by Optima Financial Group | Sep 3, 2020 | Taxes & Your Savings
Getting a copy of your IRS transcript is easy and can be done entirely via the IRS.gov website. Follow these simple steps to retrieve your tax transcript.
Keep in mind that only transcripts for filed taxes are available. For example, if you did not file in 2003, there won’t be a tax transcript for that year. Also, if the IRS has not finished with your taxes, the transcript will not be available until they have completed those taxes.
What is an IRS Transcript used for?
IRS transcripts are typically used to validate past income and to prove income to lenders. They are often used to determine status for mortgage, student, and small business loan applications and help with tax preparation.
What information is on an IRS Transcript?
An IRS transcript includes most line items from your tax return, including all accompanying forms and schedules, as it was originally filed. Any changes made after the original filing will not be reflected. Key information listed on transcripts include marital status, AGI, taxable income, payment methods, and W-2 information.
How to get your IRS Transcript Online
You can request tax transcripts online for the current tax year and the three prior tax years. To request older transcripts, you’ll need to submit Form 4506-T. To request a transcript online:
- Visit the IRS website at IRS.gov.
- Look under the Tools tab that is part way down the web page. Click: Get transcript for your tax records.
- Once you reach the transcript page, you can request to get them by mail or continue getting them online by clicking on the box to the left, Get transcript online.
- If you have gotten transcripts before, you can sign in. If not, you will need to click on the right side to create an account: Sign up.
- Complete the sign up process and log in.
- The next page will show a drop-down menu and ask why you need the transcript. Choose the answer that best fits your needs and continue. They ask you what you need it for so they can help you pick the right transcript.
- The next page lists all your transcripts, in four different categories for all the years you filed. These include Tax Return Transcript, Record of Account Transcript, Account Transcript, and Wage and Income Transcript.
- Select the transcript you need for the right year.
- The site will automatically generate a PDF file of your transcript. Print it and save it.
- Log out completely or close the browser when you are finished.
Make sure your pop-up blocker is off for the IRS site. It can cause errors when trying to retrieve your transcripts. If you chose mail, allow 5 to 10 business days for them to arrive before requesting another.
If you have problems navigating the website, you can contact the IRS for further assistance at 1-800-829-1040. For further assistance or help with a different tax issue, contact Optima Tax Relief. Optima Tax Relief offers a comprehensive range of tax relief services. Schedule a consultation with one of our professionals today.
by Optima Financial Group | Aug 19, 2020 | Tax Planning
California Tax Rates, Incentives & Exemptions
As the most populous state in the union, California attracts new residents from all over the country and around the world. From the glow of Tinseltown to the technological buzz of Silicon Valley, dreamers and entrepreneurs alike are drawn to the state. But California is also one of the most expensive states to call home – 3rd highest to be exact. California tax rates are some of the highest in the nation.
Businesses in California are not spared from the tax hammer. California imposes corporate income taxes on “C” corporations and limited liability companies that operate like corporations. As a result, many entrepreneurs who operate small businesses in California are subject to quadruple taxation – double taxation from Uncle Sam and double from California.
But as of 2014, California has enacted a series of tax breaks which will award millions of dollars in tax credits to qualifying businesses. These tax incentives were designed to lure businesses to re-locate or keep their base of operations within the state.
Aerospace Industry Gets a Break with State Tax Credits
One business field seeing some high-profile tax breaks in California is the aerospace industry. California was at one point in time the center of the aerospace industry, before the US government was forced to make drastic cut-backs in the 1990’s, essentially reducing the workforce by more than 50% of its workers. California Governor, Jerry Brown, has been trying to put together an incentive package of sorts to entice some of the larger employers to come back to the state, which would improve employment rates, bring a huge influx of new business and cash flows, as well as help off-set the current financial problems that California is facing.
The Aerospace Tax Clarification Act, which was passed in April, cleared up some ambiguity regarding the classification of rocket propulsion systems. This new act clarifies that these rockets qualify for an existing business tax exemption, rather than being classified as a taxable business supply as the prior law read.
