Author: Mark Mountney
Source: articleage.com
At Rose Financial Services, being recognised as a specialist mortgage brokerage and independent financial adviser, we receive enquiries from people from all walks of life. And it is no surprise then that the volume of enquiries sees a repetition of requirements.
The following guide has been produced to answer many of the standard questions that clients ask of Rose FS on a day to basis with regard to raising a mortgage secured on a property in Spain. It is in 3 parts, so make sure you collect them all to provide a broad based understanding of how mortgages work in Spain.
1) Are 'Interest Only' mortgages available?
Yes, and the term for the 'Interest Only' (IO) period ranges from 1 year to a full term of 25 years. However, the schemes offering longer term IO (10 to 25 years) are far more restrictive than those for shorter terms (1 to 5 years) as the Spanish lending market has yet to adjust to the British way of thinking in this respect.
After the initial IO period the mortgage automatically switches to a Repayment or Capital and Interest type for the remainder of the mortgage term. For example, if a mortgage is arranged over say, 20 years with an IO period of 2 years, from Year 3 the mortgage will switch to a Reapyment over the remainder of 18 years. The rate of interest will still be the same i.e. annually fixed, but you will be asked to start repaying the capital as well as the interest.
At this stage, we have various choices open to us and it is a good idea for you to review matters with Rose FS;
i) Allow the mortgage to transfer to a Repayment type and start to repay the capital. However, this is not always good IHT planning (see Question 2) below).
ii) Ask the bank to extend the IO period. There is no guarantee that they will allow this but market conditions then may make them find in your favour.
iii) Consider a remortgage and switch to another lender. The downside to this, of course, will be the costs attached in doing so. It is therefore important to consider your long term requirements when planning the detail of your mortgage
2) Why would I want an 'Interest Only' mortgage as opposed to a Repayment (Capital and Interest) mortgage?
The mental approach to this is different than the normal rationale applied to borrowing in the UK. The benefits are often very different;
I) In Spain there is a 'sleeping giant' of an issue which most home owners are simply unaware of: Inheritance Tax (IHT). Go to Question 12) for a guide to this VERY IMPORTANT issue.
It is so important that any property acquisition in Spain cannot adequately be considered unless this subject is understood.
Ii) Interest rates for mortgages in Spain are low by comparison to the UK and, in most cases, the capital and income employed to either meet interest payments or repayments emanates from a ฃ income or capital base.
That being so, there is a benefit to retain as much capital as possible in ฃ and invest it for a higher return. For example, even cautious investment into a deposit account can generate an interest rate return of 5% as at the date of writing. With an average Euro mortgage rate of say, 3.5% the net return is at least 1.5% per annum. Over a standard term of 25 years, that will gross up to 37.5% of capital employed. If the mortgage is for €150,000 by way of example, that equates to a massive extra income of €56250 or approximately ฃ40,000.
Iii) Interest paid is normally allowable against income received for the purpose of calculating Income Tax. Therefore, the longer an IO period is run, the greater the interest paid and hence, the tax saving. Remember, that there is also an added income via the reduction of capital employed as mentioned above.
Iv) There is a potential exchange rate risk in holding an asset (your Spanish property) in a foreign currency (Euros) against the natural income and capital base (normally ฃ for the majority of our clients).
Therefore, by keeping the liability (your Euro mortgage) as high as possible for as long as possible, there is an offset which can mitigate against negative exchange rate movements.
3) What is the normal interest rate payable for a Spanish Euro mortgage?
Rates are normally set against the European Central Bank annual rate (Euribor) or the Spanish Cajas rate with a margin and re-fixed annually. This helps cash flow projections. It is often common to see a discount offered for the first year.
Hence, the current first year rate will range from sub 3% for low IO terms and Repayment mortgages. For longer IO periods a premium is charged by the lenders, so that the average rate will be circa 3.3% to 3.6%.
4) What documents do I need to show?
ID. Passport and either a
Residencia Card (for Residents) or an
NIE (ID number for Non Residents). Rose FS will assist in arranging any NIE needed.
Proof of Income Pay slips x 3 months
P 60
Pension Letters
Rental income contracts
Tax Assessment (Self Employed)
Trading Accounts (Self Employed)
Accountant's Statement of Affairs (Self Employed)
Bank Statements x 3 months (for all bank accounts, UK and Spain)
Existing mortgages x 3 months statements
Remortgages Existing Escritura
Original Compraventa (Purchase contract)
Recent valuations
Quotations for any works being financed or property being purchased
Latest existing mortgage or loan statements being consolidated
Purchases Compraventa (Purchase contract)
Property details
Solicitor contact details
Estate Agent details
That all sounds a lot but, in most cases, many of the documents will not apply.
Also, Rose FS need only COPY documents and not the originals. However, the original passport, NIE or Residencia will be needed at the legal completion of the process.
The application process can be actioned from a distance via post, fax and e mail. You do not physically need to meet a mortgage adviser and we will complete the process of determining your needs by phone.
5) What are the costs of arranging a mortgage?
Arranging a mortgage in Spain is slightly more expensive than in the UK and broadly you should allow 5% of the mortgage amount needed as follows;
1% Lender fee
1% Rose FS fee (minimum €1,000)
1% Notary/Registration
1.6% AJD Mortgage tax
0.15% Valuation fee Up Front
€300 Booking fee Up Front
As you can see the only monies needed by Rose FS to apply for the mortgage are the Valuation and Booking fees. All other costs are due at completion and will be deducted from the mortgages advance over the new current account with the lender.
6) What is the cost of repaying the mortgage early?
