Give yourself a raise / How to find extra money

In today’s tough economic times, many people are trying to find ways to cut back. Some experts say that there are ways to bring more money home each week as well. The biggest opportunity most have is their federal withholding. According to the IRS’s figures for 2007, the average refund last year was $2,800.00. What this means is too many people are over withholding to their own detriment. How would an extra $100.00 dollars on each bi-weekly check weekly help you? You can simply take home more of your money each week rather than waiting for an April refund. We suggest you review your W-4 and consult a tax professional. Far too many people are overpaying each and every week for federal withholding.

In Response to Questions on 1099-c

We would like to address several questions from clients regarding the receipt of Form 1099-c related to income from the discharge of debt. When you complete a settlement and the amount discharged or written-off is greater than $600.00, your creditor may issue you a Form 1099-C and send a copy to the IRS. You are required to report the amount of canceled debt on your tax return. Reporting the amount on your return does not always mean you must additional tax.

The good news is that MOST of our clients qualify for the insolvency exemption and pay no additional tax. What is insolvency you may ask? You obviously would want to consult a tax professional about your specific situation as we cannot give tax advice. However, the general rule is you are insolvent if all of your liabilities (i.e. amounts owed on credit card debt, mortgages, car loans and any other debt) exceed your assets (home equity, bank accounts, CD’s, investments and other assets). The assets included depend upon your state’s law regarding asset exemptions for bankruptcy purposes.

Most of our clients are insolvent and simply file a Form 982 with their tax return declaring their insolvency. You can find this form at www.IRS.gov under “forms and publications”. Since the form can be confusing, you may also want to read IRS Publication 908 available at www.irs.gov and seek professional advice.