2. H&R Block is one of the
world’s largest tax services
providers.
We are not a government
entity and we are not the IRS.
We have been serving the
Latino community since 1955.
We have offices in the U.S.,
Puerto Rico, Canada, Australia
and other countries.
Who is H&R Block?
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3. We have over 8,000 bilingual tax professionals who
communicate in English and Spanish.
We have over 2,500 offices located in the heart of
predominantly Latino communities.
We served over 1.2 million Latino clients this past tax season.
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Who is H&R Block?
4. H&R Block Tax Professionals are rigorously trained and
deliver exceptional tax expertise.
We prepare federal, state and local tax returns for individuals
and businesses.
We also offer other services such as ITIN* (Tax ID) application
services, small business services and related financial
solutions.
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What does H&R Block do?
*Please note H&R Block does not offer immigration services.
5. Valid identification card (specify)
Social Security Number (SSN) or
your ITIN (Tax ID)
Income reporting documents (W-2,
1099-MISC, etc.)
Information on your spouse,
children and other dependents
(SSN or ITIN, dates of birth, etc.)
Additional documents (see
checklist).
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What do you need to file taxes?
6. ITIN is an Individual Taxpayer Identification Number.
Also known as “Tax ID” or “Taxpayer ID.”
If you earn money in the United States, but you don't have or
qualify for a Social Security Number, you can apply for an
ITIN from the IRS for you and your dependents in order to file
your tax return.
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What is an ITIN?
7. It serves as your identification number for filing your federal
taxes.
If you do not qualify to have a Social Security Number, you
will need an ITIN to file your tax return.
Filing a tax return may allow you to get a refund of your
income tax withholding, if you qualify.
When you file your taxes, you can claim dependents you
support in Mexico or Canada.
• You must have sent more than 50% of the support they need to
live and must meet certain other requirements.
• Documentation of support for dependents is recommended.
• Claiming dependents may provide a larger tax refund.
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Why should you get an ITIN?
8. With an ITIN you may be able to open a bank account or apply
for a mortgage loan.
By using your ITIN number to apply for loans or credit cards
you can begin to establish a credit history in the United States.
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Additional Benefits
9. Tax-deductible interest
• Borrowers of money may deduct the
interest paid on certain types of loans
• Mortgage interest deductions
• Student loan interest deductions
• Business expense deductions
• Investment expense deductions
Lenders of money usually need to report interest earned on a
loan as income
Bad debt
• A loss that results from the failure of a debtor to repay a loan
• The taxpayer who made the loan can sometimes deduct the
amount of the bad debt for income tax purposes
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Debt Deductions
10. Using a Credit Card
• Debt can affect your credit score
• Advantages
− Convenient way to pay your tax bill, especially if you file your return electronically
− Earn credit card rewards or cash back
• Disadvantages
− IRS fees to a third-party payment processor
> Processors charge between 1.88% and 2.35%, which would add $94 to $117.50
to a $5,000 tax bill; minimum credit-card fee ranges from $2.99 to $3.95
− Credit card interest if you don't pay off your balance before the due date
− Your credit score could decrease if the amount you charge to your card puts you
near your credit limit
Using a Debit Card
• IRS fees to a third-party payment processor
− Flat fee is $2.99 to $3.95, depending on the payment processor
− However, two of the payment processors charge a percentage (1.88% or 2.35%)
if you use a MasterCard debit card rather than a flat fee
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Paying Your Taxes with a Card
11. P2P Loans
• “Personal” or “Peer to Peer” loans
• Typically reported as installment loans
• Can be helpful as a credit reference
Mortgage Loans
• Options are available for prospective home buyers with little or
no credit
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Paying Your Taxes with a Loan
12. If you file your taxes late, you may be subject to penalties and
interest
Between you and the government; credit reporting bureaus are not
notified
Two different types of payment with IRS
• IRS Installment Plan
− Lets you pay the tax you owe in monthly installments
− Charges a set up fee and interest
− In most cases, these payment plans don’t appear on your credit.
However, if you owe a large amount, you could wind up with a Notice of
Federal Tax Lien filed against you, and that will definitely affect your
credit.
• Number of Days
− If you can pay off your debts within a certain number of days (usually
between 30 and 120 days), you may be able to avoid the fees that come
with the installment plans, and will typically end up paying less in
interest and penalty charges.
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Late Tax Payments
13. Financial Hardship
• For instance, if you recently lost your job and paying your taxes
would cause financial hardship, it might be difficult to know how
much you can pay back month-to-month.
• You can request that the IRS extend the due date of filing your
return by six months.
• However, interest can still accrue on any unpaid tax due at the April
15th deadline.
Offer In Compromise
• Lets you settle your tax debt for less than you owe, if you can prove
you don't have the means to pay and it is very unlikely that you ever
will
• This is discretionary on the part of the IRS, which only accepts
about 25% of the submitted applications
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Late Tax Payments
14. Tax debt does not always affect credit
• Finding out that you owe the IRS money
• Filing an extension
• IRS Payment Plan or Offer in Compromise
But sometimes it does
• When you don’t have the money to pay what you owe
• You don’t work out a solution and your debt remains unpaid
• The IRS can choose to file a federal tax lien in court to try to
ensure repayment
• In order for this to happen, your debt generally has to exceed a
certain threshold—right now that’s $10,000
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How Taxes Affect Your Credit Score
15. If you file your tax return expecting a refund, but are told by
the IRS that your refund has already been issued
A problem that’s expected to reach $21 billion during the next
five years and the IRS is not doing a lot at this point to protect
taxpayers
Won’t automatically affect your credit reports
Place a fraud alert or credit freeze on your credit reports
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Tax-Related Identity Theft
16. Removing a tax lien
• Tax liens are considered very negative
• Effect on your credit score depends on how old the lien is
− A tax lien will stay on your credit until it’s paid in full
− Generally can’t be discharged in bankruptcy
− The longer you let past years’ taxes sit unpaid, the harder it will hit the
rest of your life
> Until recently, tax liens remained on credit reports for seven years from the
date they were paid or satisfied
> Under the IRS Fresh Start program announced in early 2011, you can
request that the IRS withdraw the lien if you have paid or satisfied the tax
debt. This is not something that happens automatically. You must ask.