Redemption penalties, as they are formally called, are relatively inexpensive in Spain. The norm is for 0.5% for partial repayment and 1% full repayment. However, a common ploy in repaying a mortgage is never to redeem it in full but to leave a small balance outstanding.
7) Do I need to use a specialist Spanish and English speaking solicitor?
For Remortgages, where you are switching lenders, or simply releasing capital/equity from your home or debt consolidating, no! The process is relatively simple and does not warrant the extra cost of using a solicitor.
However, for a Purchase, using such a professional is STRONGLY recommended. Rose FS will happily recommend a firm.
8) Do I need to be in attendance at legal completion of the mortgage and/or purchase.
The short answer is no, although this is always recommended.
The legal completion is known as 'Notarisation' as the relevant deeds or 'escrituras' will be executed by a Notary. He or she will be a government appointed officer with the authority to witness and sign legally binding agreements.
If you cannot or do not want to be in attendance at the Notary it will be necessary for a 'Power of Attorney' agreement to be given to a trusted third party. Rose FS will happily act on your behalf although, for Purchases, we would request that your solicitor act for you. Also, for Purchases, a 'General Power of Attorney' is recommended as this gives much broader powers (for example, to open and run a bank account) rather than a standard limited power.
9) Do I need a Spanish bank account for a mortgage?
Yes. All banks insist on opening a Current Account to sit alongside the mortgage in order to receive monies in and pay the mortgage.
As part of the process heading towards Notarisation, you will need to execute the account opening forms. The sooner this is done, of course, the better.
10) Are their any mandatory or suggested insurances for a mortgage?
Yes. The only mandatory protection or insurance policy required by all banks (and this is the same in the UK) is Buildings Insurance. All banks will want to see this in place and will even insist upon arranging it themselves.
In addition, it is STRONGLY recommended that all mortgages are protected by a) Life Assurance and b) Income Protection to ensure that the mortgage and underlying asset, your home, is adequately protected.
You will not want to buy a property and only lose it from an accident , illness or disability beyond your control!
All Rose FS clients will be interviewed by our own Independent Financial Advisor in this respect.
11) What if my income is low or I cannot prove my income?
This is not an uncommon problem but there are normally aways around the issue and requirements of the lender.
Lenders look at 2 risks when determining whether a mortgage application is acceptable to them;
i) You and your ability to meet monthly mortgage payments.
This translates into a) the credit worthiness of the applicant (the lender will run checks) and b) provable, regular income.
ii) The Property.
This translates to a) the percentage they lend you against the valuation that they will carry out and b) the property state, type, etc.
For the Self Employed proof can sometimes be difficult because a good Accountant, in preparing the books of accounts, will try to keep net profits and hence, tax as low as possible. However, the combination of the latest books, Tax Assessment and a Letter of Comfort or Statement of Affairs from the Accountant, with sight of recent banks statements, will normally do the job.
If your income is low still, or because of a low wage, pension, rental or investment income, we can look to use a third party (normally a working child, sibling or parent) to add the weight of their own income acting either as a co-applicant on the mortgage or as a 'Guarantor'. Again, they do not need to come to Spain to execute any legal documents; this can achieved via a Power of Attorney from a distance. Rose FS will arrange this.
It is important to mention two things here;
i) The co-applicant(s) is at risk, as are you, if you do not keep up the repayments of the mortgage. That needs careful explaining to them.
However, often, the addition of a Guarantor actually diminishes such a risk as mortgage payments can be normally extended over a longer period, especially where the majn applicants are elderly.
ii) The Guarantor does NOT need to be added to the property deed. In other words, the ownership of your property need not be undermined by you using a third party to financially support your appllcation.
12) Am I too old for a mortgage and what is the maximum term to repay?
Many elderly clients think they are too old to apply for a mortgage, despite the fact that maximum age for repayment is 75. This is not so.
By using a third party to either come onto the application or to act as a Guarantor (as above) the emphasis of the lending assessment of risk is taken away from the more elderly applicants to rely on the added third party (normally a child).
This is often good Inheritance Tax planning as any debt outstanding on a death reduces the tax payable.
So, if you are in the position of 'wanting' or 'needing' access to some of the capital locked into your home, or wish to buy and are worried about either age or income, this option has to be considered.
13) Do I need to be worried about Spanish Inheritance Tax?
Worried, no! Concerned, yes! Understanding the issue and how to overcome it is more than half of the battle!
The vast majority of people that buy in Spain, especially the British, make an assumption that the IHT regime in Spain is the same as in the UK. This is simply not so. It is massively different and to understand a) the issues and it's potential impact on you and your family and b) how it is so easy to address, is a danger to say the least!
The primary differences between Spanish and UK IHT regimes are threefold;
i) There is no spouse exemption on the family home
ii) The IHT allowances lie with the beneficiary(ies) and not the deceased
iii) The standard personal allowance in Spain is just €15,958 versus ฃ275,000 in the UK. A huge difference.
The effect of IHT means that, as most people buying in Spain are non- resident for tax, the risk of having to pay IHT is high.
However, IHT is levied on the 'net worth' of the recipient and the benefit being received, so by keeping the mortgage at a high a level as possible, the taxable exposure is reduced. A Repayment mortgage decreases over time which has the directly opposite effect of increasing IHT exposure.
Even if the preference is for a Repayment it is wise to consider IO as an alternative for the IHT mitigation as above, and indeed to consider as long a term as possible, perhaps by bringing would-be beneficiaries onto the mortgage so that they, in turn, can benefit when the property passes to them on death of the current owners.
