However, these options are not always clear, which is why obtaining representation to help resolve your IRS back tax matters makes sense. When we represent a client, we dive deep into their financial situation to determine which specific program they would qualify for and how they can legally pay the least amount of taxes, penalties, and interest.  

The more we are aware of a taxpayer’s financial situation, the better arrangement we can negotiate for them. Some taxpayers think that by saving on professional tax service fees, they are doing themselves a favor, but they don’t realize they could end up paying the IRS thousands (sometimes tens of thousands more) because of the arrangement they negotiated themselves, whether it was an Installment Agreement or a settlement known as the Offer in Compromise (OIC).

The Offer in Compromise program is offered by the IRS to give taxpayers a fresh start. Getting a settlement for less than you owe is great, but did you know that just the instructions for Form 656, Offer in Compromise, are 32 pages long? Then there are options for a 5-month lump sum cash offer or a deferred 12-month offer. How do you know which option works better for you? What about the 20% down payment that is required to be submitted with an Offer in Compromise? Can it be waived, and will your deposit be forfeited if your offer is denied?

The Offer in Compromise program is complex, especially if you are a small business owner, as there may be additional forms and information necessary to complete. In our next blog article, we will focus more on the IRS Offer in Compromise (OIC) program and provide more details. If you owe more than $10K in back taxes to the IRS or state, contact us today for a free and confidential consultation.

The post I Filed My Taxes, but Now I Owe the IRS: What Do I Do Next? appeared first on Direct Tax Relief.

1. Cryptocurrency

If you’ve invested in cryptocurrency, it’s important to report your sales to the IRS. Even if you don’t receive a 1099 from your exchange (like you would when selling stocks on Fidelity, Charles Schwab, etc.), you’re still required to report your basis, date of purchase, and sold amount and date. Think of it like reporting stock and investment sales. The IRS even has a checkbox on the tax return to confirm you had no cryptocurrency sales.

2. Download Your Own Documents

Many companies no longer mail tax documents, so it’s important to download them yourself. For example, mortgage companies may not send Form 1098 mortgage interest statements, while investment brokerages may not send annual 1099-B forms that track stocks and investments. Even ride-sharing companies like Uber and Lyft may not send Forms 1099-NEC or 1099-MISC, which provide an annual account summary. To avoid missing important tax documents, make sure you keep track of them each year and download them if necessary.

3. Always ask for Direct Deposit! 

If you’re expecting a tax refund, it’s best to ask for direct deposit. We’ve seen cases where refund checks get lost in the mail or delayed, causing weeks or months of phone calls and a delay in getting your cash. Even if you owe taxes, it’s better to have the IRS or state tax agency debit your checking or savings account. Mailing a check is archaic and inefficient, and no one wants to spend hours on hold with the IRS chasing down checks.

4. Reminder to Always Report All Your Income

Some people believe that they don’t need to report income from side hustles or work if a Form 1099 wasn’t issued. This is a mistake that can result in paying additional taxes, penalties, and interest if your return is audited. To avoid this, always report all your income, even if you didn’t receive a 1099. This includes income from freelance work, rental properties, and any other source.

5. Track Your Income Throughout the Year

This is perhaps the biggest tax mistake people make: failing to track their income during the year. Whether you’re a W2 employee, sole proprietor, or operate an LLC or Corporation, the US tax system is “pay as you go.” This means you’ll need to track your financials and income through paystubs or a Profit and Loss statement to ensure you have enough tax withholdings or payments throughout the year. If you don’t plan correctly or have a good preparer/advisor, you can run into serious tax problems at the end of the year.

Conclusion: By avoiding these five common tax mistakes, you can save yourself time, money, and stress. Be sure to report your cryptocurrency sales, download your own tax documents, ask for direct deposit, report all your income, and track your income throughout the year. Taking these steps will help you stay on top of your taxes and avoid problems down the road. Start today to make next tax season easier.

The post ​​5 Common Tax Mistakes to Avoid in 2025 appeared first on Direct Tax Relief.

