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  • How to Reduce Taxes on Rental Income

    Earning rental income holds great promise for financial security and wealth accumulation. However, it is imperative to understand the tax implications associated with it to avoid massive penalties and fines. Rental property ownership is associated with tax responsibilities, as rental income is taxable. One of the biggest concerns of people having rental income is taxation. This article aims to provide insight into the workings of taxation on rental income and offers strategies for reducing tax burdens. If you are confused about rental income taxation and you want to implement the best suitable strategy for tax reduction, V-Tax Services provides assistance in managing and reducing your rental income tax in compliance with Federal and state tax regulations What is Included in Rental Income? You are required to report all rental income as part of your gross income. However, it is important to understand what is included in rental income as per IRS regulations. The following is included in rental income: All sums received for the utilization or occupancy of property under your ownership. Prepaid rent (rent received before the period it covers). Security deposits (You are obligated to report any payments you received as a security in the year if you received them; otherwise, if not retained, it's not required to be reported). Compensation for lease cancellations. Tenant-covered expenses (e.g., water and sewage payments not included in the lease agreement). If you have received payment for both the first and last month's rent, you have to report the entirety of what you received. The payment for the first month constitutes rent, while the payment for the second month is considered advance rent. Tax on Rental Income And Its Advantage The Internal Revenue Service mandates that any rental income you earn must be disclosed and subjected to taxation. Rental income falls under the category of ordinary income according to the IRS, and it is mandatory to report it on your tax return and payment of taxes accordingly. Federal taxes are structured into bracket levels, with tax rates escalating as income increases. If your rental income pushes you into a higher tax bracket, you will have to pay a higher tax rate on the portion of income within that bracket. However, there exist some specific strategies to mitigate your tax burden associated with rental income, including the possibility of deducting expenses linked to your rental properties. A significant advantage of the tax regulations concerning rental income is that it is not categorized as earned income. Unlike self-employment, where a 15.3% self-employment tax is levied on all earned income, including the employer's and employee's portions of Social Security and Medicare taxes, rental income is exempt from this tax obligation. What is the Tax Rate on Rental Income? The tax rate on rental income depends upon which tax bracket level you fall into. The following table explains the tax percentage with the increase in rental income for single filers: In the U.S., the tax system is progressive, meaning that the highest income tax bracket doesn't apply to all your income. As an example, if your ordinary income exceeds $578,126, you'll only pay 37% on the portion above that threshold. Moreover, it is significant to consider the tax laws of your state. While some states have no income tax, most of the states impose it. Therefore, if you reside in a state with an income tax, you have to report your rental income and pay taxes according to your state level. The best way to get guidance from V-Tax Services for paying tax on your rental income. Strategies to Reduce Taxes on Rental Income Following are the strategies to reduce taxes on rental income. However, to decide which strategy fits with your rental income and for the best implementation of these strategies, you need to get the services of rental income experts at V-Tax Services in the USA. 1. Depreciation Depreciation enables you to deduct the cost of your rental property over 27.5 years, reducing your taxable income annually. This tax deduction allows you to write off a portion of your property's price each year. 2. Expenses You Can Deduct As a rental property owner, you are eligible to deduct various expenses associated with your rental property, which include property taxes, insurance, repairs, and maintenance costs. These deductions reduce your taxable income which as a result reduces your tax liability. 3. Capital Gains Tax Exemption You can qualify for a capital gains tax exemption If you sell a rental property that has been held for more than a year. With this exemption, you can easily avoid paying taxes on the profit generated from the sale of your rental property. 4. Tax Deduction on Rental Income with a Mortgage When you have a mortgage on your rental property, the interest you pay becomes tax-deductible. This allows you to subtract the interest payments from your rental income, thereby lowering your taxable income. However, in that scenario the only interest portion is deductible, not the principal amount. And if you use any portion of your rental property as your primary residence, you may not be eligible to deduct the interest. 5. Utilizing a 1031 Exchange Employing a 1031 exchange enables you to sell your rental property and reinvest the proceeds into another property without incurring capital gains taxes. This tactic can be employed repeatedly, providing the opportunity to continually defer taxes on your rental income. 6. Setting up an LLC Establishing a rental property as an LLC (Limited Liability Company) can offer tax advantages, including the ability to deduct expenses and losses from rental income. LLCs operate as pass-through entities for taxation, meaning members report earnings on personal income tax returns. By establishing an LLC, you could be eligible for the pass-through deduction, enabling a deduction of up to 20% on real estate investment income, provided you offer a minimum of 250 hours of rental services each year. This deduction is commonly known as the Qualified Business Income (QBI) deduction. 7. Employ a Self-Directed IRA A self-directed individual retirement account (IRA) offers the opportunity to invest in rental property using IRA funds. The rental income generated is either tax-deferred or tax-free, depending upon the type of IRA you possess. 8. Home Office Deduction If you utilize a portion of your rental property for business activities, such as a home office, you are eligible to claim a home office deduction. This deduction aids in reducing your taxable rental income. It is significant to understand that while these strategies can lower your tax liability, they must adhere to IRS regulations. Any illegal attempts of tax evasion can result in penalties and legal consequences. The V-Tax Services can help you implement tax reduction strategies in your rental income in compliance with the IRS regulations Penalties for Not Reporting Rental Income It is mandatory to report your rental income to both the IRS and your state's taxing authority to avoid penalties. There are two federal penalties as given below: A penalty of 20% may apply to any understated amount While deliberate withholding of information about rental income can impose a civil fraud penalty of up to 75%. Therefore, it is recommended to diligently report all rental income and pay any appropriate taxes in due timeline. How Can We Help You: Reducing taxes on rental income requires careful planning, understanding of tax laws, and employing legal strategies. Utilizing tax deductions, forming an LLC, capital gains tax exemptions, utilizing a self-directed IRA, and employing a 1031 Exchange are effective methods to minimize taxes on rental income. Seeking guidance from a tax professional is significant to determine the most suitable strategies for your individual circumstances. Engaging the services of a specialized tax professional such as V-Tax Services in rental property taxes ensures access to all available deductions and credits. The experts at V-Tax Services will structure your rental property ownership to optimize tax benefits and ensure compliance with tax laws and regulations.

