Tuesday, April 26, 2011

IRS Question of the Month: What do I need to know BEFORE I call the IRS?

You must know as much as possible about your tax situation, which tax returns are filed/unfiled and how much you owe the IRS? If you do not know, ask the IRS, they must tell you. Next, you must know your own financial situation. You need to know the Fair Market Value (FMV) of your assets such as cars, real estate, retirement plans, etc., the encumbrances against those assets and whether you can borrow on them. You need to know your MONTHLY income and business and personal household living expenses. Not generally, but specifically, and your income and expenses must generally balance on a month-to-month basis. Ordinarily, you cannot spend more than you make or bring into your business/household. Basically you must write down a cash flow statement or budget that shows all of your monthly income and expenses. You must include non-taxable income, e.g., Child Support, or any regular monthly contributions from third parties. If you spend more than you bring in, ou must be able to explain how you make up the shortfall.