Tag: debt

Do Your Own Taxes To Affect Tremendous Personal Economic Recovery

Anatomy of a Debt Reduction Deal:  Five Money Moves to Make Right Now

What’s next? If you have found yourself deeply confused about how a recent debt reduction deal will likely affect your wallet, you have plenty of company.

The small writing displayed upon the contract form often induces more questions than answers. Nearly all discretionary expenditures of the US Government are slated for drastic reduction during the next decade or so. Defense costs are an especially burdensome budgetary item that is overdue to be slashed dramatically. The legislative proposal currently pending before Congress would free up an estimated total of $917,000,000,000 USD in fiscal resources from federal coffers during the first ten years after its enactment. Approximately $350,000,000,000 of that figure falls within defense and national security budgetary categories.

A fact of perhaps even more import is the recent proposal drafted by a dozen-member Congressional committee that would entail identifying areas in which to affect an additional $1.5 trillion in budget cuts. That faction’s fiscal agenda is currently an open slate that portends to entail slicing Social Security funding and increased 2011 taxes. If the committee cannot specify a minimum of $1.2 trillion in total budgetary savings or its recommendations fail to garner sufficient Congressional approval, automatic cuts become effective as of December 23, 2011.  This belt-tightening campaign looks to be pervasive and severe. Vital programs like the Armed Forces and Medicare would be affected in a major way, while Medicaid, Social Security, and a few other Federal programs might be spared.

It appears as though all problems have been aptly identified but remain unresolved. This does not mean, however, that individual savings and investment plans should be left by the wayside. Consumers must continue to implement protective measures to shield themselves from the federal government’s impending fiscal fallout. Following are some specific steps to take or immediately preclude right now:

–  Employ defensive investment strategies for all private government contractors’ corporate stocks. American Assoc. of Individual Investors spokesman Charlie Rotblut recently advised stock investors whose holdings depend highly upon federal funding must maintain them most vigilantly. Private defense firms will probably lose revenue due to the trickle down effects of these budget cuts. This phenomenon will have universal impact across the board, however. State contracts will also lose out as recession-ravished state economies deteriorate further from diminished federal fund inflows.

Rotblut further observed that national infrastructure is especially vulnerable, due to it being much more difficult for states to complete the construction of roadways, bridges, and highways.

He went on to advise individual investors to thoroughly peruse 10k annual reports of various corporations to glean their true level of relative governmental project dependency.

  • Do not be too uptight about bonds. Bonds are no longer as risky as they have historically been. This was the recent observation by Mayflower Capital spokesman Don Martin. Of course, conventional wisdom remains valid about long-term bond values being likely to decrease as interest rates take a hike. The debt deal under consideration is likely to delay the day of ultimate reckoning for several reasons, however. As Congress is honoring its foreign obligations, it reduces the probability that ratings will go down, thereby inches T-Bill rates upward. The pending bill’s proposed budgetary cuts will not take effect until at least 2013. Their specific terms, however, hold out what many commentators believe to be the nation’s brightest rays of hope for future fiscal horizons.

Mr. Martin went on to posit that the current US economic posture is stagnant and threatens to slip into recessionary status on a daily basis. Thus, lowered government stimuli due to American leader’s austere attitudes will mean dramatic falls in bond values and other discrete, short-term investments. While this calls for a cautious approach, it is hardly an occasion for endemic panic.

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Does Bankruptcy Erase Tax Debt?

The personal bankruptcy process is a way for those experiencing severe financial difficulties to wipe their debts and start again.  But does bankruptcy erase tax debt?

Some may be surprised by the fact that while filing for bankruptcy does not wipe out federal housing or education loans, it does erase tax debt, providing that certain conditions are met.  As well as having filed an honest, non-fraudulent tax return and not intentionally attempting to evade paying your taxes, there are three other criteria that must be met in order for taxes to be considered eligible for discharge.

•    3 years must have passed from the date the taxes were due to the date of petition filing.
•    2 years must have passed from the date the taxes were filed to the date of petition filing.
•    240 days must have passed from the date the taxes were assessed to the date of petition filing.

If these conditions are met, your IRS, state, and local taxes may be discharged under Chapter 7 of the U.S. Bankruptcy Code.  However, it is important to note that if the federal government has placed a lien against your property due to unpaid taxes, those taxes cannot be discharged.

Chapter 13 operates slightly differently as taxes are considered a priority and are listed at the top of the list of creditors to be repaid as part of your 3-5 year plan.  However, if your situation meets the 3 year and 240 day criteria, the judge may reduce the amount of tax you owe.  In addition, if the value of your assets or property has dropped below that of the lien against them, then the lien will be reduced to reflect that reduction in value.

Does going bankrupt erase tax debts?

Yes.  As long as you meet the criteria and file for personal bankruptcy protection under Chapter 7.

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3 Ways in which you can accelerate debt reduction

If you are under severe debts and do not know what to do, then you should understand that debt reduction should be your primary focus. This is because debt reduction can help you reduce stress and levels and leaves you with more cash that you can save or utilize in investments to make money.

Some of the ways in which you can reduce your debts and also make sure that you save are as follows.