We previously reported that the IRS had mandated companies such as PayPal and Venmo to start issuing a form 1099 and report payments that were made through these apps that totaled $600 or more during the calendar year. This new requirement applies only to business transactions, such as payment for services rendered by a plumber or freelance writer, and not to transactions between friends paying each other back for dinner, for example.

The IRS is working to reduce the tax gap, the amount of taxes that go unpaid each year due to non-reporting. Whether an individual receives a 1099 form or not, income that they generate from side gigs is considered business income, and must be reported on a 1040 tax return.

Hopefully these cash app companies will update their systems to accurately implement the updates and issue 1099 forms to users who are conducting actual business activities. Using a professional tax preparer to file your taxes can also minimize the risk of errors, as they receive ongoing education each year to keep up with the latest tax laws.

The post Important Update for Users of Cash Apps! appeared first on Direct Tax Relief.

1. Reporting correct income

Some folks think if they didn’t receive a 1099 at year end they are free and clear from reporting their income. This is false, as you are required to account for all of your income, whether it was originally reported to the government or not. Failing to accurately report your income will cause big headaches later on and of course tax, penalty and interest assessments from the government. There are also new rules for cash apps, which we discuss here.

2. Estimated tax payments

Paying estimated quarterly taxes is usually the most important aspect of your finances when you are self-employed. Many taxpayers are unaware that estimated payments are required, but they will save you a lot of stress during tax time by preventing you from facing a large tax bill. Get yourself a good tax professional to help set you up with quarterly tax payments.

3. Keeping track of business versus personal

Our suggestion to our business clients is to have a separate bank account and credit card to handle all your business income and expenses. This makes it much easier at year end when you or your bookkeeper are reconciling your business’s transactions to create a Profit & Loss and Balance Sheet. Commingling your business and personal transactions will also make things more difficult in exam and audit situations.

4. Business structure

When your side hustle gets popular and you start making significant business income, you should consider converting to an LLC or Corporation. Depending on your situation, it could make sense to convert your business structure. Before going online and creating that LLC or Corporation, you should consult a tax pro because there are many factors and responsibilities that come with making that change.

5. Hire a good tax pro

One of the leading reasons clients get into tax trouble is because they took advice from a friend or family member. The best advice a good friend can give you is to hire a tax pro. Since there are so many factors involved in tax, you need someone experienced to analyze your entire situation and put you on track for success.

The post Top 5 Tips for Freelancers appeared first on Direct Tax Relief.

You’re probably an expert in the field of your business or the product that you sell. More than likely, you’re used to taking on multiple roles to ensure your business is growing to its full potential. With all of the things you need to do throughout the year to keep your business running, you may not have had the time or the energy to study up on the latest tax regulations. 

When it comes to taxes, there are a few things you may have overlooked. Here are some pieces of advice that can help you save money down the line, and keep your business protected from penalties when tax season rolls around. 

The 5 most overlooked tips that may help your small business: 

