Arena and Associates, Inc. – Rob Arena – How to Settle Your IRS Tax Debts

If you owe taxes but you’re underemployed or unemployed, tax debts can be settled for less than the amount owed. Believe it or not, the IRS does realize that there are some circumstances wherein a person should not be held liable for some tax debts. Keep in mind, though, that tax settlement can only be considered if the taxpayer doesn’t have the means to pay.

Here are 2 options for reducing the amount of your tax liability.

Offer in compromise

The IRS may grant an offer in compromise if collection of taxes would cause you financial hardships, if there is doubt that the amount owed is correct or if they think the person has no capability to pay the full amount of tax owed.

Of course, you have to be able to prove that you can’t pay the full amount. Here, you will need to make an offer to the IRS and convince them that the amount of money you’re offering is equal to or greater than the amount they can collect from the sales of your assets such as automobiles, real estate properties, investments etc.

You also need to pay a $150 application fee to request an OIC. That payment will go to the tax debt if the application is not approved.

Partial payment installment agreement

If you can’t pay your taxes in full, but you will likely have the money to pay it in the future, you can negotiate for an installment payment plan. Here, you’ll make regular monthly payment to the IRS over a certain period of time, but this amount will be less than what you owe. A portion of your debt is forgiven after the terms of the installment agreement are fulfilled.

The monthly payment is typically based on what you can afford after taking into account your living expenses. This can be easier and less time-consuming than requesting for an OIC.

Arena and Associates, Inc. – Rob Arena – Surviving a Tax Audit

TaxAuditWe all dread having the IRS tell us it wants to reassess our tax return. The chances of being audited are very slim, but if you receive an audit notice from the IRs, there’s no need to hit the panic button.

The good news is that an audit doesn’t have to be a painful and invasive process. Here are some useful tips to help allay all your fears and deal with tax audits.

Don’t ignore the letter

You’ll be given 30 days to respond to an audit notice. Be sure to respond in a timely manner. Ignoring the notice or delaying your response allows potential penalties to add up.

Prepare financial document

You should always hold on to documents regarding taxable income, tax deductions and other credits to back up the return. Start collecting any relevant paperwork once you find out what parts of your tax return are in question. You are allowed to reconstruct records if you are missing receipts or other documents.

Be brief

If you want to get the process over with fast, be sure to provide exactly what the agent asks for. Providing additional information will only lead to new potential questions and end up slowing the process.

Get help

Experienced tax professionals know the audit procedure. They can help keep the audit on track, guide your responses and tell you what to expect. They also know how to represent your arguments to the examiner and prevent you from making mistakes.

Know your rights

For the actual appointment, you can attend by yourself, with a professional by your side or ask a representative to attend in your place. You also have the right to conduct the audit at a time and place that is convenient to you. If by the end of the process you find that you are unhappy with the result, you may appeal within the IRS or go on to tax court. The more rights you assert, the better off you will be.

Arena and Associates, Inc. – Rob Arena – Tips to Help You Plan for Next Tax Season

aaTAX_9.15Tax season seems to sneak up on us every year. Oftentimes, we find ourselves overwhelmed and anxious knowing that tax season is coming up.

Filing taxes doesn’t have to be an ordeal. It comes every year and the steps are pretty much the same. It can be less time consuming and less frustrating if you start preparing for next year’s tax season right now.

Don’t let tax season scare you into an anxious state. Here are a few tips that will help make the filing process much easier.

Stay organized

Most people will procrastinate filing their taxes and rush at the last minute to make the deadline. Now, you forgot your spouse’s birth date. Or maybe you were scrambling to find your kid’s social security number. Tax season is enough of a headache. Tracking this information just adds to the hassle of doing your taxes. Don’t wait until the end of the year to consolidate your documents.

The IRS use social security number to track everyone. A missing social security number could cost you. Gather all information and documents at the start of the year and place them in a secure spot.

Plan to maximize credits and deductions

Plan ahead and perform some research on how you can maximize the credits and deductions you can claim.

