Every April people include the weirdest expenses as tax deductions, hoping to convince IRS agents and tax court officials that they were legitimate expenses that should help lower their tax burden. Sometimes they’re denied by tax courts, but other times they’re given the nod. Here are a few that have received a blessing from U.S. tax officials.

Swimming pool: After one man developed emphysema and his doctor told him to exercise, he built a swimming pool and had it deducted from his tax burden. Because it was used for health purposes, he got the expense, but trying to deduct a swimming pool that’s used recreationally won’t fly in front of a tax court.

Kids’ clarinet lessons: If your son or daughter has an overbite, Uncle Sam will allow you to write off their clarinet lessons. Orthodontists argued successfully that the lessons should be a legitimate medical expense as playing the clarinet helps with an overbite.

Back massages: If you’re required to see a chiropractor due to a medical condition, then you can write off the costs for massages and other services received.

Breast enhancement: A tax court allowed an exotic dancer to increase her breasts to a size 56-FF, as they were deemed a stage prop essential to her act.

Kicking the habit: If you’re a smoker looking to quit, the cost you pay for an anti-smoking program can be deducted. But over the counter aides like nicotine gum or patches don’t count.

Pet food: If you own a business and rely on a pet to protect your property, the cost of pet food and other supplies may be deductible. Cats are great for repelling and killing rats, and a burley canine can serve as a great guard dog protecting automobiles or other items.

Body oil: A professional bodybuilder had his costs for body oil approved as a deduction, claiming they were a business expense necessary for his profession (they highlight muscles).

Most people have no idea these deductions and others like them can be used on April 15 and don’t even think about hiring a tax attorney to help lower their tax burden. What you probably don’t know is that a tax attorney can also help you with wage garnishments and bank levies to solve your tax debt problem with the IRS, which is one tip worth looking into.

WASHINGTON — A tax cut that began last month gave consumers the biggest jump in their incomes in nearly two years. But Americans boosted their spending only slightly, a sign that many people are being cautious with their money even as the economy improves.

Consumers increased spending 0.2% in January, the smallest gain since June, the Commerce Department reported Monday. Personal incomes jumped 1%, reflecting the 2 percentage point reduction from the Social Security tax cut.

The small spending gain pushed total spending last month to an annual rate of $10.59 trillion, up 7.4% from the recession low hit in December 2008. Some economists said that poor weather may have played a role in slowing spending growth last month. They are counting on spending to increase throughout the year, which would help the economy grow.

Source – USA Today

The economy is recovering, and signs of stabilization are finally starting to show. The government’s push to get income flowing again is slowly making it’s way to main street, and as Americans continue this upward trend, it’s time to take stock of our own financial recoveries. Making a firm resolution to resolve your tax debt is a proactive strategy to help both decrease the needless amount spent on accumulating penalties and interest, as well as increasing your own peace of mind.

IRS wage garnishments don’t just happen to anyone, they happen when you’ve ignored your tax debt for too long and the IRS has no choice but to enforce collections. You may have had many personal or emotional reasons for not paying your tax debt, and considering the state of the economy, that is understandable. However, the IRS and state taxing authorities have little sympathy for unpaid tax debt, and it is their job to collect as much as they can as quickly as possible. One of the ways they force taxpayers to do this is to issue a wage garnishment or a bank levy. The process is straightforward. The IRS will send a delinquent taxpayer either a 60, 30, or ten day notice demanding that the tax debt be paid, and if nothing is done, a wage garnishment or bank levy will be issued, attaching up to 75% of the taxpayer’s income and up to 100% of all assets in the bank.

As much as a wage garnishment hurts, it is preventable.

Remember, the IRS has sent numerous requests for the tax debt to be paid. Only when they are ignored is the wage garnishment or bank levy enforced. The IRS wants to push taxpayers into willful compliance, wherein their income is dramatically reduced to make the taxpayer agree to repayment terms so that the garnishment or levy is released. Often times, however, those repayment terms are so severe that the taxpayer cannot continue paying the monthly installment plan, and months later defaults on the agreement and the cycle begins again. The IRS sends notices that if the payment plan isn’t met, they will garnish. For most taxpayers, this vicious cycle goes on and on for years, and the tax debt becomes a troublesome part of their everyday lives.

Taking Steps

There are some very important steps to take to make sure you don’t get caught up in this nasty game of IRS roulette. Step number one: avoid having a tax debt altogether. This means filing your tax return on time each year, paying close attention to the deductions you’re taking so as not to alarm the IRS with frivolous expenses, and to pay whatever small assessments the IRS sends immediately. Don’t just put the notices in a drawer somewhere where they can collect dust and penalties, put them on top of your pile and pay them. Step number two: if you do accrue a tax liability, respond to the very first notice the IRS sends you. This is crucial. The more notices you make the IRS send, the deeper and deeper you get into their system, wherein your name and taxpayer ID# are flagged and your account is scrutinized. If you cannot afford to pay the entire amount the IRS is claiming you owe, which for most is the case, you will need to submit your financials for the IRS to determine how much they think you can pay. Most of the time, their number is much higher than your number, and a compromise needs to be made. But how do you negotiate when you don’t know what you’re entitled to?