1. Keep Your Receipts (digitally) It might sound simple, but by keeping track of all of the transactions you make related to your business, you can maximize your tax deductions down the line. It’s important to connect your small business’s banking activity to a bookkeeping software– that way you can keep track of every single expense, and won’t have to miss out on potential savings if you misplace a paper receipt. 
2. Plan for Retirement By establishing and fully funding a retirement plan, you can pay yourself instead of the IRS. Whether it’s a SEP IRA or a Solo 401 (k), by investing in retirement for yourself and your employees, you can defer taxes and potentially save thousands on payroll taxes. There are many options for potential retirement accounts, including Traditional and Roth IRAs, and Cash Benefit Pension plans.
3. Deduct Your Home Office. Did you know if you operate your business from home, you could qualify for a home office deduction? There are a few things that define a qualified “home office.” It must be exclusively used for “business purposes” to be considered a home office. These include uses like business administration, managing your business, meeting customers, or storing inventory. It cannot double as a room for personal purposes, like a living room or a dining room. If you’re not sure which part, or how much of your home qualifies as an office, we can help you figure it out.
4. Choose the Right Classification. The corporate structure you use for your business is more important than you might think. Whether you’re a sole proprietor, S-Corp, LLC, Partnership or C-Corp, the ideal structure for your business may change depending on its size and income. This can affect tax planning and the advantages you can get on your taxes. It’s a good idea to consult with an accountant or other qualified tax professional every few years (or even more often depending on how rapidly your business is growing) to figure out the correct structure for your business, and to help maximize your potential business tax deductions.
5. Get Rid of Your Old Equipment. As your business has grown, you’ve probably purchased some equipment or furniture that you don’t use any more, either because it’s no longer relevant to your needs, or because it is no longer functioning the way you need it to. If you have good equipment or furniture that you don’t need, you can donate it to a 501(c)3 nonprofit and deduct its fair value. If you have equipment or furniture that has depreciated so much in quality that it no longer is usable, you can claim a Section 1231 loss for discarding it. 

If you want to maximize your small business’s potential, need relief from any tax worries, or simply don’t have the time to deal with the IRS, we would love to help. Book your free consultation with one of our tax experts today.  

The post 5 Overlooked Small Business Tips appeared first on Direct Tax Relief.

“Okay,” you say, “but what’s a third party settlement organization?” Well, you may know them by the names of eBay, Cash App, PayPal, and Venmo. 

“Okay,” you say, “but why do I need to worry about a 1099-K from an app like PayPal or Venmo?”

You don’t necessarily need to worry, but if you’re a plumber, barber, artist, or one of the other countless self-employed and/or small business owners that received more than $600 in annual payments through these apps, you will have a Form 1099-K issued at year end. That means you’ll need to report the amount as income, along with expenses, when preparing your annual  tax returns with the Internal Revenue Service (IRS). For many self-employed individuals, this is a routine they’re already familiar with whether you received any government issued forms or not. Only now, if you’re one of these businesses or individuals, you’ll have another piece of paperwork and income source to be mindful of when staying on top of your tax returns. 

Direct Tax Relief encourages taxpayers to always report all of their taxable income, regardless of the payment method or whether a tax form is generated. If all of your earned income is not properly disclosed on your tax return with the IRS, you will face penalties and interest for understatement of income. 

If you use any of these cash apps for your business—and especially if you use them for both business and personal transactions— we suggest you contact them and review your profile to decrease your chances of receiving an incorrect Form 1099-K that includes money received that was not business or service-related. Paying back your friends for dinner or movie tickets should not trigger a Form 1099-K from being issued. But if you do happen to receive a form by mistake, it will be time consuming and frustrating to clear up these matters with the IRS so that’s why it’s best to contact the cash app ahead of being issued a 1099. Another solution is to simply set-up a business-specific account to handle service transactions, or only use one app for business and the other for personal transactions. 

This may come as a drastic change for many who perform freelance and self employed work, but as long as you continue to report your correct earnings and deductions, you shouldn’t have much to worry about. There have been bills introduced that would increase the reporting threshold from $600 to $5000, but they have not been passed yet.  If you are self-employed and would like your taxes prepared professionally or are interested in other business-related bookkeeping or accounting services, call Direct Tax Relief at (800) 505-4134 or contact us.

The post Be Careful Using Cash Apps! appeared first on Direct Tax Relief.

#1. Think in Terms of Value, Not the Lowest Price

Value trumps price almost every time. So many small businesses get started with the idea that they need to be the cheapest. Sometimes, this is just not practical. Instead, think in terms of value. If your product costs more than the competition, the question is “why?” Do you offer 24/7 customer support? Does your product contain higher-end materials? Once you’ve identified the benefits of your small business, you can accurately estimate a reasonable cost (and you can use this list of pluses in your advertising efforts, too).

#2. Always Consider Your Community

No, I don’t mean you should investigate your market (you’ve probably already done that). As a small business owner, you should consider ways to engage the community around you. Often these people are able to be direct consumers of your product or, at least, champions of your business.