  • Partial Payment Installment Agreement

    Do you want to avoid paying the IRS a large lump payment of your tax debt? Do you want to reduce your tax bill and make monthly payments? In this scenario, the best option for you is to go for a Partial Payment Installment Agreement (PPIA). A partial payment installment agreement helps you settle tax debts for less than you have to pay for. With this option, you pay monthly until a set date, after which the IRS nullifies the remaining tax liability. Thus, It cuts your tax bill, letting you pay in installments. Now the question raised in your mind, is this option is right for you? and do you qualify for this type of payment plan? The experts at V-Tax Services can help you decide if a Partial Pay Installment Agreement is fit with your situation, and we help you throughout the application process. In this article, you will learn all about the Partial Pay Installment Agreement. What Is a Partial Payment Installment Agreement? With a partial payment installment agreement, you pay monthly until the collection statute expiration date (CSED), usually 10 years after tax assessment. After the CSED, you do not need to pay more, even if your payments were less than what you owed. How Partial Payment Installment Agreements Work Partial payment installment agreements work in a simple way. For your better understanding, here is a simple analogy to show how it works. For example, someone owes $30,000 in taxes; however, one can only afford to pay $200 each month. The collection statute for one's installment expires in five years. If one qualifies for PPIA, one has to pay $200 every month for five years. After that, even if one has only paid $12,000, they won't owe anymore. But there's a twist. Every two years, the IRS checks the taxpayer’s financial situation again. Let's say after two years, the IRS sees the taxpayer's financial situation has improved. Then, the taxpayer might have to pay $300 each month instead of $200 for the rest of the five years. In the other case, if the IRS finds out the taxpayer inherited a vacation home, the IRS has the authority to make the taxpayer have to sell it or get a loan against it to pay off the taxes. This is a downside of these payment plans. Who Should Adopt a Partial Payment Installment Agreement? The answer to this question comprises the following conditions. If your financial situation meets the following conditions, you must go for the PPIA plan: You can not pay all your taxes at once. You do not own anything valuable to sell and pay off your taxes. You can not borrow money to cover your taxes. You can not manage the monthly payments on a regular IRS payment plan. Your request for a lower settlement was turned down. You don't meet the requirements for financial hardship relief or or currently not collectible status. A partial payment plan is a good choice for those who can not pay the whole amount of owed tax. It is the best option if you meet the above specific conditions. If you cannot decide on the conditions, you need to approach V-Tax Services consultants for the tax resolution process. Requirements for a Partial Payment Installment Agreement To qualify, you usually need to owe $10,000 or more in back taxes. You must show that you don't have assets to sell or can't afford monthly payments on a regular IRS plan. Also, you can't be in bankruptcy or have had an offer in compromise accepted. For instance, if you owe $20,000 for 2018 taxes and get an offer in compromise accepted, you can't switch to a Partial Pay Installment Agreement for those taxes. If you qualify, it's best to set up automatic payments from your bank account or paycheck. If you defaulted on an agreement in the last 24 months, you must use these options unless you're unbanked or self-employed. You also need to be up to date with tax filings, deposits, and estimated payments. The IRS checks your finances every two years. If things change, they might ask for higher payments or full repayment. How to Apply for a Partial Payment Installment Agreement To sign up for a Partial Payment Installment Agreement, start by applying online or filling out Form 9465 (Installment Agreement Request). You will also need to complete either IRS Form 433A (for individuals) or 433B (for businesses). These forms ask for detailed info about your money, like what you own, what you owe, and