Step number three!

Hire a tax attorney and tax relief firm like ours to intercede on your behalf and make sure whatever you owe is structured for the most favorable repayment option and avoids any further collection action such as a wage garnishment or bank levy. We can also Settle Tax Debt, File Tax Returns, Lift IRS Liens, draft and Offer In Compromise or Penalty Abatement, negotiate Payment Plans, settle 941 Business Payroll issues, appear for your Audit Defense, and negotiate with Revenue Officers.

The IRS has one goal in mind, and that is to collect the taxes you owe in full, through whatever means necessary. If you owe back taxes to the IRS or state, and have been ignoring your debt, not only will penalties and interest increase the amount you owe two, three, even four times the original balance, but the IRS and state collection agencies can eventually collect what’s owed to them through the process of forced collections, wherein they can attach wages, bank accounts, property, even equipment to satisfy the debt. Forced collections are one of the most debilitating forms of debt as they compromise either an individual or businesses ability to both earn and sustain income. If you owe more than $10,000 to either the IRS or state, our expert staff of tax attorneys, CPA’s, enrolled agents, and tax professionals can step in and help stop forced collections quickly.

Our Tax Attorneys and Professionals Will Protect You!

Working with Tax Inc. allows you to be fairly represented by tax attorneys and tax professionals that have extensive knowledge of current tax laws and can protect your legal rights for tax relief. Whether it’s to structure a favorable repayment option, stop wage or bank levies, remove unfair penalties, or even settle your tax debt, we are confident our service will exceed your expectations and bring you a fresh start.

Embattled supermodel Naomi Campbell could use one of those blood diamonds to pay off a super-sized IRS tax debt. The feds claim the cell-phone chucking billionaire-dating diva owes more than $63,000 in delinquent federal taxes, according to new public records. The lien was filed days before the 40-year-old Campbell testified at the war crimes trial of Liberian ex-president Charles Taylor. She testified that she received “dirty-looking stones” after a dinner she attended with Taylor in September 1997 that was hosted by Nelson Mandela. Campbell said she was unsure if the stones were uncut diamonds — often called “blood diamonds” because the gems are used to finance conflicts.

What’s owed: The IRS filed a $63,487 tax lien against her July 28 with the New York City Register’s office. According to the lien, she owes taxes assessed in 2009. The address on the tax lien is the landmark Carnegie Hall Tower skyscraper in New York City. Campbell sold her $4.5 million Park Avenue duplex a few years ago and also owns this Jamaican getaway.

Just like in the movies, the IRS is a formidable opponent.

For most, even celebrities like Naomi Campbell, having a tax debt does not have a Hollywood fairy tale ending. Taxpayers wrongly attempt to try and handle the IRS themselves, and the ending can be one of the worst financial choices of their lives. Imagine going into a courtroom without an attorney representing your rights? The results would be disastrous. The same consideration must be paid to your tax debt. When the IRS has failed repeatedly to collect back taxes through letters, phone calls and threats, they will begin the process of forced collections. This process can be complicated, stressful and incredibly costly. The amount of time and energy spent for most taxpayers going back and forth acquiescing to the IRS’s demands can be daunting, and most are ill prepared to successfully bring resolution.

Levies, wage garnishments, liens and asset seizures is preventable.

The most important and overlooked aspect of tax relief is to prevent tax debt from accruing altogether. The quicker you make your tax debt a priority, the quicker and easier it is to bring resolution. If left alone, a tax debt will not only grow through applied penalties and interest, sometimes doubling, tripling, even quadrupling the original amount owed, but will eventually be collected, either on your terms, or theirs. That’s one ending most want to avoid.

That number is actually down from 9 or 10 million six years ago. About 64% of non-filers are self-employed people who deal primarily in cash. They have been out of the system for an average of 4 years, are in their peak earning years, and live affluently. As a group, non-filers account for almost $14 billion a year in lost revenue to the IRS and cost each of the rest of us over $600 extra a year in taxes! The good news for those of us who fall into this category is that an average of 45% of all people using the Non-filer Re-entry Program designed by the IRS actually received a refund the first year filing a return!

So what do you do if you are a non-filer?

1. Call our offices immediately at 1-800-409-8738 so that we can accurately determine the specific years and penalties assessed for the un-filed years.