There are various routes to resolving the problem or IHT mitigation that can and should be considered;
i) Maximise the Interest Only mortgage (as above)
ii) Effect Life Assurance (normally Whole of Life). This is normally written in Trust in favour of the end beneficiaries not to not avoid tax but rather to make sure that funds are available to meet the tax bill.
iii) Add beneficiaries to the property deed. Because tax is calculated according to the distribution of the deceased's share of the property (or other assets) and the classification of the beneficiaries, it can make sense to add the beneficiaries early so that each person has a smaller share and, hence the tax exposure reduced.
The issues arising by doing this though are several;
i) By changing the owners of a property there may be a Capital Gains Tax payable. So timing is important.
ii) You may not be comfortable in gifting part of your home away, even to your children! Having said that the concern could be overcome, at least to a degree, by taking a 'General Power of Attorney from them so that control lies with you. But these powers can be cancelled at any time so you need to be comfortable with whom the arrangement is made.
Finally, it is critical that your effect a Will here in Spain. This is because there is a default mechanism that will decide the fate of your estate if you die without one. That could mean that people may benefit in a way that you had not intended! Rose FS will recommend a solicitor to assist.
I hope that this FAQ series has been useful. However, if you have an enquiry of a different nature please do not hesitate to contact us.
Mark Mountney is a partner in Rose Financial Services, a specialist mortgage brokerage and Independent Financial Advisor based in the Parque Comercial, Mojacar. He is a fully qualified mortgage and financial adviser in the UK with some 10 years experience in managing his own firm. Mark was also a founder of The Association of Mortgage Advisors, the trade association for mortgage intermediaries with 13,000 members.
Monday, December 21, 2009
Friday, December 18, 2009
Deciding Whether A Payday Loan Is Right For You
Author: Martin Sumner
Source: articledashboard.com
Payday loans are often touted as a quick fix for a bad financial situation, letting you bridge the gap between running out of money and your next wage or salary coming in. The basic idea is that you can borrow a small amount of a few hundred dollars for a short period of a week or two, and repay the debt next time you get paid.
This sort of service can indeed be very useful if you've run out of cash for living expenses, or if you're faced with an unexpected bill or expense that you simply can't cover when you need to, but are payday loans always the good choice they're presented as?
First, we'll take a look at the undeniable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use if you decide a payday loan isn't right for you.
The lending criteria for payday loans are very generous indeed, and almost anyone who's employed and has a suitable bank account will likely be approved. This means that even people with terrible credit ratings should be able to get a payday loan, despite being rejected for nearly any other form of finance.
They are also easy to arrange, and you can often get the money in your account in a matter of days. Some lenders can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very useful when you need cash in a hurry.
Finally, once you've been approved for your first loan, it's usually a very simple matter to 'refresh' your loan again if you find you need to make use of the facility if funds are again short in the future.
There are, however, two major downsides to payday loans which you rarely see mentioned in the advertisements and web sites promoting them. Firstly, they're very expensive compared to other forms of credit. Because the term of the loan is so short, a fee of 20% of the amount you borrow - which is about standard - will work out to be an eye-wateringly high APR.
The second problem is closely related: because they're so expensive, you can easily be left short of money the next month once you've cleared the loan and paid the fee. In this scenario, it's just too easy to refresh your loan again to cover the shortfall, resulting in more fees, and a never ending cycle of borrowing.
So, if you decide that a payday loan isn't a good choice for you, what alternatives do you have? The first one is making use of a credit card, if you have one. While credit cards are usually also pretty expensive forms of finance, they do allow you to spread the debt over a number of months rather than needing to be repaid straight away along with a fee.
Many bank accounts now offer an overdraft facility, which can also be used to cover a short term lack of money. The interest rate on an agreed overdraft is likely to be better than that of a credit card, but your bank may not approve your application. Beware of going ahead and overdrawing without your bank's agreement, as the charges they will levy in this case will be very expensive.
If neither of these options is available to you, and you have no other way of getting hold of money such as borrowing off family, then a payday loan may be the best option. Just ensure that you use it properly, and heed the warning sign it's giving you about the longer term state of your finances.
Source: articledashboard.com
Payday loans are often touted as a quick fix for a bad financial situation, letting you bridge the gap between running out of money and your next wage or salary coming in. The basic idea is that you can borrow a small amount of a few hundred dollars for a short period of a week or two, and repay the debt next time you get paid.
This sort of service can indeed be very useful if you've run out of cash for living expenses, or if you're faced with an unexpected bill or expense that you simply can't cover when you need to, but are payday loans always the good choice they're presented as?
First, we'll take a look at the undeniable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use if you decide a payday loan isn't right for you.
The lending criteria for payday loans are very generous indeed, and almost anyone who's employed and has a suitable bank account will likely be approved. This means that even people with terrible credit ratings should be able to get a payday loan, despite being rejected for nearly any other form of finance.
They are also easy to arrange, and you can often get the money in your account in a matter of days. Some lenders can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very useful when you need cash in a hurry.
Finally, once you've been approved for your first loan, it's usually a very simple matter to 'refresh' your loan again if you find you need to make use of the facility if funds are again short in the future.
There are, however, two major downsides to payday loans which you rarely see mentioned in the advertisements and web sites promoting them. Firstly, they're very expensive compared to other forms of credit. Because the term of the loan is so short, a fee of 20% of the amount you borrow - which is about standard - will work out to be an eye-wateringly high APR.
The second problem is closely related: because they're so expensive, you can easily be left short of money the next month once you've cleared the loan and paid the fee. In this scenario, it's just too easy to refresh your loan again to cover the shortfall, resulting in more fees, and a never ending cycle of borrowing.
So, if you decide that a payday loan isn't a good choice for you, what alternatives do you have? The first one is making use of a credit card, if you have one. While credit cards are usually also pretty expensive forms of finance, they do allow you to spread the debt over a number of months rather than needing to be repaid straight away along with a fee.