“The space commercialization industry is not only developing some of the most advanced space vehicles in the world,” stated Assembly member Al Muratsuchi, “but is also creating thousands of local, high-paying manufacturing jobs.” This law was a direct nod to the Space Exploration Technologies Corporation, a Los Angeles based enterprise founded by Tesla billionaire, Elon Musk. The bill was also supported by Northrop Grunman, the Commercial Spaceflight Federation, Aerojet Rocketdyne Inc., a division of GenCorp Inc. and Lockheed Martin.
Governor Brown is also pushing for the aerospace bill to be expanded to cover the automotive industry. California is one of several states currently bidding for Tesla to build its proposed $6 billion factory to manufacture a new auto battery, known as the “gigafactory”, here in the state. This addition to California would mean the creation of at least 6500 new jobs as well.
Additionally, Governor Brown signed a law in July 2014 which grants a 17.5 percent tax credit on wages for workers hired to build aircraft. The bill serves as an incentive to score lucrative contracts for high-paid aerospace jobs within the state. There was also a 10-year tax exemption granted for the manufacturing of equipment used for the space travel industry.
Is there a tax credit for small businesses in California?
Under the California Competes program, a full 25 percent of the $29 million in tax credits will be reserved to small businesses with gross receipts of less than $2 million annually. Huge corporations are not the only beneficiaries of the new tax incentives in California. The state recently instituted the California Competes tax credit program, designed to provide financial incentives for businesses to relocate to California or for businesses within the state to remain and add jobs.
The California Competes tax credit program replaces the former Enterprise Zone program, which was eliminated in 2013 due to it being wasteful and inefficient. Credits allocated by the program are tentatively set at $30 million for fiscal year 2013/14, $150 for fiscal year 2014/15 and $200 million for each fiscal year after that through 2018. The state’s website lists the following criteria by which California Competes tax credits will be awarded:
- The number of jobs created or retained
- Total compensation, including wages and fringe benefits
- Investment in the state
- Unemployment or poverty rates where businesses are located
- Other state and local incentives available to the business
- Incentives from other states
- Duration of commitment of the business or project
- Overall economic impact
- Strategic importance of the business to the state, region, or locality
- Future growth or expansion opportunities
- Expected benefit to the state in excess of benefit to the business from the tax credit
The California Competes Tax Credit is a non-refundable tax credit, meaning that businesses cannot receive cash back even if the credit is greater than what they would otherwise owe in corporate income taxes. But excess funds from the credit can be carried forward for as long as five years, or until the excess funds are exhausted, whichever is sooner.
Other Business Tax Incentives in California
Other tax incentives for businesses that locate or expand within the state of California include the Manufacturing Equipment Sales Tax Exemption and the New Employment Credit program. Each program is for businesses located within designated Enterprise Zones, or areas that are struggling economically.
The sales tax exemption allows eligible businesses to exclude the State’s portion of the sales and use tax (currently 4.19%), from the first $200 million in equipment purchases made between July 1, 2014 and June 30, 2022. This program will generate significant savings for eligible businesses, allowing them to pay a reduced sales and use tax rate of 3.3125% on qualifying equipment purchases.
The New Employment Credit program allows eligible businesses to receive a credit that may be taken against corporate income tax. This credit may be taken for all qualified employees hired on or after January 1, 2014. The amount of the tax credit equals 35% of the qualified wages paid for each new full-time employee hired, making a potential tax break of up to $56,000 or more per new employee over a five-year period.
For a newly hired employee to qualify the business for the New Employment Credit, they must fall into one of the following categories:
- Unemployed for 6 months or more (excluding students and self-employed workers) either without a degree or having completed a degree more than 12 months before being hired
- Veterans separated from active duty for less than 12 months
- Earned Income Tax Credit (EITC) recipients during the previous year
- Ex-offenders convicted of felonies
- Current CalWORKS or county general assistance recipients
Attracting New Business with Tax Incentives
Many Californians approve of Governor Brown’s latest attempts to keep California in the running when it comes to attracting new businesses and keeping the existing ones from moving to another state that offers better business incentives. California is beginning to offer many appealing incentives to businesses, including State Tax credits, new employee credits, green tax incentives, as well as energy and transportation credits. When combined with available Federal tax credits and discounts, California can be a very profitable place for business owners to call home.
