Tax Liens to assist in the collection of back taxes. If you've received one you should know that you do have options, and it is in your best interest to act quickly. To ensure that you have the best possible outcome, follow these initial steps in getting your tax problem resolved.

1) Do not delay or ignore it

May seem obvious, but it is the most important step. And if you have been putting off a tax problem and have received a notice of a tax lien, you've now reached a point where it's in your best interests to get in contact with the Internal Revenue Service or State taxing authority. You can easily get in touch with them directly or use a tax resolution expert to take care of the communications for you. Facing up to a tax issue can be stressful, but not dealing with a tax problem is only going to make a bad situation worse. Remember, a tax lien is not the final step in collections.

2) Confirm the lien is valid and accurate

Once you've received a notice, you should contact the taxing authority and verify the lien. Do you owe taxes? Do you owe for the type of taxes listed on the lien? I know of a restaurant who was sent a bill from the Internal Revenue Service for excise taxes for tanning beds, it may get on in the kitchen, but there's no tanning beds. Don't just assume that the lien is correct. Verify your records and compare to the taxing authority that what they indicate you owe, you actually owe.

3) Research your appeal or withdrawal options

If you have sufficient proof, a reasonable cause, or other mitigating circumstances (such as a bankruptcy) you may qualify to appeal or even have the lien withdrawn completely. In certain instances the IRS may allow a temporary lift of a lien, often when it is in the best interest of both you and the IRS, such as selling property to use the funds to pay the tax debt. Many individuals (and occasionally some less scrupulous tax attorneys) will file an appeal in error and doing so can make tax relief more difficult by extending certain statutes of limitations.

4) Determine if you can pay of the tax debt

If you have the means available, often the best option may be to pay the debt immediately so that the lien will be released. If you need to sell assets in order to help pay the tax debt, the IRS will often work with you to release the lien. Depending on the amount of the tax lien you may want to consider your credit or loan options because you will often pay less to a bank or lending institution then you will the Internal Revenue Service or State taxing authority on a payment plan.

5) Establish your tax debt solution and follow through

It may feel like you are stuck with limited or no options when you have a tax debt. And this is why working with a tax resolution expert can be extremely helpful. A qualified expert should know the options available in your situation and what method will best absolve the debt and get the tax lien released. And while the Revenue Officers likely have this information too, you can't always expect them to give you the answers (remember, their job is to get the debt paid in full as fast as possible.)

Whatever your solution may be, the final step is to keep up with the process. Get your paperwork in on time. Make all deadlines you establish with the taxing authority and provide your paperwork in a method that is verifiable (you don't want your records getting lost in the mail.) If you receive a request or notice from the IRS or state, it is important you are responsive. Even though you may have worked out a method of resolving your tax debt, there is often a lot of paperwork and communication that needs to be continued. It's entirely feasible that a person or business can fulfill these responsibilities on their own, but again a good tax resolution expert should be able and willing to take care of these items at a reasonable cost.

Every situation is different, but if you've received a notice of a tax lien follow these steps and you'll ensure the best possible outcome for your financial future.

Aaron Marx is a Managing Member of Safe Harbor Financial Consultants LLC a tax resolution firm based in Chicago IL. You can get more information about tax resolution services or visit their tax wiki for straightforward information about taxes and tax collections. Aaron also hosts a tax advocacy group on Facebook.

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Credit cards - Most of us have them, and most of us use them on a fairly regular basis. But a lot of the time, we don't realise how we are being taken advantage of. The more you know about your credit, the more you can survive the pitfalls and thrive financially.

It's important to know...

WHO works for whom

Believe it or not, credit card companies are actually meant to work for YOU. They all vie for your business so that they can make money off the bill that you're not paying. It's stiff competition out there, with companies offering loads of incentives to win your approval. Cash back, reward travel, free gas-you have more power than you think, even when it comes to negotiating your interest rate.

But to do that you first have to know....

WHAT you're getting yourself into

Good credit is essential. When you're looking to take out a loan for that dream house, you'll never get it without good credit. And the better your credit, the more pull you'll have when negotiating your interest rate. It's a catch 22-if your credit is already good, then the easier time you'll have keeping it that way.

But the only way to keep your score high is to know....

WHEN to pay and HOW much

Ideally, you'd pay off your bill at the end of every month. Realistically, you barely make your minimum amount due. Card companies love this and always put themselves first so that each month, your money first goes to paying off the interest so that you eventually build more debt and owe more money over time.

So it's important to know...

WHERE the fees hide

Card companies will entice you with a promise of "No annual fee" but then turn around and gouge you two months later. Or even worse, credit card companies are notorious for pitching "0% interest rates" or "no late fees" and then when you receive the card, the terms in the agreement are nowhere near what you originally signed up for. This tactic is so common that it has become known as the "bait and switch" and can be avoided if you read your card agreement carefully.

But credit cards aren't all bad, especially if you know...

WHY you have one

Credit cards offer a lot more protection that debit cards. And if you maintain good credit, you'll receive loads of kickbacks. Some people are even able to get loans with little or no interest rates just based on their high credit score alone.

So while having a credit card does leave you vulnerable to overspending and loads of debt, remember that if you keep up with your monthly payment and pay off your debt at the end of each month, all the fine print reading could pay off huge with cash back, miles, and other rewards.

If you're looking to finally rid yourself of debt and are looking for advice on bankruptcy, visit the ClearDebt IVA site. Apply for an IVA, an Individual Voluntary Arrangement with ClearDebt and get your debt under control.

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