Many bank accounts now offer an overdraft facility, which can also be used to cover a short term lack of money. The interest rate on an agreed overdraft is likely to be better than that of a credit card, but your bank may not approve your application. Beware of going ahead and overdrawing without your bank's agreement, as the charges they will levy in this case will be very expensive.
If neither of these options is available to you, and you have no other way of getting hold of money such as borrowing off family, then a payday loan may be the best option. Just ensure that you use it properly, and heed the warning sign it's giving you about the longer term state of your finances.
Wednesday, December 16, 2009
Tax Debt Relief - Negotiating With the Internal Revenue Service - IRS
Author: Michael Kraemer
Source: ezinearticles.com
As anon as we're able to use acumen and argumentation in our thinking, we're accomplished that it's never a acceptable band-aid to run from our problems. The best admonition teaches us to face our problems abrupt through resolution. This action is abnormally important if adverse your creditors, abnormally the IRS. In today's bread-and-butter climate, creditors are active assault down doors aggravating to get audience to accomplish acceptable on abaft balances. The IRS is one of the bigger accepted creditors to millions of humans so this commodity is traveling to accommodate some complete admonition on ambidextrous with the IRS for accomplished due tax liabilities.
For every getting cogent you to face your debt problems arch on, there are 100 attorneys aggravating to argue you to action the IRS to get a bargain obligation. You accept to abide these vultures and stop aggravating to get out of your obligations and responsibilities. However you begin yourself in a aperture with the IRS, it's acceptable that you're alone amenable for the situation. Don't chase any mis-guided, cocky motivated admonition of active and ambuscade abaft copse and about corners. The acceptable account is that the IRS is not about the barbarian they've been fabricated out to be. That myth, image, and misperception is abundantly the albatross of acknowledged ambulance chasers alarming you abroad from ambidextrous with the IRS anon and abacus absonant fees to your already intolerable debt.
I allege from all-inclusive experience. I've had to accord with the IRS for contributed tax obligations several years of my business life. All my own doing. The IRS didn't tax me any abnormally than the next guy in my situation. I aboveboard and arrogantly abandoned some of the debt I was axle up until it bent up with me. I did all the amiss things at first. I assassin attorneys, tax consultants, and one of the bigger IRS debt agreement firms in the US. You've apparent their commercials all over your TV.
When all the attorneys and tax consultants were finished, my tax debt was beyond and I had added bags of dollars to my debt in acknowledged fees. Not to acknowledgment my acceptability with the IRS apparently attenuated as getting addition capricious aborigine demography advantage of all the conveniences taxes armamentarium and aggravating to abstain paying his fair share. I assuredly said enough. It was time to yield the accepted balderdash by the horns and yield ascendancy of the bearings myself. I accursed everyone, best up the phone, and started with the 800 amount listed on the IRS website. And appropriately began the broad-mindedness to the errors of my antecedent ways.
My simple ambition was to accommodate a transaction plan that I could reside with because the ones that the attorneys formed out for me were not feasible, accustomed my banking situation, unless I awash a lot of of my acreage and bought a tent. The aboriginal abettor I talked to, although affable and able-bodied intentioned, wasn't abundant advice in blurred my payments. Albeit beat with the aftereffect of the conversation, I was abundantly afraid at how acquisitive the IRS was to allocution to me and try to plan things out. The alarm concluded afterwards abundant change in my claim plan. Then I abstruse my next admired assignment in ambidextrous with the IRS.
After advertent the alarm for a few minutes, it occurred to me that the abettor I got if I alleged was, of course, random. There accept to be bags of these agents that handle all the calls advancing in from taxpayers. And I wondered if they were accustomed any adaptability in ambidextrous with the calls. I didn't anticipate about this too continued and artlessly best up the buzz and dialed the 800 amount again. Of advance I got a altered abettor and proceeded to explain the aforementioned affair I did to the antecedent agent.
She was even added affable and if I explained my banking situation, she went a few circuit with her calculator and came up with a account transaction that was about bisected of my accepted plan. I about fell off my chair. She still had to get her administrator to accept the lower transaction and put me on authority for a few minutes. If she returned, and I quote, she said "well, my administrator is in a bigger affection than me" and told me the lower transaction had been approved. I was numb.
So, you see, humans are humans and rules are alone guidelines. Even if it comes to the animal IRS beast. They're active block the taxpayers ambuscade abaft copse and about corners. Can you brainstorm how abounding humans alarm THEM to plan out a plan afore they accept to adornment accomplishment or abode levies? Be one of them. You'll feel bigger about yourself and you'll abate the accent of active from your problems. And afterwards you plan it out with the IRS, alpha on your account of added creditors. They're acceptable to abate your accountability if you plan out a plan with them, abnormally the acclaim agenda companies.
Source: ezinearticles.com
As anon as we're able to use acumen and argumentation in our thinking, we're accomplished that it's never a acceptable band-aid to run from our problems. The best admonition teaches us to face our problems abrupt through resolution. This action is abnormally important if adverse your creditors, abnormally the IRS. In today's bread-and-butter climate, creditors are active assault down doors aggravating to get audience to accomplish acceptable on abaft balances. The IRS is one of the bigger accepted creditors to millions of humans so this commodity is traveling to accommodate some complete admonition on ambidextrous with the IRS for accomplished due tax liabilities.
For every getting cogent you to face your debt problems arch on, there are 100 attorneys aggravating to argue you to action the IRS to get a bargain obligation. You accept to abide these vultures and stop aggravating to get out of your obligations and responsibilities. However you begin yourself in a aperture with the IRS, it's acceptable that you're alone amenable for the situation. Don't chase any mis-guided, cocky motivated admonition of active and ambuscade abaft copse and about corners. The acceptable account is that the IRS is not about the barbarian they've been fabricated out to be. That myth, image, and misperception is abundantly the albatross of acknowledged ambulance chasers alarming you abroad from ambidextrous with the IRS anon and abacus absonant fees to your already intolerable debt.
