- We hope you are pleased with the results of your tax prep session and look forward to seeing you next time!
- How do I find an Enrolled Agent (EA)/Accountant (CPA)/Tax Pro/Tax Prep Practitioner in the Northeast, Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont, or Elsewhere in the US?
- Answer: You can find an Enrolled Agent (EA) in Windham, NH. Stephen B. Jordan, EA provides specialized tax preparation, low-cost tax debt resolution, & consulting for New Hampshire and all 50 states.
- Mr. Jordan serves as an Agent at Trinity Tax Solutions (trinitytax.org) as well.
- Is self-employment tax the same as federal income tax?
- Answer: No. Self-employment tax consists specifically of Social Security (12.4%) and Medicare (2.9%) taxes for individuals who work for themselves. While federal income tax is based on tax brackets, the self-employment tax is a separate obligation, though 50% of it is deductible as an "above-the-line" deduction to reduce your Adjusted Gross Income (AGI).
- What is an Offer in Compromise based on Doubt as to Collectibility (DATC)?
- Answer: An Offer in Compromise (OIC) based on Doubt as to Collectibility (DATC) is the most common type of IRS settlement. It is an agreement between a taxpayer and the IRS that settles a tax liability for less than the full amount owed because the taxpayer’s assets and income are insufficient to pay the full debt before the statutory period for collection expires.
- Unlike Doubt as to Liability (DATL), which disputes if you owe the money, DATC concedes that the debt is correct but argues that you simply cannot pay it.
- How the IRS Calculates a DATC Offer
- The IRS does not pick a random number. They use a specific mathematical formula to determine your Reasonable Collection Potential (RCP). If your offer equals or exceeds the RCP, it has a high chance of acceptance.
- The formula is generally: {RCP} = {Net Equity in Assets}) + {Future Remaining Income}
- Net Equity in Assets: The IRS looks at the "Quick Sale Value" (usually 80% of Fair Market Value) of your real estate, vehicles, bank accounts, and investments, minus any secured debts (like mortgages).
- Future Remaining Income: This is your monthly gross income minus IRS National and Local Standards for allowable living expenses (housing, food, transportation, and healthcare).
If you pay the offer in 5 months or less (Lump Sum), they multiply your remaining monthly income by 12.
- If you pay the offer in 6 to 24 months (Periodic Payment), they multiply it by 24.
Key Requirements for Filing -- To be eligible for a DATC, you must meet several "gatekeeper" requirements:
- Tax Compliance: You must have filed all required federal tax returns.
- Current Payments: If you are a business owner with employees, you must have made all required federal tax deposits for the current and past two quarters.
- Not in Bankruptcy: You cannot have an open bankruptcy proceeding.
- Application Fee: Most applications require a $205 initial fee and a non-refundable down payment (20% for lump sum or the first installment for periodic plans), unless you meet Low-Income Certification guidelines.
The "National Standards" Trap
- The IRS often rejects DATC offers because they use National Standards for expenses rather than your actual spending.
- For example, if your actual mortgage is $3,000 but the IRS standard for your county is $2,200, they will claim you have an extra $800 of "disposable income" to pay your taxes, even if that money is already spent on your housing.
Common Reasons for Rejection
- Dissipated Assets: If you sold or gave away an asset (like a car or cash) for less than its value in the 3 years prior to filing to avoid the IRS taking it, they will "add back" that value to your RCP.
- Future Income Potential: If the IRS believes your income will significantly increase in the near future (e.g., you just finished a degree or a medical residency), they may reject the offer.
- Equity in Home: If you have significant equity in a home that could be refinanced to pay the debt, the IRS will generally not accept a lower offer.
**Stephen B. Jordan, EA** prepares tax returns on a first-in, first-out (FIFO) basis, and our turnaround time varies depending on the time of year.
- Our resources are fixed.
- Tax return data begins in January, increases in February, intensifies in March, and then wanes after April 15th.
- Our turnaround time is 7 days or sooner in January, and 14 - 21 days, or sooner, in February and March.
- 'Turnaround time' begins after we receive your tax documents required to complete your tax return (e.g., W-2, 1099, K-1, 1098), including answers and explanations to our questions.
- Mid-February, our turnaround time is:
- 14 - 21 days, or sooner, for S-Corps (Form 1120-S) and Partnerships (Form 1065), and
- 14 - 21 days, or sooner, for Individuals (Form 1040), weekends included.
- If you are stressed out due to external deadlines (e.g., home mortgage financing, FAFSA application, pending divorce, etc.), please call/text our office at (603) 508-0124 or email us at stephenbjordan50@gmail.com so we can plan and manage your expectations.
- We strive to realize efficiencies and provide outstanding client service.
- Our fee schedule is based on the work performed to complete your tax return. We have three (3) different "Tiers":
- The first "Tier" is for our "Simple" tax returns.
- The second "Tier" is for our "Moderate" tax returns.
- The third "Tier" is for our "Challenging" tax returns, which are reviewed with the client and commonly extended into August and September.
Tax Prep Suggested Fees - Detailed (in USD)
- Form 1040 - W-2 Wages
- Independent Contractor/Sole Prop
- Rental Property
- State flat rate
- Itemized Deduction
- Investment Activities
- +50/Schedule
- Sch B
- Sch D
- Stock Sales 1099-B
- RSU grants W-2
- Sch K-1
- Home Sale
- 1st-Time Home Purchase