If you have paid for expenses related to your job and it wasn’t reimbursed by your employer, this can be deducted on your return. Work-at-home individuals, on the other hand, you can claim deductions for your home office.

Find a tax preparer

The first year I paid an accountant $800, it definitely put a hole on my budget. But then I realized it was a good idea after all since I was able to save $10,000 in taxes. An accountant can help you use tax saving strategies, receive a bigger refund and pay less in taxes.

Don’t rush at the last minute to find an accountant to complete your tax return. Find one sooner rather than later.


Arena and Associates, Inc. – Rob Arena – When Should You File an Amended Tax Return?

Taxes 9.8So you already did the math and double checked everything on your tax return. Now, that everything has been checked, you dropped the return in the mail. But despite your best efforts, you still forgot something or made a foolish mistake.

Considering how complicated it can be, it’s not uncommon to forget something on your taxes. Maybe you forgot to report some income on your 1040 or a new 1099 just came in the mail. What should you do now? Don’t panic. You still have a chance to fix those errors by filing an amended tax return.

An amended tax return allows you to file again in order to add credits or deductions you have missed, correct your income or your filing status.

If any of the following apply to you, consider filing an amended tax return.

Reporting additional income

You were too eager to file your tax return that you have already sent it even before you 1099, K1s and other information showed up in the mail. Upon checking, you then realized that the income is much higher as compared to the one you reported. This calls for an amended tax return.

Change your filing status

Choosing the wrong filing status can have a big financial impact. After all it is used to determine your tax rates, standard deductions and brackets your income is subject to. The IRS allows you to change your filing status, but only if it was filed within 3 years from the original filing date.

Changing the number of dependents

If you accidentally claimed dependents you weren’t eligible for or you didn’t claim a dependent you could have, then go ahead and file an amended tax return. The IRS won’t know until you tell them.

If you amend, make sure that you correct everything. You can’t just cherry-pick the ones in your favor and leave those that increase your tax liability.

Arena and Associates, Inc. – Rob Arena – Tax Tips for Newly Married Couples

Getting married brings about a lot of changes. For some, it brings a new home, new name and a new baby. Get ready for another change because it will be your first time to face the IRS as a couple.

Filing tax returns was probably one thing you never gave much thought when you got married. However, it is important for you to understand how getting married affects your taxes.

Here are some tips from the IRS for the newlyweds.

Filing status

Even if you were married on the last day of the year, December 31, the IRS still consider you as married for the entire year. But if you got married on the last day of the tax year, then you can file as single or head of household.

Filing jointly vs filing separately

Now that you’re married, you only have 2 choices: either file as married filing jointly or marred filing separately.

In most cases, it makes more sense to file jointly. You’ll probably pay less tax and it’s easier too. But we also need to keep in mind that every couple’s situation is different and there are times when filing a separate return may be a good idea. You can have your accountant run both sets of numbers to determine which filing status will result in lower taxes.

Some couples choose to keep their financial lives separate. If this sounds like you, then you’d be better off filing separately.

Change of name and address

When you file an income tax return, you need to make sure that the name on your form matches your records at the Social Security Administration. That said, it is important that you report the change to the SSA by filling form SS-5.

Also, don’t forget to update your address with the IRS and the U.S. Postal Service if you have moved to a new permanent address. All you need to do is to fill out form 8822 and mail it to the address on the form.

Arena and Associates, Inc. – Rob Arena – Tax Saving Tips for Teachers

This month, teachers shall bid farewell to the lazy days of summer and embark on a new school year. If months continue to fly by like that, the next thing we know it’s the holiday season once again and tax time right after that. That said, you should start planning for your tax deductions.

In this blog post, we’ll help you find deductions that you may have overlooked in the past so you can get back as much money as possible.

Classroom supplies

Most teachers would purchase supplies for their classrooms out of their own pockets. It’s amazing how small purchases can quickly add up, and can put a hole in your household budget. The good news is that you deduct these expenses to help reduce your taxes.

