Highland Tax Q&A / The 3 Most Common Questions

Share on facebook
Share on google
Share on twitter
Share on linkedin

This week I decided to put together a few common questions my clients and potential clients frequently have. When dealing with an outstanding tax liability there are various questions regarding IRS the correspondence, what information needs and doesn’t need to be turned into the IRS, as well as if a non-liable spouse needs to have his/her information listed on the financial form.  Further, questions pop up about IRS Penalties, Interest, and where monies are applied when payments are made. Below are 3 questions and answers to the most frequent questions I have had in the last week:

Q. Does my wife have to be listed on financial form we turn into the IRS? I am curious because I (the husband) am responsible for the tax liability.

A. Unfortunately yes your spouse must be listed on the financial form.  The reason behind the answer is fairly simple. In order to have a complete financial form along with the most accurate picture of what your finances look like we must have your wife’s information listed on the form.  What I  most frequently do is list the husband and wife’s income and then all expenses. Depending on the percentage of income each spouse brings to the table will depend on the amount of expenses we will allow the responsible party. Therefore, I obtain an accurate depiction of what the household is doing versus what the responsible party is contributing and spending on a percentage basis.  Now I know what you are already thinking, is the non-liable spouse ever responsible for the tax accrued, and the answer is no.

Q. Do I need to give the IRS information about my bank accounts and assets?

A. This is a yes/no answer.  If you owe the IRS more than $10,000 in 941 tax liability you can fully expect to have to provide information about your business.  If the liability is more than $25,000 in 1120 income tax debt, the same thing applies.  However, if you owe less than $50,000 in personal income tax debt or trust debt you may not have to provide information about your personal finances.

Q. When I make a payment, where do my payments get applied? Am I able to designate payments?

A. If you or your business are making payments on an installment agreement you can expect your payments to be applied back to the oldest module first, to tax, penalties, and interest.  If you are designating payments, you may make payments to be applied toward tax only, which will save you a significant amount of interest and penalties in the long run.

Of course if you have any questions above and beyond what was discussed here feel free to call us at 720-398-6088!