Tax Liens & Tax Matters


Table of Contents

  1. What can be done when a tax lien is filed?
  2. Highlights from the Taxpayer Relief Act of 1997
    a. Home Sale Gain Exclusion
    b. Child Credit for Middle-Income Families
    c. Expanded IRA Opportunities
    d. New Education Tax Breaks
    e. Other Changes

What can be done when a tax lien is filed?
Some Available Options

Once a tax lien is filed you still may have a number of options available to you that you may not be aware of:

1. File for bankruptcy protection under Chapter 7 or Chapter 13

2. Make an offer in compromise (settlement agreement) with the Internal Revenue Service for substantially less than the tax liability;

3. Set up an installment payment agreement;

4. Reopen the case and seek abatement of penalties and interest and possible reduction of the taxes;

5. File for a Taxpayer Assistance Order;

6. In some cases, seek a preliminary injunction in U.S. District Court;

7. Seek innocent spouse status to remove liability of one spouse;

8. Petition the Internal Revenue Service to remove your lien;

9. Petition the Internal Revenue Service to have your account declared currently uncollectible; or

10. File correct original returns to replace the estimated returns prepared and filed by the Internal Revenue Service.

Some or all of these options may apply to you. You should consult with an experienced attorney regarding your options.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

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Home Sale Gain Exclusion
Highlights from the Taxpayer Relief Act of 1997

For sales of principal residences after May 6, 1997, joint return filers can exclude gains up to $500,000. The exclusion limit for single or married filing separate filers is $250,000. To qualify as a principal residence, the home must have been owned and used as a main residence at least two out of the five years preceding the sale. The new gain exclusion rule replaced both the old-law gain rollover rule and the $125,000 one-time exclusion for taxpayers age 55 and older.

There are other rules regarding this exclusion which you should review with your tax attorney.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

MAIL US
(E-Mail transmissions are not confidential)


Child Credit for Middle-Income Families
Highlights from the Taxpayer Relief Act of 1997

For children under age 17 at year-end who qualify the taxpayer for a dependent deduction, the Act creates a new tax credit. The credit is over and above the dependent deduction. For 1998, the credit will be $400 per child. This increases to $500 for 1999 and thereafter. The benefit of the credit begins phasing out starting at an adjusted gross income level of $110,000 for joint filers, $75,000 for singles, and $55,000 for married filing separate returns.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

MAIL US
(E-Mail transmissions are not confidential)


Expanded IRA Opportunities
Highlights from the Taxpayer Relief Act of 1997

Numerous changes have been made to the IRA rules to expand their availability, allow more penalty-free distributions, and permit investment in bullion.

Starting next year, an individual who is not an active participant in a qualified retirement plan can contribute and deduct up to $2,000 to an IRA, even though the other spouse is an active participant. Family adjusted gross income can be as high as $149,999, but the deduction is phased out between an adjusted gross income of $150,000 and $160,000.

There are other important changes concerning IRA opportunities. These should be reviewed with your tax attorney.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

MAIL US
(E-Mail transmissions are not confidential)


New Education Tax Breaks
Highlights from the Taxpayer Relief Act of 1997

The Act establishes two new post secondary education tax credits: the HOPE Scholarship tax credit and the Lifetime Learning tax credit. The HOPE credit is based on a per-student concept and is available for tuition paid after 1997. The credit amount is limited to 100% of the first $1,000 of qualifying annual tuition expenses and 50% of the next $1,000-for a total annual maximum of $1,500 per student. However, the HOPE credit is allowed only for the first two years of post secondary education.

The Lifetime Learning credit is based on a per-taxpayer concept and is available for tuition paid after June 30, 1998. The Lifetime Learning credit is intended to help cover college degree program expenses after the first two years plus education to acquire or improve job skills. The Lifetime credit amount is 20% of annual tuition expenses up to $5,000-so the maximum credit available is $1,000 per year regardless of the number of students in the family. In 2003, the limit increases to 20% of annual expenses up to $10,000.

For more information on these tax credits check with your tax attorney.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

MAIL US
(E-Mail transmissions are not confidential)


Other Changes
Highlights from the Taxpayer Relief Act of 1997

The unified estate and gift tax credit will gradually increase to permit single individuals to make tax-free transfers up to $1 million.

There has been a reduction in capital gains rate. The changes are generous, but very complicated. Now up to 12 different rules can potentially come into play when you have capital gains transactions.

The home office deduction rules have been eased.

There has been a repeal of 15% penalty tax on "excess" distributions on retirement plan dollars from IRAs and qualified retirement plans.

The Act also provides increased deductions for self-employed health insurance and an increase in the charitable mileage rates.

New provisions will increase the cigarette tax and revamp the airline ticket tax.

Changes will also be made regarding donations of appreciated stock to private foundations.

Many other areas have been affected by the Act. Check with an experienced attorney to determine whether you can benefit from these changes.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

MAIL US
(E-Mail transmissions are not confidential)


Copyright 2001, 2002
Last modified: February 11, 2010