2. We will contact the IRS office to address your past non-filing tax status and your desire to be compliant.

3. We will explain that information for the past however many years is missing or lost due to illness, divorce, or natural disaster, etc. (if applicable). The assigned revenue officer will more than likely co-operate by providing us with income data entered under the matching program from the IRS computer listed under your Social Security number.

4. We will prepare your tax returns, enlisting your support to fill in the information such as estimates of contributions, medical expenses, and other deductions. Due to the economic recession, revenue officers have been accepting reasonable estimates in cases like these.

This entire process could take as little as a few weeks or as much as a few months, if items can’t be found immediately. The IRS will add up to 25% in penalties plus interest to the balance due. That is to be expected. However, perhaps you will be one of the 25% of non-filers who are due a refund! No one will deny that so far, the majority of the IRS’s attempts to pursue the underground economy has been successful. But if you are unjustly attacked, we will assist you to be in the strongest position to hold on to what you’re entitled to.

To say pets are popular isn’t doing them justice. According to the Humane Society of the United States, 39 percent of homes have a dog, while cats are at a slightly less popular 33 percent. So now that it’s National Pet Adoption Month, you might want to know about these tax deductions to help Fido help you out in April.

If you’re just starting your career and need to move to another town with your beloved pet, however much it costs to move your cat, dog, snake or bird is tax-deductible. Pets are considered your personal effects according to the IRS, so as long as they don’t get motion sickness in the car ride, feel free to take them along for the ride – and write it off in April.

Guide dogs and other service animals provide invaluable assistance to those who are blind, deaf or have other disabilities, so it makes sense to be able to write off the expenses of buying, training and maintaining them. They’re considered medical expenses by the IRS and go a long way for those in physically unfortunate situations.

If you run a business and oversee some valuable inventory, then a guard dog is something that can help. And if your business is riddled with rats, then a feisty feline can help, too. What also helps are the associated tax deductions. While the pet adoption fees can’t be written off, the costs for food and other supplies for a cat or dog to help your business may be. Consult with a tax attorney to make sure.

As you’ve probably seen on TV, there’s a whole industry devoted to the showcasing of animals, giving pet owners opportunities to trot their pets in front of professional judges who evaluate a pet’s appearance as well as physical ability. Expenses for transportation to shows, veterinary bills and show equipment can be deductible, but make sure to dot your I’s. Keep good documentation, and ensure they’re business-related so you can receive the blessing of a tax court.

While Fido or Rex can be your best friend year-round, they can also be your best friend come tax time. But if you’re facing action by the IRS due to back taxes or other tax-related matters, a knowledgeable tax attorney can help you with the wage garnishments and bank levies that may be coming your way. That’s a best friend for your financial

President Obama and Congress just passed major legislation overhauling our country’s health care system, and if you’re a small business owner there will be changes to the tax code for you to take advantage of over the coming months.

Chances are that if you run a small business, you know firsthand how much the cost of healthcare can impact your bottom line. Healthcare costs have risen over recent years, and it’s especially true for small businesses that don’t have the buying power of some of the country’s larger corporations. If you run or own a small business, here are some changes to the tax code that you may find useful:

• Small Business Health Care Tax Credit: This credit covers up to 35 percent of the total premium costs for a small business to cover its workers’ health care plans. It is effective immediately, and the credit is set to increase to 50 percent in 2014.
• Starting in 2014, small businesses and individuals will be able to purchase health care plans from a state-run health care exchange, offering plans with competitive rates from private health care providers.
• If you employ fewer than 50 people, you’re exempt from the 2014 requirement that you provide health care for your employees or face a fine of $2,000 per worker.

In today’s economy, healthcare is a major concern for employees and can impact your business’ ability to recruit top-notch talent. If you’re able to take advantage of these changes to the tax code due to health care reform law, you’ll be one step ahead of your competition.

Being debt free is another way for your business to stay competitive, especially when it comes to tax debt that can add up over months or years with interest and penalties. Our firm has helped thousands stay ahead of the IRS’s whip and resolve millions in tax debt, and can help you and your business thrive.

Chances are you’ve probably heard about Nicolas Cage’s problems with the IRS – and there are a lot of them. The government placed a tax lien on the Oscar-winning actor’s real estate holdings, including a whopping $6.2 million lien for 2008, and the actor stated last week that he owes the IRS almost a total of almost $14 million.

Unlike Wesley Snipes (who for several years just didn’t file any taxes at all) Nick Cage is in a Face/off with the IRS for under reporting his income for a number of years. He pledged to pay back all of the $14 million, but if he doesn’t, he’ll probably be Gone in 60 Seconds on the next Con-air flight to federal prison. That’s an Adaptation he won’t be looking forward to.