what you make. In this situation, V-Tax Services can help you deal with the PPIA plan to the IRS on your behalf. Depending on how much you owe, the IRS might look even closer at your finances. If they spot anything that may be an alternative to your tax debt, they might ask for: Details about any money or stuff you didn't mention. Why has your income dropped by 20% or more? Records of things you own, like land or cars. Info from the Department of Motor Vehicles. Your credit report. Bank statements. After reviewing your finances, the IRS might ask you to sell stuff or take out loans. After that, the IRS figures out how much you need to pay each month. How the IRS Calculates Your Monthly Payment With IRS payment plans, you have to pay what you can afford. However, you are not allowed to decide the amount. IRS has strict policies about expenses and wants you to use all your extra money for tax payments. An expert tax advisor like V-Tax Services can help you get the most allowances. Usually, you need to pay at least $25 a month for a partial payment plan. If you cannot afford this threshold amount, you might qualify for hardship status, where the IRS stops collecting until your situation improves. Selling Assets for Partial Payment Installment Agreements The IRS may require you to sell assets or take out a loan against them to cover part of your tax liability. For instance, if you owe $30,000 and you own a new luxury car, you will probably be required to sell it. Only a very small amount of assets are exempt from this requirement as the IRS has power when it comes to collecting overdue payments. You might not have to sell your assets or borrow a loan if these situations apply: The assets have a minimum cost. No creditors will grant you a loan against this asset. If your spouse shares ownership of the asset but isn't responsible for the tax debt The asset cannot be sold in the market. The asset is the main source of income so you cannot make your monthly PPIA payments without this asset. Selling the asset would push you into a severe economic crisis. Before selling any of your assets as demanded by the IRS, you need to consult with tax advisors of V-Tax Services. They can make sure you are making the best decisions and getting the best deal with the IRSExtending the Collection Statute Expiration Date Once more, the collection statute expiration date (CSED) marks when the IRS can no longer demand payment for your taxes. If the IRS thinks you will gain something valuable that could cover your tax debt after this date, they might ask you to extend it before agreeing to a PPIA. If you are on a fixed income and can only afford small payments, but expect a large sum from a trust after your tax collection time ends, the IRS might require you to extend the deadline before approving your payment plan. The same applies to businesses holding assets that could cover taxes after the deadline, like unsellable property. Your tax collection deadline (CSED) will extend automatically in these cases: Applying for an offer in compromise. Requesting a Collection Due Process (CDP) hearing. Asking for innocent spouse relief. Having your case reviewed in tax court. During a bankruptcy case and six months after the automatic stay. Before extending your CSED, you need to ask V-Tax Services experts. The experts will guide you and help you make an informed decision regarding the extension of CSED as it may be necessary for a PPIA and to avoid further collection actions, but only do so if it benefits you. How Can V-Tax Services Help You? A Partial Payment Installment Agreement (PPIA) is a tax resolution method provided by the IRS to settle your outstanding tax debt through monthly payments over a set period. Some individuals may opt for a lump-sum payment through an Offer in Compromise, others find it more convenient for PPIA payments until the expiration of the collection statute. To determine the most suitable approach for your circumstances, seek guidance from the tax specialists at V-Tax Services. We will assess your situation and recommend the IRS resolution option that aligns with your financial situation. Setting up a PPIA can be complex, but we can help. At V-Tax Services, our experts are experienced in PPIAs and other tax resolution methods. We work hard to minimize your tax payments, saving our clients millions of dollars.

