Fleming Financial Solutions Inc.

Tag: Debt Resolution

  • You Owe the IRS…Now What?

    You Owe the IRS!

    Now what do you Do?

    Let’s Talk About Your Options!

    George and Shirley came to see me to complete their tax return. They had been referred to me by another client of mine.

    George and Shirley had been blessed to have great and stable jobs. Even better, Shirley won a contract to provide support services to a government contractor. As they had never run a small business, they were referred to me to help them. Unfortunately they waited until 2015 to contact me as opposed to 2014 immediately after she won the contract.

    The good news was winning the contract, the bad news was they owed more taxes than they expected. I explained through tax planning we could have avoided the situation if they had contacted me prior to year end last year. With that not happening, there were several options open to them.

    Their options were:

    1. Pay the balance due in fall
    2. Get a loan to pay the balance
    3. Borrow from retirement accounts
    4. Offer in Compromise
    5. Currently Not Collectible
    6. Bankruptcy
    7. Installment Agreement
    • Paying the loan in full or borrowing from a lender or from their retirement were options they either couldn’t do or were unwilling to do.
    • An Offer in Compromise allows you to offer the IRS a lower amount than is currently owed. Because of their income and assets, George and Shirley do not qualify for the Offer in Compromise.
    • Currently Not Collectible allows you to delay collection action if you can prove that you don’t have the income or assets to pay the debt. George and Shirley couldn’t quality because of their income and assets.
    • Bankruptcy was also an option but the tax debt was too new to be considered and they did not want to affect their credit.
    • The last options available were an Installment Agreement (IA). With an IA you agree to pay the IRS a set amount monthly until the debt is paid. There are three options with installment agreement; each depending on the amount due.

    If you owe the IRS less than $10,000 you qualify for the Guaranteed IA. Your minimum acceptable payment is $25 a month debt is paid. Certain qualifications must be met to qualify, these include but are not limited to owing only income taxes and no other types of taxes; not able to pay taxes immediately out of savings or other means, have not had an IA in the last 5 years and able to pay the tax fully within 3 years (36 months).

    If you owe more than $10,000 but less than $25,000 you may qualify for the Streamlined IA. Like the Guaranteed IA, you are not required to fill out a personal financial statement and can setup a payment plan even if you have the means to pay the tax liability in full. Additional qualifications include filing all returns on time, paid in full during the payment period.   Also, the tax liability must be paid within 5 years (60 months) or before the Collection Statute Expiration Date (CSED) which is a ten year period from the tax assessment date.

    If you owe more than $25,000 you’ll work with a revenue officer who’ll require you to complete and submit personal financial statement with supporting documentation. A decision will be made based on your numbers as to how much you can pay. The IRS will compare your monthly income and your monthly allowable expenses and the difference is the amount the IRS will expect you to pay.   You’ll pay this amount until the debt is paid in full or until you reach the CSED.   The IRS may ask you to authorize an extension of the CSED in order to qualify for this payment plan.

    George and Shirley owed slightly more than $25.000 so I suggested they pay an amount that brought them below $25,000 so they could qualify for the Streamlined IA. As such they were able to negotiable a monthly payment that they could live with!

    Additionally I immediately began reviewing their personal finances and business income for changes we could make now so they wouldn’t owe in the future.   This was ultimately a good outcome for them. What about you?

    If you find yourself owing the IRS and want an open and honest discussion about your options, schedule an appointment at THIS LINK and come to see me. Don’t put it off…it will only get worse.

    Let’s beat the IRS together….Legally.

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  • Need to Save? 22 Ideas to Help You!

    Need to Save Money?  Here How!

    According to the U.S. Department of Commerce, Bureau of Economic Analysis, as of December 1, 2012, the Personal Savings Rate in the United States was 6.5%.    This is based on savings as a percentage of Disposable Personal Income or DPI.

    DPI is defined as the total amount of money available for an individual or population to spend or save after taxes have been paid.