Some ways to engage them include:

• Partner with other local businesses. Not every nearby business is a competitor. Think of ways to get to know the other owners. This could be as simple as a monthly meeting to discuss events, partnerships or general community needs.
• Address needs in the area. This doesn’t have to be costly! It could be hosting a fundraiser for a local softball team or having a clothing drive for a nearby shelter.
• Host local events. Does your business have a storefront? Invite local artists and host a gallery opening with a free wine and cheese night. This is a great way to meet citizens in your area.

When you become a known part of the community, you create a firm foundation for your business, becoming integral to the region. Plus, improving the community is always a good thing.

#3. Create a Business Plan—but Make It Flexible

This is one of the most widely ignored small business tips, and it can be the most detrimental. You cannot go into business without a plan (or, you shouldn’t). This plan should include things like the value of your business, your current business strategy and a list of future goals with a well-thought-out timeline.

Once your plan is established, make sure it’s flexible. There will be unforeseen twists and bumps in the road toward success. You’ll want to be able to deviate from the plan when needed while maintaining the core elements that spurned the birth of your business in the first place.

#4. Address the Financials

Okay, here is the boring stuff (unless you’re us, of course). Along with your business plan, you will need a financial plan. There are many things to consider, including start-up costs, tax plans, and measurements for profits and losses. A trusted accountant should play a big role in this step.

#5. Take Ample Time for Hiring

As an owner of a small business, it’s easy to want to have a hand in everything. After all, this thing was built from your blood, sweat, and tears (and savings account). However, feeling the need to micromanage everything will burn you out very quickly.

Consider these two tactics:

• Hire excellent individuals. Hiring the best doesn’t necessarily mean the most experienced (and most expensive). Instead, look for candidates who seem genuinely interested in your business and have proven themselves to need little oversight in producing excellent work. Candidates like these usually come with stellar references and great examples of past performance. Keep in mind, these examples may have stellar academics, community engagement or club participation—anything that will show they’ve been able to complete big tasks with little coercion.
• Outsource to industry professionals when needed. When you inevitably reach a point within your business that cannot be done by you or your employees, hire outside professionals. This may mean a specialist in your particular industry or a marketing firm. These professionals allow you to avoid reinventing the wheel, so you can focus on profitability and expansion.

Some of these small business tips we knew immediately, and some we have learned over time. Hopefully, they will all prove useful to you in the growth of your organization. If you run a local or a small business and need a bookkeeper or a professional tax preparation specialist, contact Direct Tax Relief. We’ve been in business for over ten years and have helped small business owners become more successful with the best state and federal tax strategies for their situation.

The post 5 Overlooked Small Business Tips (Yes, Taxes Are Included) appeared first on Direct Tax Relief.

What are Payroll Taxes?

Payroll taxes are funds paid by employers that go toward services like Medicare and Social Security. At present, the 2016 Social Security tax is 6.2% of the first $118,500 earned by an employee, and the Medicare tax is 1.45% of an employee’s entire annual salary. These taxes are calculated by the employer and, ideally, paid to the IRS each pay period or every month.

When Do Tax Problems Usually Arise?

Basically, problems occur when employers fail to pay or underpay their portion of payroll taxes.

There are several ways this type of tax debt happens. For some business owners, improper accounting can lead to under or missed payments. For others, it may relate more to an inability to pay. For instance, small businesses may experience a slump in sales or they could expand too quickly, thinning their profit margin. Both cases could result in unpaid taxes and the need for payroll tax debt relief.

How Can Business Owners Obtain Payroll Tax Debt Relief?

Employers facing payroll tax debt have a few options available to them.

• Installment Agreement (this allows employers to make payments on tax debt rather than paying in one lump sum)
• Offer in Compromise (this lets employers settle tax debt for a lower amount than owed)
• Currently Not Collectible (this option is available to small businesses and owners who have no way of making monthly payments)

How can I get started on my payroll tax debt relief?