Back in the days, teachers were allowed to deduct up to $250 for unreimbursed classroom-related expenses each year. Unfortunately, this law has expired in 2013. Don’t worry; you can still deduct the cost of the supplies you purchased as unreimbursed employee expense. That said, it is important to keep all of your receipts or credit card statements and compile them in an envelope.

Continuing education expenses

Teachers and educators, who take courses to keep up their competency, may qualify for the Lifetime Learning Credit. Here, teachers are given 20% tax credit off the cost of courses taken up to a maximum of $2,000 per educator per year.

Costs incurred in attending trainings, workshops, conferences and seminars are also tax-deductible, provided that they are work-related.

Travel-related deductions

If you are a teacher, who travels from school to school or a coach, who oversee after-school activities outside the campus, be sure to keep track of your travel expenses. If you itemize your deductions, you can deduct $0.57 a mile for all business miles driven.

Professional expenses you incur for teaching

If you are a teacher, who has spent your own money for professional books, union dues and any other expense that are related to your profession, be sure to keep track of them and claim the costs on your taxes as a deduction.

Arena and Associates, Inc. – Rob Arena – IRS Data Breach and Theft of Personal Tax Information.

A computer breach of the IRS “Get Transcript” tool, which allowed cyber thieves to steal tax information from thousands of taxpayers is much bigger than the agency originally disclosed.

An additional 220,000 potential victims had information stolen from an Internal Revenue Service website as part of a sophisticated scheme to use stolen identities to claim fraudulent tax refunds, the IRS said Monday. The revelation more than doubles the total number of potential victims, to 334,000.

The breach also started earlier than investigators initially thought. The IRS first disclosed the breach in May.

The thieves accessed a system called “Get Transcript,” where taxpayers can get tax returns and other filings from previous years. In order to access the information, the thieves cleared a security screen that required knowledge about the taxpayer, including federal pension identification number, date of birth, tax filing status and street address, the IRS said.

The personal information was presumably stolen from other sources. The IRS believes the thieves were accessing the IRS website to get even more information about the taxpayers, which could help them claim fraudulent tax refunds in the future.

In all, the thieves used personal information from about 610,000 taxpayers in an effort to access old tax returns. They were successful in getting information from about 334,000 taxpayers.

The IRS isn’t the first agency – public or private – to initially underestimate the magnitude of a data breach. The Office of Personnel Management announced earlier this year that hackers had stolen sensitive information on 4.2 million people. The number of affected people has since grown to more than 21 million.

The IRS said it is notifying all potential victims and offering free credit monitoring services. The IRS is also offering to enroll potential victims in a program that assigns them special ID numbers that they must use to file their tax returns.

The IRS said Monday that thieves started targeting the website in November. Originally, investigators thought it started in February. The website was shut down in May.

IRS investigators believe the identity thieves are part of a sophisticated criminal operation based in Russia.

If you or someone you know is concerned that your have had your information stolen then contact Arena and Associates. We can get direct access to your account and cure any identity theft issue with the IRS. Call 303-847-4038.

Arena and Associates, Inc. – Rob Arena – Penalties for Failing to File Your Taxes

file-your-taxes-for-freeWe’ve all heard the countless tales of people avoiding income tax. Maybe they don’t have enough money to pay their taxes or they don’t have the information to complete their return. No matter what the reason is, ignoring the IRS is certainly not a good idea. Mind you, delaying filing or payment can be more costly for you.

The following penalties shall be imposed for not filing or paying your taxes on time.

Late penalties

Tax payers who do not file or pay their income tax by the due date are subject to fees, interest and penalties in addition to the amount of tax due.

Failure to file your income tax by the April 15 deadline will incur a 5% penalty on top of the amount you owe. But if you do not pay your taxes by the due date, a penalty of .5 -1% of the unpaid tax per month applies. The penalty will take effect immediately after the deadline and will be charged for every month you delay.