I allege from all-inclusive experience. I've had to accord with the IRS for contributed tax obligations several years of my business life. All my own doing. The IRS didn't tax me any abnormally than the next guy in my situation. I aboveboard and arrogantly abandoned some of the debt I was axle up until it bent up with me. I did all the amiss things at first. I assassin attorneys, tax consultants, and one of the bigger IRS debt agreement firms in the US. You've apparent their commercials all over your TV.
When all the attorneys and tax consultants were finished, my tax debt was beyond and I had added bags of dollars to my debt in acknowledged fees. Not to acknowledgment my acceptability with the IRS apparently attenuated as getting addition capricious aborigine demography advantage of all the conveniences taxes armamentarium and aggravating to abstain paying his fair share. I assuredly said enough. It was time to yield the accepted balderdash by the horns and yield ascendancy of the bearings myself. I accursed everyone, best up the phone, and started with the 800 amount listed on the IRS website. And appropriately began the broad-mindedness to the errors of my antecedent ways.
My simple ambition was to accommodate a transaction plan that I could reside with because the ones that the attorneys formed out for me were not feasible, accustomed my banking situation, unless I awash a lot of of my acreage and bought a tent. The aboriginal abettor I talked to, although affable and able-bodied intentioned, wasn't abundant advice in blurred my payments. Albeit beat with the aftereffect of the conversation, I was abundantly afraid at how acquisitive the IRS was to allocution to me and try to plan things out. The alarm concluded afterwards abundant change in my claim plan. Then I abstruse my next admired assignment in ambidextrous with the IRS.
After advertent the alarm for a few minutes, it occurred to me that the abettor I got if I alleged was, of course, random. There accept to be bags of these agents that handle all the calls advancing in from taxpayers. And I wondered if they were accustomed any adaptability in ambidextrous with the calls. I didn't anticipate about this too continued and artlessly best up the buzz and dialed the 800 amount again. Of advance I got a altered abettor and proceeded to explain the aforementioned affair I did to the antecedent agent.
She was even added affable and if I explained my banking situation, she went a few circuit with her calculator and came up with a account transaction that was about bisected of my accepted plan. I about fell off my chair. She still had to get her administrator to accept the lower transaction and put me on authority for a few minutes. If she returned, and I quote, she said "well, my administrator is in a bigger affection than me" and told me the lower transaction had been approved. I was numb.
So, you see, humans are humans and rules are alone guidelines. Even if it comes to the animal IRS beast. They're active block the taxpayers ambuscade abaft copse and about corners. Can you brainstorm how abounding humans alarm THEM to plan out a plan afore they accept to adornment accomplishment or abode levies? Be one of them. You'll feel bigger about yourself and you'll abate the accent of active from your problems. And afterwards you plan it out with the IRS, alpha on your account of added creditors. They're acceptable to abate your accountability if you plan out a plan with them, abnormally the acclaim agenda companies.
Michael G. Kraemer is an entrepreneur and motivational speaker. Visit his affiliated Debt Consolidation website for tips and advice on negotiating with creditors to reduce your debt and or monthly payments.
Tuesday, December 15, 2009
Irs Installment Agreements
Author: Larry Weinstein, CPA
Source: articledashboard.com
So you find yourself with an IRS debt and you don't know how to pay it back.
Installment agreements are perhaps the most widely used method for paying past tax debts.
If you cannot afford to pay your tax liability in full, the IRS may enter into an installment agreement with you.
This will allow you to pay off your tax liability through monthly payments or installments. Installment agreements may pay all (full pay) or part (partial pay) of your past tax liability.
If you cannot pay the amount you owe within 60 months, you must file Form 433-A or 433-B. The IRS will analyze these forms and use the information to determine the amount you can pay.
The IRS has the discretion to decide on the payment amount and will usually, negotiate with you in food faith. The IRS will consider your financial situation and assets while negotiating with you. You will typically not be approved for an installment agreement if you have money or assets that IRS deems unnecessary to live on.
The IRS will usually inform you within 30 days whether or not your request has been accepted or denied or if any additional information is required to be submitted by you.
If the IRS approves your request, you will be required to pay a one time fee of $105.
Requirements for Receiving an Installment Agreement
? You must be current on all your tax returns.
? If self employed, you must be current on your quarterly estimated tax payments for the current year.
? If you have employees, you must be current on your payroll tax and Form 941 filings.
? You must make all installment payments on time.
? You must also file all tax returns and make tax payments including any estimated tax payments or Federal Tax Deposits during the term of the agreement on time.
Once you have been approved for an installment agreement, the interest and penalties continue to accrue on the unpaid portion of back tax liability throughout the duration of the installment agreement till you pay off your entire tax debt.
The interest is adjusted quarterly and combined with penalties, the rate is about 15% per year. In most cases, you could end up paying more than what you owed at the beginning. You will be charged interest and a late payment tax penalty by the IRS on the tax not paid by April 15th, even if your request to pay tax in installments is granted by the IRS.
Once you enter into an installment agreement, the IRS will suspend all collection efforts and will stop issuing wage garnishments, bank levies and notices. Depending on the circumstances, the IRS may file a Notice of Federal Tax Lien to protect its interest until you pay the liability in full.
Source: articledashboard.com
So you find yourself with an IRS debt and you don't know how to pay it back.
Installment agreements are perhaps the most widely used method for paying past tax debts.