Giving false information to the IRS on April 15 isn’t like telling a fib to one of your co-workers at the water cooler. You may gain a short-term convenience, but chances are the IRS will find out and you’ll be in for a long and expensive problem down the road. And using questionable expenses to lower your tax burden doesn’t help either. Nicolas Cage is yet another celebrity we can use as an example of what not to do.

Believe it or not, this isn’t the actor’s first go around with the IRS. After writing off $3.3 million in personal expenses such as limousines, meals, gifts, travel and a Gulfstream jet from 2002 to 2004, Cage faced legal action by the IRS looking to recoup $1.8 million of his National Treasure in back taxes, penalties and interest. He claimed they were legitimate business and security expenses, but the IRS thought otherwise.

Like many of the people we’ve been able to help, Nicolas Cage was able to settle this portion of back taxes for a fraction of what he owed: out of $1.8 million, he ended up paying a modest $666,000. Although we didn’t represent Cage, we like those results. And while most of our clients might not be celebrities, we treat them like they are.

If you’ve listened to the radio, read the newspaper or watched television over the past couple weeks, you probably know that Michael Jackson’s life has come to a tragic end. After his death we’re learning more and more about his life and successful career as a singer and businessman.

And we all know just how successful he was. For decades he was the King of Pop, and the size of his estate proves it. He owned the Beatles’ catalog, the 2,700-acre Neverland Ranch and sold out stadium shows the world over. So it’s no surprise that the IRS is now looking to take a bite out of his estate in upwards of $80 million in taxes.

Dividing up the King of Pop’s estate is going to be long and complicated. It’s hard to determine just how valuable his estate is, how much his family’s inheritance will be and how much debt he had. The one thing we can be sure of is that the IRS will be first in line to get a piece of the estate tax pie.

The current value of his estate isn’t exactly known, but news reports indicated that he had $567 million in assets in March 2007 and $331 million in debt. That leaves a net worth of $236 million and an IRS take upwards of $83 million after exemptions and a 45 percent estate tax.

If he owed more than his estate is worth, a court would divide his assets among his creditors, like in a bankruptcy case. We’ll see how it all pans out as we’ll likely hear more about his estate over the coming months and years.

While your estate may not be as large as Michael Jackson’s, your back taxes only make it less valuable for your loved ones who inherit it. It’s a better idea to settle your tax debt today instead of having your family pay for it tomorrow.

Hoping to inject a dose of energy into our sluggish economy, Congress just passed a massive stimulus measure in hopes of getting it back on track.

It’s filled with numerous spending measures aimed at building roads, bridges and other forms of infrastructure. But look closer and you’ll notice that Washington is trying to nudge American homes toward energy efficiency by including numerous tax credits aimed at making our homes greener.

Are you thinking about remodeling your home or renovating your rundown garage or guest house? If you are, you have a wealth of tax credits to take advantage of – all with Uncle Sam’s stamp of approval.

Adding insulation or items like a set of energy efficient windows, heating or air conditioning systems can get you a tax credit of up to 30 percent of the total cost. You can also qualify for a tax credit of the same rate if you make an improvement to your home with alternative energy equipment, such as a solar-powered water heater or a wind turbine.

But Uncle Sam’s new environmental tax credits aren’t limited to the home – they’re also aimed for the road. Purchase a qualified plug-in electric vehicle after February 17 and you can qualify for a tax credit up to $2,500. If you purchase a plug-in electric conversion kit for your car, you can get your hands on a tax credit of up to $4,000.

Saving energy is always a good thing. It’s good for the environment, and it’s good for your wallet. Another good thing is settling your back tax debt with the IRS. That’s a stimulus measure we can help you with that doesn’t require an act of Congress.

Every year we hear stories of IRS agents going after a small number of Americans who owe back taxes. They’ll typically add interest to what you already owe and in extreme cases they’ll garnish your wages to ensure they get their money. Just look at Timothy Geithner, President-elect Obama’s choice to head the U.S. Treasury Department. You probably had no idea that he’s been audited by the IRS and ended up owing Uncle Sam more than $40,000 in back taxes. Luckily for him, the IRS waived the penalties but kept the interest. Even the guy who’s chosen to oversee the country’s finances and the Internal Revenue Service can fall victim to the same tax mistakes that many Americans make every year!

Geithner, now president of the Federal Reserve Bank of New York, allegedly didn’t pay taxes while working for the International Monetary Fund between 2001 and 2004. He says it was all a mistake, and his circumstances are similar to those of many Americans before finding out they’re in the same position: as an American citizen working for the IMF, he was considered self-employed and was required to pay his own Social Security and Medicare taxes as the employer and as an employee. He also said he got bad advice from an accountant that led to further problems.

While you probably aren’t in line to become the next Treasury Secretary, give us a call if you find yourself in the same position as Tim Geithner. We help people like him all the time.