Below is a list of some additional tax incentives and tax credits currently offered in the state of California.
| California Tax Programs, Credits, and Incentives |
Benefits to Businesses |
| California Competes |
$29 million in various tax credits to businesses who create or retain jobs within the state of California |
| Aerospace Tax Clarification Act |
Qualifies rocket propulsion systems for an existing business inventory tax exemption |
| California Motion Picture and Television Production Credit (AB-1839) |
20% of expenditures for a qualified motion picture and 25% of production expenditures for an independent film or a TV series that relocates to California |
| Manufacturing Equipment Sales Tax Exemption |
Allows businesses to exclude the state share of sales tax (4.19%) from the first $200 million equipment purchases. |
| SB 1309 |
Tesla bill to include tax credits, workforce training grants and streamlined permitting and environmental reviews |
| New Employment Credit |
35 percent of wages between 1.5 and 3.5 times the minimum wage for a period of five years. |
| California Research and Development Tax Credit |
Credit for costs attributable to research activities conducted in California |
| California Capital Access Program Collateral Support (Cal-CAPS CS) |
Pledges cash (up to 40% of loan) to cover collateral shortfall of loans of $100,000 or more in Severely Affected areas |
| Small Business Loan Guarantee Program |
Enables small businesses to obtain a loan it could not otherwise obtain |
| Industrial Development Bond |
Provides manufacturing and processing companies low-cost, low-interest financing for capital expenditures |
| Employment Training Panel |
Helps assist with post-hire training reimbursement |
| Community Development Financial Institutions Investment Credit |
20% of qualified investments made into a community development financial institution |
| Disabled Access for Eligible Small Businesses (FTB-3548) |
$125 per eligible small business, and based on 50% of qualified expenditures that do not exceed $250 |
| Enhanced Oil Recovery (FTB 3546) |
1/3 of the similar federal credit but limited to qualified enhanced oil recovery projects located within California |
| Environmental Tax (FTB 3511) |
$0.05/each gallon of ultra-low sulfur diesel fuel produced during the year by a small refiner at a California facility |
| Low-Income Housing (FTB 3521) |
Similar to the federal credit but limited to low-income housing in California |
| Manufacturing Enhancement Area Hiring |
Hiring credit for Manufacturing Enhancement Area |
| Prison Inmate Labor (FTB 3507) |
10% of wages paid to prison inmates |
| Targeted Tax Area Hiring (FTB 3809) |
Business incentives for trade or business activities conducted within a targeted tax area |
This article was written by staff writers Audrey Henderson and Jennifer Leonhardi. Consult with Optima’s Tax Relief professionals to learn more.
by Optima Financial Group | Aug 8, 2020 | Tax Planning
We all know the thrill of winning from gambling whether you’re an avid gambler or the occasional one. But did you know that all winnings are fully taxable? No matter how small your gambling winnings, they must be reported on your tax return. Gambling income includes- but not limited to- winnings from lotteries, keno, slot machines, table games (i.e. poker, craps, roulette, blackjack, etc.), racing or sports betting, and bingo.
Are gambling losses deductible?
Yes, and here’s where the deductions on your gambling losses come in – you may be entitled to a deduction if you had any gambling losses come tax filing season, but only up to the extent of your winnings for the year. For example, if you won $3,000 from gambling for 2016, the most you can deduct on your 2016 tax return is $3,000, no matter how much you lost. Gambling losses must be reported on Schedule A as an Itemized Deduction, which are separate from winnings. Continue reading for important facts about claiming your gambling losses on your tax return.
Five important facts about deducting gambling income and losses:
- You must report the full amount or your winnings as income and claim your losses (up to the amount of your winnings) as an itemized deduction.
- You cannot reduce your gambling winnings by your gambling losses and then report the difference.
- Claim your gambling losses on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions’.
- The IRS recommends that you keep written documentation, like a notebook or a diary, for proof in case of an audit and to keep winnings and losses separate and organized. According to the IRS Publication 529 Miscellaneous Deductions, your notebook should contain at least the following:
- The date and type of your specific wager or wagering activity.
- The name and address or location of the gambling establishment.
- The names of other persons present with you at the gambling establishment.
