Posted on

If I Got an IRS Notice CP90, What Now?

When the IRS sends you a notification, it can stir up feelings of unease, particularly concerning significant issues such as potential tax collections. Among these notices is the IRS Notice CP90. Knowing how to interpret and react to this notice is essential. Here is a detailed manual on the steps to take upon receiving IRS Notice CP90.

What’s IRS Notice CP90?

Upon receipt of IRS Notice CP90, also referred to as the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, individuals are informed by the IRS that there are outstanding tax liabilities that need to be addressed.

In this letter, it is brought to your attention that the IRS is issuing a last cautionary message declaring their plans to seize your assets, including income, financial accounts, and other possessions, to settle your outstanding tax obligations. Additionally, you are being formally notified of your entitlement to initiate a Collection Due Process (CDP)

IRS Notice CP90

What Is IRS Notice CP90 For?

Upon receiving IRS Notice CP90, it signals that there is an outstanding tax debt that has not been resolved despite previous collection efforts. This particular notice is issued following a series of previous notifications urging payment, and it serves as a warning that more forceful collection measures, such as levies, are on the horizon unless prompt action is taken.

Steps to Takes When I Receive IRS Notice CP90

Thoroughly Understand My IRS Notice CP90 

Before doing anything else, carefully review the notice provided. It is crucial to go through it comprehensively to grasp its information. The notice will outline the outstanding balance, the specific tax periods under review, and the date by which a response is required. It is imperative to note the deadlines and carefully follow any guidelines outlined in the notice.

Verify the Details

Before proceeding, it is important to confirm the accuracy of the information provided. Take the time to carefully review all details in the notice to make sure there are no discrepancies. Check that the specified tax amount is correct and that the notice is indeed intended for your attention. Should you identify any inaccuracies, feel free to reach out to the IRS promptly to resolve any issues.

What Are My Options

What Are My Choices?

After verifying the correctness of the notification, take some time to explore the possible ways to settle the outstanding debt.

Pay the Amount Owed.

To settle the outstanding balance, it is advisable to remit the entire sum specified in the notification promptly to prevent additional charges and accruing interest. Payment options include settling the debt through the IRS online platform, over the phone, or by sending a check or money order through the mail.

Set Up a Payment Plan

Establishing a payment arrangement if you are unable to cover the entire sum owed, contemplate arranging a payment schedule with the IRS. By doing so, you can conveniently make regular payments to settle your tax obligations gradually.

Offer in Compromise

For individuals facing financial constraints in meeting their tax obligations, an alternative solution is an Offer in Compromise (OIC). This specialized program provides the opportunity to resolve tax debts for a reduced amount if certain qualifying criteria are met, offering relief to those unable to pay the full sum or arrange a payment plan.

Request a Collection Due Process (CDP) Hearing

To initiate a Collection Due Process (CDP) Hearing, you are entitled to request the hearing within 30 days of being served with Notice CP90. This opportunity enables you to discuss your situation with an IRS representative and consider different options for resolving the levy.

Request a CDP Hearing

To initiate a CDP Hearing, submitting your request within 30 days of receiving the notice is essential. Fill out the Tax Form 12153, also known as the Request for a Collection Due Process or Equivalent Hearing, and forward it to the specified address on your notification. Once a timely CDP hearing request is made, the levy process will be temporarily paused until the hearing is held and a determination is reached.

Consult a Dedicated Tax Professional

For professional assistance regarding IRS Notice CP90, it is essential to seek tax advice from an dedicated tax professional. The implications of receiving this notice are significant, and dealing with the associated procedures can be challenging. To effectively address this matter, it is advisable to engage a tax professional like a certified public accountant (CPA) or a tax attorney. They possess the expertise to clarify your choices, assist with documentation, and advocate for you in discussions with the IRS.

Do Not Delay

Act promptly without delay. It is crucial to promptly address the notice, no matter which path you decide to take. Disregarding the IRS Notice CP90 could lead to serious outcomes, such as the confiscation of your belongings and additional monetary fines.

