Innocent Spouse Relief has always been available as a way for taxpayers who file joint tax returns and who were not aware, nor had any kind of reason to be aware, that her or his spouse had underpaid or understated their liability for income taxes. It was designed to offer the innocent taxpayer some protection from the faults of their partners and spouses and details of how it works were to be found in Publication 971 which was entitled Innocent Spouse Relief.
The regulations detailed in Publication 971 state that innocent spouse requests that are seeking relief from liability need to be filed within 2 years from the time that the IRS begins action for collection against the spouse. The point of this time limit was always that it was established to encourage early and swift resolution while there was still evidence remaining. However it has been announced that the IRS now intends to issue new regulations stating that they will be removing this two year time limit. In doing so they have stated that the reason for its removal is that they wish to extend the period in order to assist more innocent spouses in their relief requests.
From now on the IRS will not be applying that 2 year limit to any equitable relief cases and any taxpayers who have previously been denied relief requests purely on the basis of the two year limit are now eligible to reapply if they wish to. To do so they need to fill out IRS form 8857. In addition, those taxpayers who have ongoing cases currently held in suspension are now going to be afforded the benefits of the new rules and need not restart their application. Similarly they will not be applying the two year restriction to any cases that are pending litigation that involve equitable relief and if litigation has become final, they will suspend collection under many circumstances.
All changes are effective immediately and can be found in Notice 2011-70.
Alex is a freelance journalist and financial blogger. He loves to write about football and jazz but spends most of his days writing about mortgages, credit cards and tax reduction.
There are different types of retirement plans. One of the best retirement plans available for workers is the Individual Retirement Account or the IRA. This type of retirement plan is not just a savings account but is also an investment account. The contributions that you make to your IRA can be used to buy different types of investments such as stocks, mutual funds, certificate of deposits, bonds, securities and a lot more.
There are two common types of IRA accounts, the Roth IRA and the Traditional IRA. Most often than not, people would choose Roth IRA over traditional IRA. This is because Roth IRA provides account holders more liberty regarding their retirement funds. It also allows account holders to avoid tax rate increases because of the non-tax deductible contributions.
If you are planning to open a Roth IRA account, it is best that you know the basic Roth IRA rules. By knowing these rules you will be able to know what Roth IRA really is and the different processes involved in this retirement plan. You can also avoid high taxes and penalties if you know the basic Roth IRA rules.
One of the most important rules that you should know about is the IRA distribution rules for Roth IRA account. This will give you an idea how you can get your funds and which is permissible by the IRS and which is not. Roth IRA is regulated by the IRS to prevent individuals to take advantage of the system and act in the best of interest of workers who want t save for their retirement.
The IRA distribution rules for Roth IRA accounts allow account holder to make qualified distribution of earnings when the account holder reaches the age of 59 ½ however, principal contributions can be cashed out anytime. This way, account holders will have enough money on hand if ever unexpected situations come that needs financial backing and at the same time makes sure that the individuals will have enough funds for their future retirement. Withdrawal on earnings made before the age of 59 ½ will be subjected to penalties or taxes or both.
A SEP IRA is a very popular retirement plan especially for the small companies or those of us who are self-employed. Some may ask “What is a SEP IRA? What makes it so popular?”
A SEP is a retirement plan tailored for those who own small businesses with a small number of employees or a self-employed individual. Because this retirement plan’s target demographic involves those companies or individuals who do not have a huge income capable to sustain a high priced retirement plan, the terms of a SEP are very flexible, while giving the same benefits to employees as a traditional IRA.
Employers are the one who setup the SEP plan. Employees are responsible for their own individual IRAs where the contributions of the SEP will go to.
In this retirement plan, only the employer is allowed to make contributions to the SEP. Any contribution made cannot be taken from the employee’s salaries. Though it may seem like the employer is at the losing, end that is not the case. Contributions made by the employer are 100% tax deductible.
When it comes to contribution limits, the maximum possible contribution is the lesser of $49,000 or 25% of the annual salary of the employee. Contributions and benefits given must be equal for all employees involved in the SEP.
The beauty of this plan is in its flexibility. Employers can choose when and how much they want to contribute to the SEP. So if business is not doing well, they can choose not to make contribution now, or just give a lower contribution. If profits are up, then the employer can take advantage of the high contribution limits for a bigger contribution to the SEP.
Ina small business where time, budget and resources are limited, flexibility is important. A SEP IRA gives a business owner all the flexibility he or she needs to provide the employees with retirement plan benefits without putting the business in jeopardy. It’s also convenient because employees can do a 401k rollover into the SEP plan which ensures their retirement funds keep growing.