    As we struggle with the economy and the sequestration furloughs,  and look for ways to increase our savings or just maintain what we have, here are a few ideas for you to put into place.

    1. Each night when you come home, empty your pockets and put any change into a jar to save.  You’ll be surprised how quickly it can add up.
    2. Quit smoking and save on average about $6 per pack.  If you smoke 2 packs a week, that’s $624 up in smoke.
    3. Put that lottery ticket money you spend each day into a savings account instead of funding the state.  They tax you enough as it is.
    4. Take your lunch to work.  $10 a day is $50 a week or $2600 a year you could be saving.
    5. Consider a second job or part-time business opportunity.  Use it exclusively for savings goal or paying off debt.
    6. Transfer balances from high interest rate credit cards to lower rate cards.
    7. Instead of paying extra to pay down a lower interest mortgage, instead use the additional to pay 12% to 24% credit card balances.
    8. Save for your purchases instead of using credit cards
    9. Tithing is a great way of budgeting – it forces you to live on the 90%.
    10. Pay Yourself 2nd.   Start off saving at least 5% of your gross income and build from there.
    11. Current practice calls for creating an emergency savings fund equal to 3 to 6 months of your living expenses.
    12. Consider a whole life insurance policy as an alternate savings vehicle.
    13. Comparison shop for your credit cards, home owners insurance, life, auto insurance and home telephone and cellphone services.
    14. Take advantage of payroll deduction plans for retirement and savings accounts.  Payroll deduction is a painless way to save.
    15. Begin putting together a cash flow plan for your family (budget)
    16. Make a weekly or bi-weekly commitment to review the family finances with your spouse.
    17. If you regularly get a tax refund, it means the IRS is getting an interest free loan from you.
    18. Save Your Tax Refund or use it to help pay off any outstanding debts.
    19. Clip those newspaper and sales paper coupons and use them before they expire.  Buy only if you need to not because something’s on sale.
    20. Use Groupon, Living Social and other social media sites as savings resources, too.
    21. Work to improve your credit scores – the higher your scores, the lower your loan interest rates.
    22. Save your next pay increase.

    Lastly, be willing to make the hard financial choices and stay the course.  Being debt free and under financial control will relieve much stress and tension from you and your family’s lives.

    Need a good “cashflow tool”?  Click here and take a look at the video.  It’ll be worth your time and effort.

    If I can help you with these and other financial issues, including tax planning and preparation, business consulting or incorporation services, please feel free to give me a call or visit my website at www.flemingfinancialsolutions.com and schedule an appointment.

  • Getting Married? Financial Questions to Ask Before You “Tie the Knot”!

    Whether you are married, engaged or thinking about, here are some “tough love” questions to ask before and after!
     

    1. How much income do you make?
    2. How much do you have in savings?
    3. How much have you saved for retirement?
    4. How much debt do you have?
    5. Do you have a plan to pay off your debt?
    6. My debts and your debts – will we pay them all off together or will we be responsible for our individual debts as well as what ever we create together?
    7. Will we have combined checking and savings accounts or separate accounts?
    8. What are your credit scores?
    9. Do you have life insurance, health insurance or disability insurance?
    10. When will the beneficiary be changed to the new spouse?
    11. Do you want children?
    12. If so, daycare or 1 parent will stay at home?
    13. Will we homeschool, public school or private school?
    14. Will we save for their college and/or let them pursue grants, scholarships or loans?
    15. Do you owe child support and if so, how much and for how much longer?
    16. Are all your tax returns filed?
    17. Do you owe Federal and/or State “back” taxes? If so, how much on each?
    18. If you owe, are you paying on them now?

    I’m sure that the answers you’ll get will generate more “lively” discussions.

    Feel free to responsibly comment! To Your Financial Health!

  • Get Debt Free!

    $1 Trillion
    Via: Credit Score

    How’d you like to be debt free in 1/2 to 1/3 the time without spending any more money than you currently spend? Just complete the form below and you’ll receive an email with more information.

    To Your Financial Health!