  1. Plan a budget to manage finances: It is most essential for you to formulate a budget that you can use by which you can assess your financial condition. The budget that you formulate should list all your expenses and also your monthly income. It should have categories to tell you how much you spend and where you spend it. This helps you in getting a clear picture of your finances and also makes you aware about where you are spending and how much you are spending. You must also make provisions in your budget so that you can save a certain amount every month. You must subtract the total expenses from the total income and the amount that you get is to be used to pay off your debts. If you feel that this amount is not sufficient, then you must try to reduce your expenses or increase your income. The budget keeps you motivated and helps in debt reduction as well as savings.
  2. Do not spend on what you do not need: It is important for you to know that when you are paying off your debts you are to try and spend as less as possible. This is to be done so that you can save enough to pay off your debts. Every month make a list of the things that you really need and buy only those things. Things that you desire but do not need must be avoided. The best way to refrain yourself form making such purchases is to wait. If you want to buy something that is very expensive wait for a few days to make the purchase. You will gradually realize that the desire to possess it has left you. This will save you a lot of money and you will be able to pay off your debts with ease. After you have finished paying your debts, if you still practice this, you will have enough left for investing and making money.
  3. Do not add up more debt: You should try not to add more debt to your existing debt. This is because when you are already paying off debts then it is best that you do not take on new debts. If you take on new debts, then you will have to pay a certain amount of money towards it. This will lead to a shortfall in the amount that you have to pay off towards your current debts. In order to avoid that and accelerate debt reduction you must not take on further debt. This will also help you save and make more money in future.

These are a few ways in which you can tread the path of debt reduction and opt for a new way life where you have enough to save and enough to invest.

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Why Everyone Should Use IRS Efile

E-filing the fastest way and easiest way to submit a tax return. Everyone is doing it. 99 million people in 2010 transmitted their tax returns electronically to the Internal Revenue Service. These 70% of the taxpayers know everyone should use this fast, easy service.

Starting in 2011 both the people who pay taxes and those who prepare taxes will see an important change. As of January 1, 2011 people who are paid to process 1040s must be qualified to submit these returns by e-file. Volunteers are exempt. Anyone requiring more information can find it at the IRS website.

Taxpayers should try electronic filing. Fewer people mail their tax returns or prepare paper 1040s every year for a good reason.

Electronic filing is safer and protected. Within two days the IRS notifies the taxpayer the documents had been received. If there is an error, the 1040s returned for corrections.

E-filing= Quicker Money & More Ways To Get It

By combining e-filing and direct deposit, taxpayers can get their refund in as little as 10 days. Almost 75% of the returns have refunds. $2900 was the average amount overpaid.

Taxpayers can choose the option they want with e-filed returns. Those who file early can pick a withdrawal date up to April 15. Taxpayers can pay by a mailing a check with a voucher or by credit card.

E-file Gets It Done

There are three ways to e-file. Tax preparers can do it for their clients. Commercial software for preparing tax returns can automatically send it. A free tax preparation and filing service called Free File is available online. Or at the IRS website.

As the number of people preparing taxes on their own computers is growing, there are a number of software programs designed to assist. One of these is Free File which asks simple, clear questions and helps people navigate through complex issues by the answers provided. However the return is prepared, E-file is the way to go.

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Back Taxes and the Move to Settle Them

It is very much normal for people to move into the process to settle tax debt to make their records straight. With a good standing history of paying taxes, you get better chances of higher loan approvals. To settle IRS tax debt, you need to get an installment agreement with the local government unit. This contract is to act as a process of paying monthly returns to the concerned agency to pay the liabilities. Basically, the agreement is defined as an arrangement between the government and the taxpayer over a certain period of time.

The creation of this method to settle tax debt will prevent the agency from going into enforced collection actions. If the concerned taxpayer is unable to construct such an agreement plan between the agency and the taxpayer, the IRS will have the grounds to hold the accounts of the person. In some cases, the persons’ wages will also be levied until the debts are paid in full. As a matter of fact, the records of the taxpayer remain in current and updated histories. When the person is unable to meet it, then most probably, his records and bank accounts will be placed on hold. The installment agreement signifies the intent of the person concerned to pay the obligations. Interests and penalties that have been accrued will still be forced as part of the obligations to be paid.

People who want to settle tax debt can have this option as a method of making their records current. In fact, with the recent conditions of the American economy being in turmoil, the IRS will ensure that you get the best deal possible. In a sense, if you are someone who is more than willing to pay the obligations, then most likely the IRS will be a little lenient on you. The IRS is also offering taxpayers, who miss out on a payment for the installment, an opportunity to make up for it. If you want to be part of the installment program, then you would have to declare the returns that are past due. Defaults on payments will eventually be pardoned but will still be part of the total obligations of the payer.

The Necessity of Debt Consolidation

When you are in serious debt, you cannot avoid getting annoying phone calls and embarrassing confrontations with debtors visiting your home. A number of people prefer to avoid such situations, but they are confused on what to do about it. There are times, when paying off your loan is not really the problem. The real problem is that you do not know how to go about it.

A secured debt consolidation is the answer to individuals who lack the kind of organization needed to properly pay off loans from numerous sources. Proper management of income and payment is needed for people get back to their normal routine.  That is why there are many debt consolidators out there who are offering their services. These entities can aid you in saving your properties and other assets. The main attraction and feature of debt consolidation are the putting together of all your different debts and creating a functional payment scheme to address this consolidated debt.

There are several benefits that you can reap when you decide to the services of debt consolidating firms. You do not have to receive phone calls and demand letters. You will also find a secured way of keeping your remaining assets and property. Another benefit is that the debt consolidators will help you avoid declaring early bankruptcy. Your chosen debt consolidation firm will be dealing with creditors. They will find a way to guide you in reducing your present debt with such creditors.

Initial consultation with a debt consolidation firm involves evaluating your present debt and credit status as well examining your present source of income. The firm will then draft a debt consolidation quote specifically designed to address your unique situation. This quote will reflect the rate and frequency of payment. It will also show an efficient payment system that will eventually pay off all debts in a specific period of time.

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