Tax breaks, real or a myth?

According to IRS attorneys, each year millions of Americans take advantage of numerous deductions, credits and exemptions when filing their taxes. Often, taxpayers are not sure if they may claim a particular deduction or whether claiming a specific tax break might cause an IRS audit. Those who have questions about what deductions they may claim on their yet unfiled returns, are encouraged to speak with a tax attorney or other tax professional to get the straight scoop!

For many Americans, these tax breaks are not available. According to Chris Edwards, who studies tax policy at the Cato Institute (a Washington-based Libertarian think-tank), the American tax system is “a huge convoluted mess.” David Cay Johnston, a professor at Syracuse University Law School, agrees and asserts that the tax system is “a mess that’s completely unfair, and that few Americans understand.”

Of course, America’s biggest tax breaks are no secret to anyone. For example, 34.6 million taxpayers reduced their federal tax obligations by nearly $77 billion dollars by claiming the interest paid on their home mortgages. Another 36 million families reportedly saved in excess of $54 billion dollars claiming the $1,000 per child tax credit. And most of us are well-acquainted with the deductions for state and local income, sales and personal property taxes. 40.7 million Americans supposedly cut their tax bills by $40 billion dollars asserting these tax deductions.

But what if you derived income from Social Security or a pension? Is that income taxable or is it exempt from taxes? Suppose you made a charitable donation which represented more than 25% of your total income, are you likely to get audited? Suppose you disclosed an off-shore bank account prior to the August 2011 deadline to avoid criminal penalties, will you still have to pay a 25% penalty on the largest balance you had in the account between 2003 and 2010? These and other questions can often be confusing and off-putting for the average taxpayer. This confusion can cause taxpayer avoidance, and even get them into more trouble with the IRS. Be advised, sticking your head in the sand won’t make the government go away!

If you owe back taxes, have unfiled returns, are the subject of IRS wage garnishments, IRS levies and/or IRS liens, go get help now. Consult with a competent tax lawyer, or other tax professional, who can help give you the advice needed to fix your tax problems, help you get your unfiled returns completed and filed, and work with you to settle back taxes owing. Ultimately, it’s your responsibility seek out the help you need and get your unfiled tax returns filed and the back taxes you owe paid.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

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