Since the penalty for failing to pay is lesser than the failure to file, we urge you to file your taxes on or before the deadline whether or not full payment can be made.


In addition to the penalty, you’ll also be charged an interest for not paying your taxes in full. The interest rate is set quarterly by the federal government. Pay as much as you can to reduce the amount you owe.

Tell the IRS why you’re late

Everyone makes mistakes, especially when under the stress. So if you have a good excuse for not being able to file or pay taxes on time, do not hesitate to let the IRS know. If they consider your excuse, then you may not have to face penalties.

Filing an extension

If you requested for an extension to file and you were able to pay 90% of your tax by April 15, then you don’t have to face a failure-to-pay penalty. But be sure to settle the remaining balance on or before the extended due date.

Arena and Associates, Inc. – Rob Arena – Tax Deductions for Self-Employed Individuals

Being self-employed means taking on costs and risks that you don’t have when you work for someone else. While most self-employed people celebrate the freedom of not having a boss, they often cringe at the sight of their taxes.

With the high rising costs of doing business and securing your own health insurance, it is important that you get all the tax write-offs you are entitled to in order to thrive and survive.

Here are some tax deductions that can benefit self-employed individuals and small business owners alike.

Home office

The cost of any workspace that is especially devoted to your business, whether you own or rent it, can be deducted as a home office expense. This allows you to deduct a portion of your utilities, repairs, home improvement and rent or mortgage payments to your home.

To calculate your deduction, measure your work area and divide it by the square footage of your home. Then, multiply that by the home’s expenses for the year.

Health insurance premiums

If you are paying for your family’s health insurance out of your pocket, then you can deduct 100% of your premiums as an adjustment to your business income.

Vehicle and mileage

The IRS also allows you deduct the cost of using your car for your business. Keep a record of the miles you drive business-related activities and deduct the dollar value of business miles travelled on your tax return. Be sure that personal and business use is completely separated.

Phone and internet

You are also entitled to deduct your phone and internet expenses. If you only one have phone in the house, it means that the phone is used for both personal and business purposes. That said, you shouldn’t deduct the entire monthly bill. The key is to deduct the expenses that are directly related to your business.

Educational expenses

Think about any classes, workshops, seminars you’ve attended to improve your job or business. All of these are tax-deductible. Also, don’t forget, books, magazines and other research materials.


Arena and Associates, Inc. – Rob Arena – IRS Phone Scam Continues to Pose a Significant Risk

WPTV-IRS-Scam_1402421805728_6125775_ver1.0_640_480An aggressive and sophisticated phone scam has been making rounds throughout the country. Tax season may be over, but the IRS has been seeing a surge of these phone scams in recent months.

Tax payers, including recent immigrants have been receiving aggressive and threatening phone calls from criminals, who are pretending to be IRS agents.

This swindle is incredibly simple and straightforward. Armed with a long list of potential victims, these con artists are demanding tax payers to send them past-due taxes through wire transfer or a preloaded debit card. They also try to scare their victims into providing financial information. If the amount owed is not paid immediately, they threaten their victims with arrest, financial penalties, driver or business license revocation and deportation.

It can be pretty easy to determine whether or not the call is fake. The fact that you have received a call from a person who claims that he/she is from the IRS is a big red flag. Why? Because the IRS does not contact people over the phone, they do it by post mail. Besides, the IRS respects taxpayer rights. They do not ask for credit card information over the phone and do not ask people to pay via wire transfers or prepaid debit cards.

These con artists may sound convincing since they may know a lot about you. Many of them will even spoof the caller ID and make the display the IRS toll free number to make the pitch seem more legit.

If you received a call from someone claiming to be from the Internal Revenue Service and demanding payment, then hang up the phone immediately and report the incident to the IRS. Call (800) 829-1040 if you know you don’t owe taxes or have no reason to believe that you do. But if you received an email, forward it to Be sure not to open any links or attachments in that email.