If you cannot afford to pay your tax liability in full, the IRS may enter into an installment agreement with you.
This will allow you to pay off your tax liability through monthly payments or installments. Installment agreements may pay all (full pay) or part (partial pay) of your past tax liability.
If you cannot pay the amount you owe within 60 months, you must file Form 433-A or 433-B. The IRS will analyze these forms and use the information to determine the amount you can pay.
The IRS has the discretion to decide on the payment amount and will usually, negotiate with you in food faith. The IRS will consider your financial situation and assets while negotiating with you. You will typically not be approved for an installment agreement if you have money or assets that IRS deems unnecessary to live on.
The IRS will usually inform you within 30 days whether or not your request has been accepted or denied or if any additional information is required to be submitted by you.
If the IRS approves your request, you will be required to pay a one time fee of $105.
Requirements for Receiving an Installment Agreement
? You must be current on all your tax returns.
? If self employed, you must be current on your quarterly estimated tax payments for the current year.
? If you have employees, you must be current on your payroll tax and Form 941 filings.
? You must make all installment payments on time.
? You must also file all tax returns and make tax payments including any estimated tax payments or Federal Tax Deposits during the term of the agreement on time.
Once you have been approved for an installment agreement, the interest and penalties continue to accrue on the unpaid portion of back tax liability throughout the duration of the installment agreement till you pay off your entire tax debt.
The interest is adjusted quarterly and combined with penalties, the rate is about 15% per year. In most cases, you could end up paying more than what you owed at the beginning. You will be charged interest and a late payment tax penalty by the IRS on the tax not paid by April 15th, even if your request to pay tax in installments is granted by the IRS.
Once you enter into an installment agreement, the IRS will suspend all collection efforts and will stop issuing wage garnishments, bank levies and notices. Depending on the circumstances, the IRS may file a Notice of Federal Tax Lien to protect its interest until you pay the liability in full.
Sunday, December 13, 2009
Overdue Taxes? Act Quickly To Avoid Financial Woes
Author: Quentin Mitchell
Source: articledashboard.com
When your taxes are overdue, the Internal Revenue Service knows just how to make you pay up.
Each year, the IRS processes more than 200 million tax returns and collects over $2 trillion. Yet the agency is still owed billions of dollars in overdue taxes. As the major revenue collection agency of the federal government, however, there isn't much the IRS can't do to collect what is owed.
In fiscal year 2004, the IRS brought in $43.1 billion in enforcement revenue. It can use wage levies, bank levies or tax liens to get you to pay your overdue taxes. The agency needs only a judge's permission to seize assets when it involves a personal residence.
"A notice from the IRS is serious business," said Charlie Jones, executive vice president of operations for JK Harris & Co., one of the nation's largest tax resolution firms. "The IRS is a powerful law enforcement agency. Most enforcement actions concerning collection of taxes can be done without judicial review. The IRS' power can make life very uncomfortable for someone who owes it money."
Ignoring a warning from the IRS can be risky and expensive. It's important that taxpayers realize their liability can be solved, and talking with an expert is often the best strategy. Because penalties and interest add up quickly, the sooner you seek guidance, the better.
"We serve a lot of clients who have received a notice or intent to levy from the IRS," Jones said. "Many people come to JK Harris when the IRS has already started its collection process."
Jones said the IRS has several programs that can help people avoid further enforcement if they qualify. JK Harris works with its clients to see if they meet the requirements for these programs. The firm then handles all correspondence with the IRS and also develops and submits the client's case. When necessary, its staff of former IRS agents, CPAs, attorneys and enrolled agents attempt to negotiate the best and most favorable way of settling a tax debt.
Source: articledashboard.com
When your taxes are overdue, the Internal Revenue Service knows just how to make you pay up.
Each year, the IRS processes more than 200 million tax returns and collects over $2 trillion. Yet the agency is still owed billions of dollars in overdue taxes. As the major revenue collection agency of the federal government, however, there isn't much the IRS can't do to collect what is owed.
In fiscal year 2004, the IRS brought in $43.1 billion in enforcement revenue. It can use wage levies, bank levies or tax liens to get you to pay your overdue taxes. The agency needs only a judge's permission to seize assets when it involves a personal residence.
"A notice from the IRS is serious business," said Charlie Jones, executive vice president of operations for JK Harris & Co., one of the nation's largest tax resolution firms. "The IRS is a powerful law enforcement agency. Most enforcement actions concerning collection of taxes can be done without judicial review. The IRS' power can make life very uncomfortable for someone who owes it money."
Ignoring a warning from the IRS can be risky and expensive. It's important that taxpayers realize their liability can be solved, and talking with an expert is often the best strategy. Because penalties and interest add up quickly, the sooner you seek guidance, the better.
"We serve a lot of clients who have received a notice or intent to levy from the IRS," Jones said. "Many people come to JK Harris when the IRS has already started its collection process."
Jones said the IRS has several programs that can help people avoid further enforcement if they qualify. JK Harris works with its clients to see if they meet the requirements for these programs. The firm then handles all correspondence with the IRS and also develops and submits the client's case. When necessary, its staff of former IRS agents, CPAs, attorneys and enrolled agents attempt to negotiate the best and most favorable way of settling a tax debt.
Friday, December 11, 2009
IRS Gets Tough on Collection of Large Tax Debts
Author: James Coleman
Source: articleage.com
The Federal budget deficit is big and getting bigger. As you may be aware, our political leadership in both parties is not fond of cutting spending despite what they may say to voters from time to time. Since raising taxes is not popular, a decision has been made to get tough on the taxes that are owed to Uncle Sam. The IRS is now getting very tough on collecting tax debts. Enforcement Action is up and Offer-in-Compromise settlements are way down over the last few years.
