Chicago Bankruptcy Lawyer Blog

Who wouldn't want to get a $6,500 tax credit this year? Apparently the many folks who can't afford to buy another house, say Chicago bankruptcy attorneys.

In November, the federal government updated its homebuyer tax credit - which was originally meant to help renters buy their first home - to include current homeowners as well. The idea was to encourage homeowners to upgrade to a new house, hopefully stabilizing prices and boosting the sluggish real estate market in the process.

But homeowners aren't biting - mostly because they can't afford to. With unemployment up, home values down and foreclosure looming, homeowners might find better benefits from another strategy: Chapter 13 bankruptcy.

Continue reading "Chicago Homeowners Find an Alternative to Foreclosure With Chapter 13" »

So you lost your job last year and picked up some unemployment benefits. Once you find employment, you're out of the woods, right?

Not necessarily, say Chicago bankruptcy attorneys. Unemployment benefits sure come in handy when you need to put food on the table. But they can also cost you. As it turns out, unemployment benefits are taxable after the first $2,400 - or $4,800 per married couple. After that amount, you'd better start treating those payments as income, because they'll be taxed that way. Not sure how much you received last year? You should receive a Form 1099-G in the mail, which you'll need to report on your 1040.

Fortunately, there are ways to offset some of the damage - and not just of unemployment benefits, but of any surprise tax.

Continue reading "Chicago Bankruptcy Attorneys Recommend Cash Cushion For Tax Season" »

The early bird gets the worm - and sometimes the tax refund.

Just because tax deadline day is April 15 doesn't mean you have to wait until then to file, according to Chicago bankruptcy attorneys. Sure, most of us look at the filing process as a chore to be put off until the last possible minute. But with all sorts of new credits and deductions added to stimulate the economy, you might want to get it over with early and get some money back in your pocket sooner rather than later, especially if you're in debt.

Continue reading "Chicago Bankruptcy Attorneys Point Out Benefits Of Early Tax Filing" »

Remember that stimulus package the government enacted back in February? Well, apparently Uncle Sam got a little too generous.

It's just been announced that up to 15 million taxpayers could owe some of that stimulus money back next year. Why? Under the Making Work Pay tax credit, most working Americans had less withheld on their paychecks, resulting in extra take-home pay of about $60 a month. But when the government changed its withholding tables for the new system, it didn't factor in things like whether someone was married to a working spouse, held more than one job, was retired with income taxes withheld on their pension or was a college student still being claimed as a dependent on their parents' taxes.

So let's say you have two jobs, each one earning at least $20,000. That means you could have been credited twice - and will owe half of that money back to the government on your income taxes. If you're owed a tax refund, that refund will simply be reduced. But if you owe taxes, you'll also have to pay all that stimulus money back to Uncle Sam come April. Fortunately, there's a way to help ease the pain of such nasty surprises.

Continue reading "Some Employees May Have to Pay Stimulus Money Back" »

What's the only thing worse than not paying your taxes? Not filing at all.

This Thursday, Oct. 15 is the final deadline for the whopping 11 million U.S. taxpayers who filed for an extension on their 2008 return. With the economy still down in the dumps, many folks haven't seen an anticipated improvement in their finances - consequently, some are opting to simply ignore the deadline and not file.

Here's why that's a mistake. You might be able to get away with ignoring your creditors for a while, but you can't ignore Uncle Sam. If you don't file, you're immediately going to start incurring fees - these late penalties can be up to one-quarter of your total obligation. Before you know it, your debts could be doubled or tripled. You may even face jail time.

But there's a simple - though maybe not ideal - way to avoid all that.

Continue reading "Tax Extension Filing Date This Thursday" »

Uncle Sam is in a bind - and he might require your help.

To aid the federal government in covering its $1 trillion dollar deficit, the IRS has ramped up its focus on individual workers, small business owners and the self-employed in the form of "soft letters" and tax audits.

If you haven't reported all your taxes, made a mistake or otherwise raise a red flag at the IRS, you might get a "soft letter" - a polite but serious notice encouraging you to refigure your taxes. Your best bet is to quickly comply because, if the IRS doesn't get its funds, their next step is to mail a correspondence audit - a letter demanding payment for a certain item (sometimes more than you really owe) - or, even more scary, send out an agent for an actual audit.

Continue reading "Chicago Bankruptcy Lawyers Warn of IRS Tax Audit Increase to Cover Debt" »