Episode 7: In this episode, Timalyn discusses the importance of your tax transcript. If the IRS has begun sending you letters about unpaid taxes such as failure to file notices or intent to levy notices. You need to act quickly. Timalyn explains why the tax transcript is the best place to begin.
What Is a Tax Transcript?
When clients hire Timalyn to represent them in tax relief matters before the IRS, one of the first steps she takes is to review the tax transcript. Your tax transcript lists everything the IRS recognizes as income for a particular tax year. It also lists potential deductions. It's possible that your tax return omitted income generated or income that was reported to the IRS, but you didn't receive. You may also have additional deductions, beyond what the IRS shows on the tax transcript.
This document will verify the amount you actually owe as a tax liability. This is very important because you don't want to pay more than what you actually owe. The IRS does make mistakes. Timalyn explains a situation she encountered when working with a couple on their tax issues.
Various Types of Tax Transcripts
Timalyn explains that there are multiple types of transcripts. The wage and income transcript can help you when you can't find your W2s or 1099s. It can help you to accurately prepare your returns.
Form 1098 is a mortgage interest statement. This for can also show interest paid on a student loan. This form can also be useful when preparing your tax returns.
A return transcript shows what you reported on your return.
An account transcript is a very powerful transcript. It shows when you filed your return, was there a refund due and how long you have to claim that return. If you have back taxes, this account also informs you of how much longer the IRS has to collect those taxes and information on tolling events.
Tolling events, including a bankruptcy filing or divorce proceeding can extend the time the IRS has to collect the tax debt.
The Clock is Running
Remember, the IRS only has a specific period of time during which it can collect back taxes. Likewise, you only have a specific period of time to collect a tax refund. Timalyn recommends that you work with an experienced tax relief expert who can properly analyze your various tax transcripts and ensure that not only are they accurate, but that you take the steps necessary to claim any eligible, but unclaimed refunds.
The Collections Statute Expiration Date (CSED), which Timalyn discussed in Episode 5, is the last date the IRS has to collect on a past due tax debt. Depending upon your CSED date and your specific situation, an experienced tax relief expert may be able to help you effectively navigate the tax relief journey, so as to minimize what you actually have to pay the IRS.
What Is a Tolling Event?
Timalyn explains that the IRS, typically, has 10 years to collect. However, a tolling event can extend the collection period. A tolling event basically pauses the collection period. For instance, if you are filing bankruptcy, the IRS cannot collect on back taxes, during that time. That non-collection period of time will be added onto the back of the original collection period.
How to Request an IRS Tax Transcript
There are several ways to do this. You have the option of creating an account at IRS.gov and requesting the information. Self-service can be convenient, but if you make a mistake regarding the information provided, or simply can't figure it out due to the complexity, it doesn't really help you.
Another option is to work with Timalyn Bowens, America's favorite EA, or another tax professional to properly analyze your transcripts.
Note: At this point during the podcast, Timalyn references something she covered in Episode 5, but she actually meant Episode 6. Hey, mistakes happen. She's human, too.
An important point Timalyn makes is that you have to know what you're dealing with, in order to effectively negotiate with the IRS. The IRS Tax Transcript can be a complicated document. Mistakes can be costly. Timalyn and her team will be happy to assist to resolve your tax debt issues for both you and the IRS.
If you'd like to speak with Timalyn and her team about your specific situation, visit www.BowensTaxSolutions.com and click on the blue Book Now button to schedule time. Penalties, interest and other fees are building. Don't wait to address your tax relief issues.
As we conclude Episode 7, we'd like to encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit: https://www.americasfavoriteea.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