- The amount(s) you won or lost.
- According to the IRS, you should also have other documentation for additional proof through the following:
Form W-2G (if given), certain winnings; Form 5754, statement by person(s) receiving gambling winnings; wagering tickets; canceled checks; substitute checks; credit records; bank withdrawals; and statements of actual winnings or payment slips provided to you by the gambling establishment. Learn more about how gambling impacts your taxes with Optima Tax Relief. To keep up to date with gambling winnings tax laws and your responsibilities as a taxpayer, please refer to the IRS Help & Resource page or consult your local CPA or tax attorney.
by Optima Financial Group | Jul 29, 2020 | Taxes & Your Savings
The United States federal income tax system is operated under a system of voluntary compliance. This innocuous sounding term actually packs quite a potent punch – there is little that is voluntary about the federal tax system, at least where paying taxes is concerned. Many celebrities and ordinary citizens alike have learned this lesson the hard way, almost always at great financial cost.
Voluntary Compliance and Audits
The “voluntary” nature of taxation relates to the method of submitting and paying income tax obligations. The Treasury department places the burden of figuring, reporting and paying income taxes in the hands of its citizens, rather than automatically collecting the revenue. In contrast, sales taxes and other use taxes are involuntary. Whenever you buy an item or service that carries sales tax, you not only pay the price of the merchandise or service, but the tax as well.
Although the IRS collects taxes under a voluntary compliance system, the assumption is that most of the population will fail to pay its full tax burden, either by mistake or by deliberate attempts at tax evasion. To remedy the resulting shortfall, the IRS has instituted a system of tax audits. A majority of audits are triggered by suspicious items included or omitted from tax returns. Other tax audits are generated because taxpayers who should file tax returns fail to do so or file so-called frivolous returns. An unfortunate minority of taxpayers are flagged for audits by random selection – just plain bad luck.
Celebrity Tax Evasion & Frivolous Tax Returns
Throughout history, famous and infamous figures have been caught in the net of failure to comply with the “voluntary” system. Notorious gangster Al Capone died in prison as a result of a conviction of income tax evasion. More recently, celebrities like Martha Stewart, Wesley Snipes and Marc Anthony have been snared by convictions for federal income tax evasion. One persistent but thoroughly discredited strain of tax protest arguments claim that federal income taxes are unconstitutional, or that taxpayers can eliminate their federal income obligations by filing “zero” tax returns. Snipes was one of the more famous figures taken in by this line of reasoning, and as a result was convicted of misdemeanor tax evasion in 2008 and sentenced to 3 years in prison. As of 2014, the movie star was back on the silver screen, headlining in the action feature Expendables 3. Presumably, Snipes will pay a rightful proportion of his earnings from the film, marketed as a summer blockbuster, to the IRS. The IRS exercises little patience with taxpayers filing what it concludes to be frivolous returns. It imposes an array of civil penalties, listed below:
- Accuracy-related penalty under section 6662 (20 percent of the underpayment attributable to negligence or disregard of rules or regulations)
- Civil fraud penalty under section 6663 (seventy-five percent of the underpayment attributable to fraud)
- Erroneous claim for refund penalty under section 6676 (twenty percent of the excessive amount)
- Fraudulent failure to timely file income tax return (triple the amount of the standard failure to file addition to tax under section 6651(a)(1))
- Frivolous submissions other than tax returns under the Tax Relief Health Care Law of 2006 ($5,000 penalty)
Is Tax Evasion a Felony?
Criminal penalties for tax evasion based on frivolous tax returns can be severe. Both fines and jail time may be imposed upon conviction. Specific penalties are listed below.
- Felony for attempting to evade or defeat tax under Section 7201 provides as a penalty a fine of up to $100,000 ($500,000 in the case of a corporation) and imprisonment for up to 5 years with optional additional fine up to $250,000
- Felony for willfully making and signing under penalties of perjury any return, statement, or other document that the person does not believe to be true and correct as to every material matter under section 7206 is a fine of up to $100,000 ($500,000 in the case of a corporation) and imprisonment for up to 3 years with optional additional fine up to $250,000
- Felony for promoting frivolous arguments and assisting taxpayers in claiming tax benefits based on frivolous arguments under section 7206(2) may be fined up to $100,000 ($500,000 in the case of a corporation) and imprisonment for up to 3 years with optional additional fine up to $250,000
How Do Corporations Avoid Paying Taxes?