  • Tax Resolution

    Intro Are you facing tax debt or IRS tax problems in Denver or any other region of Colorado state? Do you want to save money on your tax bill and want to mitigate the looming threats of fines and penalties with tax resolution services? Our tax debt relief professionals at V-Tax Services provide solutions for state or IRS tax problems that seem irresolvable and challenging. In this article, we will explain the possible options for tax resolution to achieve tax debt relief in Denver by availing the services of a leading tax advisory firm, V-Tax Services. IRS Tax Resolutions If you want to eliminate IRS tax notices for tax debt, tax levies, and back taxes, you need to approach a tax advisory firm like V-tax Services in Denver for tax resolution services. Our tax professionals offer multiple tax relief services, including Offer in Compromise (OIC), Fines Abatement, Currently Not Collectable (CNC), Installment Agreement, or any other option for tax relief. In addition to tax resolution, V-tax Services offers personalized services for tax planning, preparation, and filing for personal or business returns, regardless of the size of outstanding tax obligations. We can protect you from the severe consequences of a lack of tax filing by applying suitable solutions and dealing with tax authorities to give you peace of mind. Hire V-Tax Services experts to shift tax-related affairs on our shoulders and concentrate on your business, personal life, and obligations. Tax Relief With Tax Resolution Options Relief in the state or IRS taxes is possible; however, it depends upon the taxpayer's ability to pay now or in the future. Tax relief can also be validated in situations that cause liability or errors the taxpayer, or the taxation authorities make. The Experts at V-Tax Services evaluate your outstanding tax obligation and propose the most suitable solution to help you out of tax loopholes. The following options for tax resolution: 1. Offer in Compromise An Offer in Compromise (OIC) enables taxpayers to resolve their tax debt for less than the total owed, especially when full payment becomes cumbersome for you. This is an agreement between taxpayers and the Internal Revenue Service (IRS) to settle tax liabilities for a reduced amount. The IRS will agree to an OIC with the following three conditions: ● There is uncertainty that the IRS can collect the full amount owed ● There exists a valid uncertainty regarding the accuracy of the owed amount. ● The compromise promotes efficient tax management. The Aim of an OIC The Offer in Compromise aims to reach a settlement that benefits both the government and the taxpayer, providing a fresh start and encouraging future compliance. Eligibility For Offer in Compromise: The following are the eligibility criteria to apply for the Offer in Compromise: ● You have submitted all required tax returns and fulfilled all estimated payment obligations. ● You are not currently undergoing bankruptcy proceedings. ● You have a legitimate extension for the current year's return ● If you are an employer and have deposited taxes for the previous two quarters. In 2014, more than 60% of offers were declined for the Offer in Compromise. Those capable of paying through installment plans or alternative methods typically do not qualify for the Offer in Compromise. The V Tax Professionals Ltd. firm evaluates your eligibility for tax settlement through an Offer in Compromise and presents your case for the best possible outcome with the IRS. 2. Currently Not Collectible When the IRS puts your tax debt on Currently Not Collectible (CNC) status, it means your tax debt should be removed from active collections. The financial hardship or an inability to pay tax debt qualifies taxpayers for CNC status. To qualify, you must demonstrate to the IRS that paying your tax debt would create a hardship for you and your family. If approved, you will receive a letter stating your collection case is temporarily closed due to financial inability. Qualifying For CNC Status ● The IRS will first check your savings to see if they can be used to pay taxes. ● If you lack assets, the IRS will review your income and expenses before assigning you the CNC status to determine whether you qualify for an installment agreement. ● The IRS may request a financial statement (Form 433), proof of monthly income (paystubs, bank deposits), and living expenses (receipts). With the CNC status, you might not need to pay the IRS until your financial situation improves. Yet, a drawback of the IRS's non-collectible status is its temporary nature, typically lasting up to two years. Advantages of Currently Not Collectible Status