Because of the complexities of payroll taxes and the IRS, it is recommended that employers in need seek out qualified help for this type of debt relief. Direct Tax Relief specializes in payroll tax debt relief for small businesses and the self-employed. To learn more about our A+ rating with the Better Business Bureau or our excellent reviews, give us a call at 1-877-505-4829. IRS Payment Schedule: https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-due-dates

The post Seeking Payroll Tax Debt Relief? You Have Options appeared first on Direct Tax Relief.

In a world of get-rich-quick schemes and short-lived businesses with the sole purpose of large profits, it is incredibly important to do your research when seeking out any debt relief agency. In fact, it was for this exact reason the Better Business Bureau (BBB) came to exist.

The Better Business Bureau

The BBB is a nonprofit group with more than a century of experience in the review of businesses throughout the U.S. To state it plainly, this consumer advocacy group works to inform the public on trustworthy (and not-so-trustworthy) businesses.

The BBB reports on things like consumer complaints and customer reviews. They also investigate internal business practices and marketing initiatives to ensure honesty and transparency.

Meaning of an A+ Rating

Ratings on the BBB are similar to grades, with A+ representing the most trustworthy level of business standards.

There are eight major components all businesses are graded on (as taken from the BBB website):

1. Build Trust – A business must show a positive track record in the marketplace.
2. Advertise Honestly – No bait-and-switch advertising or false promises.
3. Tell the Truth – This includes proper disclosures on all products and services.
4. Be Transparent – Openly identify things like ownership, policies, guarantees and procedures.
5. Honor Promises – Honor any written or verbal agreements.
6. Be Responsive – Make a good faith effort to resolve any disputes or complaints.
7. Safeguard Privacy – Properly handle all data and respect the privacy wishes of customers.
8. Embody Integrity – Maintain high standards of honesty, while keeping customer needs at the forefront

If an organization meets a high level of execution in all of these areas, they will be granted the coveted A+ rating.

Direct Tax Relief’s Standing with the BBB

For the past eight years, DTR has maintained an exceptional, A+ rating with the BBB. This is due in part to the number of years we’ve been in business, our low number of consumer complaints (and our handling of such), and the overall integrity with which we run our company.

If it sounds like we’re bragging, you’re right! Honestly, we are proud to be an IRS tax debt relief company that is working for our clients. And the best part is, our customers echo our A+ rating!

The post The Meaning of a BBB A+ Rating for a Tax Debt Relief Agency appeared first on Direct Tax Relief.

Don’t let this be you! Burying your head in the sand like an ostrich will not make the problem go away. The most important thing you can do when responding to an audit notice is to know your rights, understand your options and seek professional help if needed.

What is a CP2000 Notice of Underreported Income?

Using the plainest language, a CP2000 Notice of Underreported Income means that the IRS has found a discrepancy between the information reported on your tax return and the information they received from other sources. The discrepancy could include a difference in income, deductions, credits, or payments.

The notice will also contain a proposed assessment of charges and a number to contact to challenge the assessment if you don’t agree.

How will they find me with so many taxpayers filing returns?

Some IRS audits are random. Last year alone, the IRS assessed over six billion dollars in additional taxes from underreporting. IRS computer systems take all of the W-2, 1099, and other filing information reported by employers, banks, etc., and compare it with filed tax returns.

What should I do?

Responding to this notice, and sometimes simply knowing what you can use to substantiate your claims, can be a daunting and stressful task. Luckily, Direct Tax Relief can help with IRS tax resolution services. With over 10 years of industry experience and a team of seasoned licensed professionals and staff, DTR handles an array of tax-related services, including IRS audit representation, the establishment of reasonable installment arrangements, Offers in Compromise for those who qualify, penalty abatement, and preparation of delinquent and current tax returns.

Need help with the IRS? Give us a call at 1-877-505-4829.

The post I Filed My Tax Return. What Are the Chances of an IRS Audit? appeared first on Direct Tax Relief.