If you or a client of yours owes delinquent Federal taxes, be prepared for a financial proctology if you want to set up a payment plan or settle with IRS for less than what is owed. An IRS Form 433A or 433F may be required for individuals and a 433B for business taxpayers. Many expenses claimed are subject to limits known as the "IRS National Standards." Get the current IRS standards from their website.
If more than $25K is due, the following documented proof may be required by IRS to set up a payment plan:
1. Three months of all bank account statements the taxpayer has in their name;
2. 401k Statements;
3. Three months of pay stubs or proof of year-to-date earnings and deductions;
4. Proof of monthly bills (rent, mortgage, utilities, childcare, etc.);
5. Paid medical bills and prescription drugs; and
6. Car note, car valuation, mortgage balance, insurance costs.
If you own property, IRS may require that you apply for a loan before they will grant you an Installment Agreement or Temporary Hardship. A loan denial letter might be required to be submitted to the Revenue Officer (RO) or to the Automated Collection System (ACS) representative working the case.
The best thing that you can do if you want to avoid being put through the ringer on providing financial data is to pay your balance in full or get it below $25,000 before it gets to an IRS collector. If you can get it below $25K, chances are you can get a "streamlined" installment agreement and only have to meet requirements to pay off the debt in less than 60 months.
Don't ignore any letters you get from IRS! Wishing the IRS will go away won't make it so. The good news is that IRS is still allowing folks a 120 day grace period to full pay. You must ask for it and all delinquent tax returns must be filed. In addition, no enforcement action can be in place at the time you make the request.
Ignoring the IRS or missing an IRS deadline will likely result in enforcement action. If the IRS garnishes your wages, the levy will likely not be released until a full financial statement is given, all delinquent returns are filed, and a resolution is agreed to by the RO or ACS. If your bank account is seized: barring an extreme hardship that can be proven…kiss the money good bye.
If you owe a large tax debt, get professional help. Hire a Certified Public Accountant (CPA), Enrolled Agent (EA), or a Tax Attorney who is familiar with collection cases. Don't hire some company that promises you that they can "wipe out" all your taxes, penalty, and interest just by signing their Power-of-Attorney. Make sure whomever you hire takes a complete financial statement from you. Without it, promises of what kind of IRS deal they can get you are probably bogus.
The IRS has a program to settle tax debts for less than what is owed, but only for those people who qualify. It is called the Offer-in-Compromise. Very few will ever qualify for an OIC. IRS is currently rejecting over 80% of the OICs it is getting. Even getting a payment plan is difficult if you have a large tax debt.
If you are dealing with a serious IRS problem, stay focused and don't get depressed. If you let a tax problem overwhelm you, then you are doing a disservice to yourself and your family. After all, it is only money. Before you call IRS: get your documentation together; prepare an IRS Form 433A, 433B or 433F and double check your figures. When dealing with IRS employees, stay calm and polite no matter how cold they might be to you. They have a tough job to do and have to follow the procedures they are given by IRS management. They are not bad people and neither are you. Good luck!
You can find help at the following websites:
www.irs.gov (Internal Revenue service)
www.naea.org (National Association of Enrolled Agents)
www.ascpa.com (American Society of CPAs)
www.nsacct.org (National Society of Accountants)
James Robert Coleman, E.A., A.T.A.
Enrolled Agent, Accredited Tax Advisor, former IRS Revenue Officer.
Member-National Association of Enrolled Agents & National Society of Accountants.
http://www.exirsman.com
Source: articleage.com
The Federal budget deficit is big and getting bigger. As you may be aware, our political leadership in both parties is not fond of cutting spending despite what they may say to voters from time to time. Since raising taxes is not popular, a decision has been made to get tough on the taxes that are owed to Uncle Sam. The IRS is now getting very tough on collecting tax debts. Enforcement Action is up and Offer-in-Compromise settlements are way down over the last few years.
If you or a client of yours owes delinquent Federal taxes, be prepared for a financial proctology if you want to set up a payment plan or settle with IRS for less than what is owed. An IRS Form 433A or 433F may be required for individuals and a 433B for business taxpayers. Many expenses claimed are subject to limits known as the "IRS National Standards." Get the current IRS standards from their website.
If more than $25K is due, the following documented proof may be required by IRS to set up a payment plan:
1. Three months of all bank account statements the taxpayer has in their name;
2. 401k Statements;
3. Three months of pay stubs or proof of year-to-date earnings and deductions;
4. Proof of monthly bills (rent, mortgage, utilities, childcare, etc.);
5. Paid medical bills and prescription drugs; and
6. Car note, car valuation, mortgage balance, insurance costs.
If you own property, IRS may require that you apply for a loan before they will grant you an Installment Agreement or Temporary Hardship. A loan denial letter might be required to be submitted to the Revenue Officer (RO) or to the Automated Collection System (ACS) representative working the case.
The best thing that you can do if you want to avoid being put through the ringer on providing financial data is to pay your balance in full or get it below $25,000 before it gets to an IRS collector. If you can get it below $25K, chances are you can get a "streamlined" installment agreement and only have to meet requirements to pay off the debt in less than 60 months.
Don't ignore any letters you get from IRS! Wishing the IRS will go away won't make it so. The good news is that IRS is still allowing folks a 120 day grace period to full pay. You must ask for it and all delinquent tax returns must be filed. In addition, no enforcement action can be in place at the time you make the request.
Ignoring the IRS or missing an IRS deadline will likely result in enforcement action. If the IRS garnishes your wages, the levy will likely not be released until a full financial statement is given, all delinquent returns are filed, and a resolution is agreed to by the RO or ACS. If your bank account is seized: barring an extreme hardship that can be proven…kiss the money good bye.