Save My Tax Documentation

Ensuring thorough documentation is essential in managing interactions with the IRS. It is important to retain duplicates of all communication exchanged with the IRS, encompassing official letters, payment records, and any completed forms. The significance of maintaining accurate documentation cannot be overstated, especially when needing to challenge assertions or address potential concerns down the line.

What Happens If I Don’t Respond?

Neglecting to address IRS Notice CP90 can result in serious repercussions. The IRS has the authority to take action by garnishing your wages and seizing your assets. This could involve the IRS deducting a percentage of your earnings directly from your employer in order to settle your outstanding tax obligations.

Should individuals fail to settle their tax debts, the IRS may resort to freezing and confiscating funds from their bank accounts. In more severe instances, the IRS has the authority to seize tangible assets such as properties or vehicles to offset the outstanding amount. Disregarding such notifications will not alleviate the debt, potentially leading to adverse financial consequences.

Tax Help for Those Who Received IRS Notice CP90

When faced with an IRS Notice CP90, it’s natural to feel overwhelmed, but it’s important to approach the situation with a clear mind and a proactive attitude. Exploring the available solutions, enlisting expert support, and swiftly responding can empower you to tackle the notice head-on and progress in managing your tax obligations.

By taking the initiative now, you can avoid exacerbating financial troubles and take charge of your financial well-being. Dedicated tax professionals at RapidTax are committed to assisting you in tackling and resolving any tax issues you may have encountered.

Posted on

Tips for Non-Resident Aliens and Resident Aliens Tax Filing

It may come as a surprise that individuals who are not American citizens are still obligated to pay taxes on their income, regardless of where they reside. Even if a portion of their time is spent outside the country, tax obligations remain. Crucially, the manner in which taxes are assessed hinges on one’s classification as a non-resident aliens or as a resident aliens for tax filing.

To put it simply, resident aliens face different tax regulations compared to non-resident aliens. Let’s delve into some tax advice tailored for these two alien statuses and understand the impact each status has on your tax obligations. The initial stage in the tax-filing process for resident and non-resident aliens involves establishing your alien status for tax assessment.

Should you meet the criteria of the IRS green card test or the substantial presence test, you will be classified as a resident alien for tax purposes. Conversely, if you are unable to meet these criteria, then you will be subject to taxation as a non-resident alien. Understanding how resident and non-resident aliens are taxed is essential for optimizing your tax situation.

How Are Resident Aliens Taxed?

As a resident alien, your tax obligations align closely with those of a U.S. citizen. Essentially, you are required to disclose all the income you earn on your tax return, regardless of whether it was obtained domestically or overseas.

Different revenue streams can encompass salaries, gains from investments, payments for using intellectual property, profits from ownership shares, income from leasing property, and various other origins. Much like U.S. citizens, resident aliens utilize identical forms and categories when submitting taxes. Moreover, they are eligible for similar tax breaks, incentives, and exclusions.

resident aliens tax

How are Non-Resident Aliens Taxed?

When it comes to taxation, non-resident aliens face a different set of rules. Specifically, the IRS mandates that taxes are only owed on income earned within the United States by non-resident aliens. Furthermore, any income tied to a U.S. business must be accounted for. Notably, income generated in foreign countries remains untaxed by the IRS.

For non-resident aliens filing their tax returns, it is recommended to opt for Form 1040-NR, the U.S. Non-resident Alien Income Tax Return, instead of Form 1040. Utilizing this form allows non-resident aliens to access deductions and credits that can effectively lower their taxable income.

How are Dual-Status Aliens Taxed?

In the situation where an individual is classified as a dual-status alien, they are both a resident and non-resident alien concurrently during a single tax year. This designation usually occurs upon entry into or departure from the United States. In such a case, the individual must submit a tax return, with the type of return being determined by their status at the conclusion of the tax year.

Suppose you transitioned to resident alien status by the end of the year. In this case, your tax obligations would involve completing and submitting Form 1040, identifying it as a dual-status return. Additionally, you must provide details of the income you received as a non-resident throughout the tax year.

