There are many taxpayers who owe taxes and having difficulty paying the tax all at once. The IRS has a number of ways for people to pay their back taxes.

The IRS has initiated an effort to help individuals and businesses meet their tax obligation with new policies to help taxpayers pay back taxes and avoid liens.

Here are important tips for taxpayers who owe taxes to the IRS.

1. Get a loan to pay your tax obligation.
   The best tax tip for those who owe taxes is to get a loan to pay the entire tax obligation. Paying the tax debt in full is better than making installment payments to the IRS.
2. Request additional time to pay your tax debt.
   Taxpayers can request additional time to pay their tax through the Online Payment Agreement application at www.irs.gov or by calling 800-829-1040.
3. Pay off the tax debt with credit cards.
   The interest on a credit card may be lower than the interest and penalties imposed by the Internal Revenue Service.
4. Pay the tax balance by Electronic Funds Transfer.
   To pay using electronic funds transfer, use the Electronic Federal Tax Payment System by either calling 800-555-4477 or using the online access at .
5. Request an Installment Agreement to settle your tax debt.
   You can request an installment agreement if you are unable to pay the tax in full. The agreement is between you and IRS to pay the tax owed in monthly installments.
6. Request an Online Payment Agreement.
   If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
7. Request an Installment Agreement by mail.
   You can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope you received from the IRS. The IRS will inform you (usually within 30 days) whether your request is approved, denied, or if additional information is needed.
8. Is your tax debt more than $25,000? Request an Installment Agreement.
   File a Collection Information Statement If you owe more than $25,000 in taxes. You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
9. Beware of User Fees.
   If an installment agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43.
10. Check your withholding allowance.
    Taxpayers who have a balance due may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. A withholding calculator at www.irs.gov can help taxpayers determine the amount that should be withheld.

For more information about the Fresh Start initiative, installment agreements and other payment options, or for more tax tips, visit www.irs.gov or call 800-TAX-FORM (800-829-3676).

source: irs.gov

Did you send your kids to summer camp this year? If you did, here is a great tax tip to know: those expenses may help you qualify for a tax credit.

Working parents and parents who are looking for work must arrange care for their kids under 13 years of age.

Here are 5 things a parent should know about a tax credit available for child care expenses incurred during the summer.

5 Things Parents Should Know About The Child Care Tax Credit

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

This is a great tax tip because most parents aren’t even aware that summer day camp expenses may qualify them for the Child Care Tax Credit.

What’s so important about choosing the right tax preparer? As a taxpayer, you are legally responsible for what’s on your tax return even if someone else prepares it. Therefore, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

How do you know if you’re choosing the right tax preparer? Here are some tax tips for choosing a tax preparer:

• Check the person’s qualifications
  Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations require all paid tax return preparers including tax attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.
• Check on the preparer’s history
  Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.
• Find out about their service fees
  Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.
• Make sure the tax preparer is accessible
  Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise. A good tax preparer will also provide you help in answering your tax questions.
• Provide all records and receipts needed to prepare your return
  Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
• Never sign a blank return
  What are you crazy? Avoid tax preparers that ask you to sign a blank tax form.
• Review the entire return before signing it
  Another one of the top ten tax tips is that before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it. If not ask for answers to your tax related questions.
• Make sure the preparer signs the form and includes their PTIN
  A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.

You can report abusive tax preparers and suspected tax fraud to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888. For additional tax help or tax tips visits the IRS website.

Source: irs.gov