If you cannot afford to pay owed taxes, filing for CNC status offers the following benefits: ● You have time to pay without IRS collection efforts or wage garnishment. ● If your situation doesn’t improve within ten years, you surpass the collections statute of limitations, and the IRS forgives your debt, including penalties and interest. Disadvantages of Currently Not Collectible Status Though CNC status provides temporary relief for paying federal taxes, it has the following disadvantages: ● Interest and penalties are still assessed, raising your owed amount. ● The IRS will apply your future tax returns toward your outstanding balance. ● CNC status isn't permanent. Your financial status is reviewed annually, and the IRS can revoke it if it determines you can pay. ● If you owe over $10,000, the IRS can place a lien on your property until the debt is settled. The experts at V-Tax Services will investigate your savings and assets and guide you throughout the process of getting Currently Not Collectible Status. 3. Installment Agreement The IRS offers an Installment Agreement for tax repayment, extending up to 72 months for income taxes and covering penalties and interest. During this period, the IRS prohibits levying or garnishing wages. Direct Debit Installment Agreements Direct debit installment agreements allow repayment without disclosing income and assets to the IRS. For debts under $25,000, or between $25,000 and $50,000, repayable within 72 months, with minimal paperwork. Partial Pay Installment Agreements If you are not meeting the conditions of Direct Debit Installment Agreements, the IRS offers a Partial Pay Installment Agreement (PPIA). You'll submit forms and documents for the IRS to determine your payment. To qualify for this agreement, you have to owe $10,000 or more, have a lack of assets for payment, and be unable to afford standard installments from the IRS. In a partial payment installment agreement, taxpayers pay their liability monthly until the collection statute expiration date (CSED), usually ten years from the tax assessment date, but reviewed every two years. Installment Agreement Owed Amount Time Duration Direct Debit Installment Agreements More than $25,000 but less than $50,000 72 months Partial Pay Installment Agreement (PPIA) $10,000 in back taxes or more. CSED is typically ten years, and it is reviewed every two years. 4. Fines Abatement If a taxpayer has a valid reason for not adhering to tax laws, there is a chance that they could request the waiver of any fines imposed. The professional at V-Tax Services will assist you in fine abatement. 5. Amending tax returns In numerous instances, taxpayers may discover errors in their previous filings or find that tax authorities have made a mistake on their behalf, resulting in an overpayment of taxes. In such cases, individuals can rectify the situation with the guidance of V-Tax Services' tax experts. Why Choose US V Tax Professionals Ltd. V Tax, the best tax advisory firm in Denver, can help you file unfiled tax returns, prevent bank levies, conduct audits, remove tax fines, and support taxpayers in meeting IRS compliance. We offer Tax resolution services throughout Colorado State, especially in Denver, and specialize in multiple IRS debt reduction services. Our experts keep your interests safe, stop any future actions from tax authorities, and help you grow your financial situation. Contact us and allow us to deal with tax authorities as we know the ins and outs of working with Tax authorities. Our Tax Resolution Services Include: ● Get a free initial consultation ● Represent you in communication with the IRS ● Sort out federal and state taxes, even if you haven't filed ● Ensure you're up-to-date with all tax filings ● Negotiate a manageable solution for your tax debt ● Offer guidance for informed decision-making ● Provide personalized service at fair prices ● Course Tax Preparation ● Stop Enforced Collections ● Remove wage and bank levies ● Business Tax Service ● Individual Tax Service ● Tax Strategies

  • Taxation of Rental Income

    #taxsavingstrategies #taxhelp #taxseason2024 #taxsavings #denvercolorado #taxesdenver #littletoncolorado #taxpreparation #taxpreparer #TaxExpertise #TaxExperts #taxpreparer #taxpreparationservices #taxprofessional #taxpros #TaxProblemSolver #taxprofessional #TaxExpertise #businessowner #businessgrowth #BusinessSuccess #SCorporation #rental #rentalincome #rentalproperty For Tax Preparation, Tax Resolution Services contact us: taxes@vtxaservices.com Phone:970-306-8221 https://calendly.com/vtaxes/estimate-for-tax-preparation Our office is at:26 W Dry Creek Cir, Suite 600, Littleton, CO, 80120