If you owe a large tax debt, get professional help. Hire a Certified Public Accountant (CPA), Enrolled Agent (EA), or a Tax Attorney who is familiar with collection cases. Don't hire some company that promises you that they can "wipe out" all your taxes, penalty, and interest just by signing their Power-of-Attorney. Make sure whomever you hire takes a complete financial statement from you. Without it, promises of what kind of IRS deal they can get you are probably bogus.
The IRS has a program to settle tax debts for less than what is owed, but only for those people who qualify. It is called the Offer-in-Compromise. Very few will ever qualify for an OIC. IRS is currently rejecting over 80% of the OICs it is getting. Even getting a payment plan is difficult if you have a large tax debt.
If you are dealing with a serious IRS problem, stay focused and don't get depressed. If you let a tax problem overwhelm you, then you are doing a disservice to yourself and your family. After all, it is only money. Before you call IRS: get your documentation together; prepare an IRS Form 433A, 433B or 433F and double check your figures. When dealing with IRS employees, stay calm and polite no matter how cold they might be to you. They have a tough job to do and have to follow the procedures they are given by IRS management. They are not bad people and neither are you. Good luck!
You can find help at the following websites:
www.irs.gov (Internal Revenue service)
www.naea.org (National Association of Enrolled Agents)
www.ascpa.com (American Society of CPAs)
www.nsacct.org (National Society of Accountants)
James Robert Coleman, E.A., A.T.A.
Enrolled Agent, Accredited Tax Advisor, former IRS Revenue Officer.
Member-National Association of Enrolled Agents & National Society of Accountants.
http://www.exirsman.com
Thursday, December 10, 2009
Can the IRS Take My Pension?
Author: Darrin Mish
Source: articlerich.com
IRS Problems can cause you and your family a lot of stress. You have worked hard all your life to be able to have a nice home and car. Now the IRS is threatening to take this all away. You have received a notice from the IRS stating that they are going to seize your assets to pay off the back taxes you owe. Can they do this? Can they take your car, your home, even your pension?
The IRS can seize your assets to pay your tax bill but there are certain assets that are safe from the IRS.
1. Clothing and school books
2. Fuel, food, furniture and personal effects up to $2,500
3. Tools and books that are job related up to $1,250
4. Unemployment, worker's compensation, public assistance and job training benefits
5. Undelivered mail
6. Certain annuity and pension benefits which includes the Railroad Retirement Act, Railroad Unemployment Insurance Act, Special Pensions for Medal of Honor winners, and Retired Serviceman's Family Protection Plan and Survivor Benefit Plan
7. Certain service-oriented disability payments
8. Deposits to the special Treasury fund made by members of the armed forces and Public Health Service employees who are on permanent duty assigned outside the US
9. A minimum amount exempt from a levy on wages, salary, and other income
You will notice that on the above list it says "certain annuity and pension benefits." These benefits are not completely exempt from the IRS. Your pension may be at risk if you owe a large sum to the IRS.
The IRS will typically seize your assets in this order:
1. Bank and checking accounts
2. Cars, boats, airplanes, and other recreational vehicles
3. Cash value life insurance
4. Accounts receivable
5. Stocks and bonds
6. Wages
7. Collectibles
8. Investment and vacation real estate
9. Pensions, IRAs and Keoghs
10. Home
As you can see, pensions are low on the list.
When the IRS seizes assets, they only need enough to pay off your tax bill. Do not forget, however, that your bill has been accruing penalties and interest so it has been increasing daily. If there are no other assets available to satisfy your bill than the IRS can seize your pension.
Darrin T. Mish (http://www.getirshelp.com) is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. He can be reached at his website at http://www.getIRShelp.com
Source: articlerich.com
IRS Problems can cause you and your family a lot of stress. You have worked hard all your life to be able to have a nice home and car. Now the IRS is threatening to take this all away. You have received a notice from the IRS stating that they are going to seize your assets to pay off the back taxes you owe. Can they do this? Can they take your car, your home, even your pension?
The IRS can seize your assets to pay your tax bill but there are certain assets that are safe from the IRS.
1. Clothing and school books
2. Fuel, food, furniture and personal effects up to $2,500
3. Tools and books that are job related up to $1,250
4. Unemployment, worker's compensation, public assistance and job training benefits
5. Undelivered mail
6. Certain annuity and pension benefits which includes the Railroad Retirement Act, Railroad Unemployment Insurance Act, Special Pensions for Medal of Honor winners, and Retired Serviceman's Family Protection Plan and Survivor Benefit Plan
7. Certain service-oriented disability payments
8. Deposits to the special Treasury fund made by members of the armed forces and Public Health Service employees who are on permanent duty assigned outside the US
9. A minimum amount exempt from a levy on wages, salary, and other income
You will notice that on the above list it says "certain annuity and pension benefits." These benefits are not completely exempt from the IRS. Your pension may be at risk if you owe a large sum to the IRS.
The IRS will typically seize your assets in this order:
1. Bank and checking accounts
2. Cars, boats, airplanes, and other recreational vehicles
3. Cash value life insurance
4. Accounts receivable
5. Stocks and bonds
6. Wages
7. Collectibles
8. Investment and vacation real estate
9. Pensions, IRAs and Keoghs
10. Home
As you can see, pensions are low on the list.
When the IRS seizes assets, they only need enough to pay off your tax bill. Do not forget, however, that your bill has been accruing penalties and interest so it has been increasing daily. If there are no other assets available to satisfy your bill than the IRS can seize your pension.
Darrin T. Mish (http://www.getirshelp.com) is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. He can be reached at his website at http://www.getIRShelp.com
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