Individual taxpayers are far from alone in their attempts to minimize their tax burdens. Complex accounting maneuvers with names like the Double Irish or Dutch Sandwich allow major corporations like Apple and Google to evade the 35 percent US corporate tax. But unlike tax evasion or frivolous tax returns, corporate tax dodges are largely perfectly legal – for now. Governments around the world have begun to put measures in place designed to curb offshore tax havens and other corporate tax evasion strategies.
Fair Tax System
The voluntary compliance system is far from the only viable system of income taxation. The so-called fair tax system is based on imposing use taxes – the more goods and services a person uses, the more taxes he or she pays. But fair use systems often impose a heavier burden on low-income taxpayers because they pay a higher proportion of their income use taxes. For this reason, fair use taxes are often labeled as regressive — and aggressively unfair.
Simple Tax System
Supporters of a so-called simple tax system include tax expert Austan Goolsbee and policy wonk Ezra Klein. Under a simple tax system the IRS would calculate taxes, credits and deductions and provide taxpayers with a copy of the completed return. Taxpayers who agree with the IRS’s calculations could simply accept the return, while taxpayers who disagree could file their own returns.
The simple tax system has obvious advantages. The IRS has a good idea of what many taxpayers earn and owe anyway, thanks to Form W-2 and various versions of Form 1099. The simple tax system would also ensure nearly 100 percent compliance, since the IRS would be supplying tax returns rather than individual citizens.
As one might expect, the tax preparation industry (including TurboTax) largely disfavors the simple tax return system. Approximately 60 percent of all Americans contract with outside tax preparers to file their federal and state income tax returns. Implementing something like the simple tax system would cut deeply into that percentage.
While the simple tax return system is indeed simple, there are potential pitfalls. First, many taxpayers may accept the IRS’s version of their returns whether it is accurate or not from inertia, laziness or fear of reprisal. Second, even if the IRS and its agents were totally diligent in calculating the maximum credits and deductions, human error must still be considered.
Death and Taxes
Given the present financial and political climate, it is unlikely that the voluntary compliance tax system will change in the foreseeable future. It’s also a safe bet that attempts to evade taxes will continue, including extreme cases such as Facebook co-founder Eduardo Savarin, who renounced his American citizenship in 2012 shortly before the social media giant launched its IPO. In the face of such tax evasion attempts, the IRS will also undoubtedly continue its enforcement strategies, including the dreaded audit.
Considering a tax consultation? Optima Tax Relief offers a range of services discussed in our free consultation. Our award winning staff of tax professionals provide comprehensive tax relief services to help you resolve any tax issue. Speak to us today.
by Optima Financial Group | Jun 2, 2020 | Tax Relief Solutions
The IRS is always prepared, shouldn’t you be as well? Do you need a tax relief lawyer?
Yes, absolutely.
This is a blog for a tax relief company with a small army of tax lawyers, so that’s what we’re paid to say, right? Well, yes, but it doesn’t make it any less true.
Benefits of Using a Tax Relief Lawyer: True Stories
A tax relief lawyer is a wise decision. In January, 2014, Forbes reported that Beanie Beans founder Ty Werner was convicted of evading $5.5 million dollars in taxes owed on the $27 million in interest accrued from millions of dollars stashed away in a Swiss bank account. The sentence? Two years on probation and some hefty fines, which were small change for a billionaire like Werner.
Unrelated, and a couple of months earlier, Daniel Thody, a defense contractor was found guilty to five counts of tax evasion for failing to report $15,000 and $50,000 in taxes from $1.8 million earned as a contractor for the Department of Defense. He faces up to 25 years in prison, 5 years for each count.
Which one do you think hired a tax relief lawyer and which one thought representing himself would be the smarter option? The old adage that he who represents himself has a fool for a client may be a cliché, but that doesn’t make it any less true either.
We’ve already shared the 10 benefits of working with a tax relief firm, but here are a few good reasons you should lawyer up when dealing with the IRS.