  • Attention Business Owners - BOI Reporting

    #taxsavingstrategies #taxhelp #taxseason2024 #taxsavings #denvercolorado #taxesdenver #littletoncolorado #taxpreparation #taxpreparer #TaxExpertise #TaxExperts #taxpreparer #taxpreparationservices #taxprofessional #taxpros #TaxProblemSolver #taxprofessional #TaxExpertise #businessowner #businessgrowth #BusinessSuccess #SCorporation For Tax Preparation, Tax Resolution Services and BOI reporting contact us: taxes@vtxaservices.com Phone:970-306-8221 https://calendly.com/vtaxes/estimate-for-tax-preparation Our office is at:26 W Dry Creek Cir, Suite 600, Littleton, CO, 80120

  • IRS Opening for E-Filing

    #taxsavingstrategies #TaxHelp #taxseason2024 #TaxSavings #denvercolorado #taxesdenver #littletoncolorado #taxpreparation #taxpreparer #TaxExpertise #taxexperts #taxpreparer #taxpreparationservices #taxprofessiona #taxpros #TaxProblemSolver #taxprofessional #TaxExpertise For Tax Preparation and Tax Resolution Services contact us: taxes@vtxaservices.com Phone:970-306-8221 https://calendly.com/vtaxes/estimate-for-tax-preparation Our office is at:26 W Dry Creek Cir, Suite 600, Littleton, CO, 80120

  • In-person Tax Services, 26 W Dry Creek Cir, Suite 600, Littleton, Colorado, 80120

    #taxsavingstrategies #taxhelp #taxseason2024 #TaxSavings #denver #taxesdenver #littletoncolorado #TaxPreparation #taxpreparer #TaxExpertise #taxexperts #taxprep #TaxPreparationServices For Tax Preparation Services contact us: taxes@vtxaservices.com Phone:970-306-8221 https://calendly.com/vtaxes/estimate-for-tax-preparation Our office is at:26 W Dry Creek Cir, Suite 600, Littleton, CO, 80120

  • Rental Income

    #taxsavingstrategies #Taxes #TaxExpertise#taxsavings #moneysaving #moneymanagement #RealEstateOpportunity #realestatetips #realestatelifestyle #realtors #realestateagent #smallbiz #smallbusinessbigdreams #selfemployed #SelfEmploymentTax #selfemployment #businesstips #bussinessowner #BusinessGrowth #Denver #denvertax #denvercolorado #denverrealestate #coloradorealestate #homeoffice #homeofficedenver #homeofficedeductions Subscribe to our YouTube channel:https://www.youtube.com/channel/UCzjAmWDIcSxk2w7KXBfxWSA

  • Business Deductions - Home Office Deduction

    #taxsavingstrategies #taxes #TaxExpert#taxsavings #moneysaving #moneymanagement #RealEstateOpportunity #realestatetips #realestatelife #Realtors #realestateagent #SmallBiz #smallbusinessbigdreams #selfemployed #selfemployment #businesstips #bussinessowner #businessgrowth #denver #denvertax #denvercolorado #denverrealestate #coloradorealestate #homeoffice #homeofficedenver #homeofficedeductions Subscribe to our YouTube channel:https://www.youtube.com/channe l/UCzjAmWDIcSxk2w7KXBfxWSA

  • General Benefit of S-Corporation Election

    #taxsavingstrategies #taxes #taxexpert #taxsavings #moneysaving #moneymanagement #realestate #RealEstateTips #realestatelife #realtors #realestateagent #smallbiz #smallbusinessbigdreams #selfemployed #SelfEmployment #businesstips #bussinessowner #businessgrowth #denver #denvertax #denvercolorado #DenverRealEstate #Colorado Subscribe to our YouTube channel:https://www.youtube.com/@vtaxservicesvirtualtaxser.../videos

  • Tax Savings!

    #taxes #taxplanning #taxsavings #realestate #realestateexpert #realtorlife #realestatetips #smallbiz #realestategoals #taxsavingstrategies #TaxExperts

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