In the event that Form 1040-NR is selected for reporting income, it’s important to recognize that this form is designated as a dual-status document. These dual-status tax returns come with specific limitations on filing, making it advisable to seek guidance from a tax specialist for assistance.

Can Resident Aliens and Non-Resident Aliens Leave the U.S. Without Paying Taxes?

When departing the United States, aliens are typically required to obtain a sailing permit from the IRS. This permit provides clearance from the IRS and can be acquired by submitting either Form 1040-C, known as the Departing Alien Income Tax Return, or Form 2063, the U.S. Departing Alien Income Tax Statement and Annual Certificate of Compliance. Prior to departing, it is important to settle any outstanding tax obligations, including those from earlier years. The time required to complete this procedure typically ranges from 2 to 3 weeks, so it is advisable to schedule your departure with this in mind.

Tax Help for Resident Aliens and Non-Resident Aliens

Navigating through the complexities of your alien status in relation to tax obligations is just the beginning of the challenges you may encounter while preparing your tax return. The subsequent steps of filing and settling your taxes involve a distinct set of responsibilities that may necessitate the expertise of a seasoned tax advisor.

Navigating the complexities of identifying your alien status for tax purposes can be quite daunting. If you find yourself feeling uncertain about your classification even after reviewing our tax advice for resident and non-resident aliens, seeking guidance from a tax expert can provide the clarity you need. Embark on your journey to tax compliance with the expert guidance of a seasoned, dedicated Tax Professional at RapidTax.

Posted on

Important Tax Updates That Will Change After 2025

In the absence of Congressional action, 2026 will usher in significant tax adjustments, such as increased tax rates and reduced standard deductions. Anticipate substantial 2025 tax updates on the horizon, all attributed to the repercussions of the 2017 tax reform legislation.

Beginning in 2026, a significant number of individual tax provisions are set to revert back to the regulations implemented in 2017. These provisions, which are currently scheduled to expire after 2025, will require action by Congress to be extended beyond that point. Let’s delve into the essential provisions that are due to expire.

  • 2025 Tax Update 1. In the upcoming year of 2025, alterations are set to take place within the individual income tax brackets. tax rates will return to 10% ~ 15% ~ 25% ~ 28% ~ 33% ~ 35% ~ 39.6%.
  • 2025 Tax Update 2. We can expect to see significant increases in standard deductions in 2025. The legislation passed in 2017 led to a substantial doubling of these deductions, marking a significant shift in tax policy.
  • 2025 Tax Update 3. In the year 2025, the child tax credits have seen a significant increase compared to the amount set before 2018. The credit has now been raised to $2,000, up from $1,000.
  • 2025 Tax Update 4. In the tax reform bill of 2017, a change was made to the AGI (Adjusted Gross Income) cap for cash donations to qualified charities, boosting the limit from 50% to 60%.
  • 2025 Tax Update 5. In the current year of 2025, individuals benefit from a significantly increased estate and gift tax exemption.
2025 tax update

Some Restrictions on Well-Known Tax Deductions End After 2025.

  1. In compliance with current regulations, there are limitations on the tax deductibility of home mortgage interest can be tax deducted on up to $750,000, which is less than what was previously.
  2. Incorporated within Schedule A are various tax deductions that fall under the 2%-of-AGI threshold. The recent legislation of 2017 has removed this particular group of itemized deductions up to the year 2025. Among these are costs such as unreimbursed employee expenditures (covering travel, meals, education, etc.), fees associated with brokerages and IRAs, hobby-related expenses, and fees linked to tax return preparation.
  3. In the tax year 2025, individuals may claim tax deductions for theft and casualty losses from only the federally declared disaster area eligible for the tax deduction.
  4. In the upcoming year of 2025, two significant tax provisions set to expire were not present in the laws of 2017. One of these changes is the widening of eligibility for the Obamacare health premium credit, benefiting more individuals purchasing insurance through a marketplace. 

Additionally, the exemption from federal income tax on most student loan debt forgiven between 2021 and 2025 stands out as a departure from the usual tax treatment of canceled debts. Find your dedicated RapidTax Tax Professional to walk you through these new 2025 tax updated and provisions from start to finish.