What Can a Tax Attorney Do For You?
A tax attorney will ensure that you are treated better. It’s unfair, even illegal, but it’s also human nature. IRS agents are flesh and blood and if they can get away with bullying someone into their interpretation of the law, they probably will. A tax lawyer can ensure the IRS is playing by the rules and treating you fairly. IRS investigators are much more careful about asking inappropriate questions or wasting your time with unnecessary requirements if they know they are dealing with a tax attorney.
That was the finding of an investigation into nine groups in Ohio and Kentucky that sought nonprofit status. Organizations that didn’t have legal representation were more likely to have their applications stalled and receive inappropriate or unnecessary questions from the IRS.
You don’t have to worry about an IRS agent getting upset with you for hiring a tax relief lawyer either. The good ones prefer dealing with tax professionals because they don’t have to waste their time and patience explaining to you the ABCs of a tax audit or the basic IRS guidelines for a criminal investigation. In fact, hiring an experienced tax relief lawyer is generally seen as a sign of good faith to resolve your tax issues.
A few bad eggs may resent you hiring a lawyer and try to dissuade from doing so, but that’s when you really need a lawyer in your corner. The IRS’s own Declaration of Taxpayer Rights clearly states that “If you are in an interview and ask to consult such a person [a lawyer, agent or accountant], then we must stop and reschedule the interview in most cases.” Be suspicious if an IRS agent prefers not to deal with a tax professional.
Can the IRS See My Foreign Bank Account?
The IRS is a behemoth of an agency, one of the most powerful organizations on the planet. From 2008 through to 2014, over 50 bankers from Switzerland, India, Israel and other countries have been indicted for helping rich Americans squirrel billions of dollars into offshore accounts.
In 2013, the IRS also cracked the code of silence of Swiss financial institutions and got UBS, the largest Swiss Bank, to divulge confidential information on American tax evaders, and pay a $780 million penalty.
Even the IRS Thinks You Need a Tax Lawyer
The Taxpayer Advocate Service is an independent organization within the IRS which has the job of ensuring that you are treated fairly and helping you resolve problems with the IRS. Although it’s unlikely a Taxpayer Advocate Service lawyer will protect your interests quite as aggressively as a regular tax attorney, they are better than nothing, if you can’t afford to pay one.
If money is an issue, there is another option: Low Income Taxpayer Clinics. Although these clinics are partially funded by the IRS, they are completely independent and are operated by nonprofit organizations and academic institutions.
Only a Tax Attorney Can Represent You in a Criminal Investigation
Certified Public Accountants are great. When it comes to tax planning, business budgeting and asset management, a CPA is – all things being equal – more useful than a tax attorney is. But when you have a dispute with the IRS, especially if you’re accused of tax fraud or tax evasion, a tax relief lawyer is the only intelligent choice. Tax attorneys are the only ones who can represent you in a court of law and provide you the legal advice and analysis you need.
If that is not reason enough, I have two and a half words for you: attorney-client privilege. Unlike CPAs and accountants, attorneys cannot be subpoenaed to testify against a client in a criminal procedure.
Is it Worth it to Hire a Tax Attorney?
Does this mean you need a tax lawyer every time you get a letter from the IRS? No, of course not. You can probably deal with small mistakes and omissions by yourself or by giving your tax preparer a quick call. However, if there is any chance your case could go sour, you need to call a qualified and experienced tax attorney, and pronto. A good rule of thumb is that if you’re asking yourself whether it’s serious enough to merit calling a lawyer, it probably is.
A quick consultation call with a tax lawyer can save you thousands of dollars in unnecessary legal fees you could have avoided by not procrastinating. Tax lawyers know how IRS attorney think, many tax attorneys worked as IRS attorneys before hanging their own shingle. So, they know what to say, what not to say, and what buttons to push when negotiating your case.
Hiring a lawyer sends the IRS a clear and powerful message. You’re taking the investigation seriously; you’re not going to let IRS agents push you around; and you want to work with the IRS to avoid criminal charges.
The bottom line is that the IRS is scary enough when you have a first-rate lawyer at your side. So hire one already. Need to hire a tax relief lawyer? Our tax professionals at Optima Tax Relief are here to help.