• The sooner you pay your past tax, the sooner it can stop affecting
your life
• Patience; extremely time-consuming process
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Rebuilding Credit
17. Removing a tax lien
• When paid in full
− Request, in writing, that the IRS notify credit reporting agencies,
creditors or financial institutions
− Also make request for removal to credit bureau
− Check property records to be sure the lien isn’t showing up against the
property
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Rebuilding Credit
18. Importance of a trusted, trained tax professional
• Receives on-going training
• Experienced
• Registered with IRS as required by law
• Available year-round
• Guarantees accuracy of their work, paying penalties and interest
if they made or caused an error on your tax return
• Available for consultation in the event you are audited
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Seek An Expert
19. Visit us online at hrblock.com/espanol.
Call us at 1-800-HRBLOCK (800-472-5625).
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Contact us!
Debt can impact federal income taxes in a number of ways. Borrowers of debt may be deduct the interest paid on a loan. Lenders of debt usually need to report interest earned on a loan as income.
Debt taken out against a principal residence can give rise to tax-deductible interest. The mortgage interest deduction is available for two types of debts. Interest on a mortgage used to buy, build, or substantially improve a primary residence is tax deductible up to $1 million of debt. Interest on other home equity mortgages is tax deductible up to $100,000 of debt. Similarly, debt on rental properties generates tax-deductible interest against rental income.
Student loan debt can give rise to tax deductible interest. The student loan interest deduction is available for up to $2,500. The deduction is limited to taxpayers with incomes under under $70,000 or under $145,000 for married persons filing a joint tax return.
Debt incurred in a trade or business also gives rise to tax deductible interest. The loan proceeds must be used for business expenses.
Margin loans taken out against investments can generate a deduction for investment interest expenses.
Lenders of debt usually need to report interest earned on a loan as income
Bad debt
A loss that results from the failure of a debtor to repay a loan
The taxpayer who made the loan can deduct the amount of the bad debt for income tax purposes
The money loaned must have been reported as income on a tax return
Taxpayer must prove that the debt became worthless during the tax year for which they claim the deduction for the bad debt
If the loan is subsequently repaid, a recovery for the bad debt must be included in the taxpayer's income in the year it is received
The debt must be a “bona fide” debt, with evidence to support, such as a written document. Loans between family members are typcially classified as gifts, rather than bona fide debts.
if you are going to borrow from another source such as credit cards or a personal loan to pay your taxes, keep in mind that debt can affect your credit scores; How much it will hurt (or help) your scores depends on everything else in your credit reports.
Implications of paying taxes with a credit card
Advantages
Using a credit or debit card might seem like a convenient way to pay your tax bill, especially if you file your return electronically
And it could be especially tempting if you have a rewards credit card that will rack up points or earn you cash back
Disadvantages
You'll pay a fee to a third-party payment processor contracted by the IRS to handle credit-card transactions (processors charge between 1.88% and 2.35%, which would add $94 to $117.50 to a $5,000 tax bill; minimum credit-card fee ranges from $2.99 to $3.95)
You'll pay interest to your credit card company if you charge your taxes and don't pay off your balance before the due date
Your credit score could take a hit if the amount you charge to your card puts you near your credit limit
You'll pay a fee for using a debit card, too. The flat fee for paying your tax bill with a debit card is $2.99 to $3.95, depending on the payment processor. However, two of the payment processors charge a percentage (1.88% or 2.35%) if you use a MasterCard debit card rather than a flat fee. So if you can afford to pay your tax bill, you'll be better off mailing the IRS a check or having funds automatically withdrawn from your bank account.
You can look into a small loan from a P2P service. These loans are typically reported as installment loans, which can be helpful for rounding out your credit references.
if you have a specific goal in mind, such as buying a home, talk with a loan officer. There are decent mortgage programs available for prospective home buyers with “thin files” (in other words, not a lot of credit).
If you file your taxes late, you may be subject to penalties and interest--but that's between you and the government. The credit reporting bureaus are not notified
Two different types of payment with IRS
The IRS installment plan lets you pay the tax you owe in monthly installments; it charges a set up fee and interest, but those rates combined still might be lower than what you'd pay your credit-card company; In most cases, these payment plans don’t appear on your credit. However, if you owe a large amount, you could wind up with a Notice of Federal Tax Lien filed against you, and that will definitely affect your credit.
If you can pay off your debts within a certain number of days (usually 30 to 120 days), you may be able to avoid the fees that come with the installment plans, and will typically end up paying less in interest and penalty charges. Depends on the situation. Not automatic – must be requested through the IRS web site.
You have more options if you can’t commit to a steady payment plan or a short extension. For instance, if you recently lost your job and paying your taxes would cause financial hardship, it might be difficult to know how much you can pay back month-to-month. If this is the case, you can request that the IRS extend the due date of filing your return by six months. However, interest can still accrue on any unpaid tax due at the April 15th deadline.
Offer in Compromise, and it means that you and the IRS could agree upon a repayment that may even be less than your actual owed debt. This is discretionary on the part of the IRS, which only accepts about 25% of the submitted applications; A so-called offer in compromise lets you settle your tax debt for far less than you owe, if you can prove you don't have the means to pay and it is very unlikely that you ever will
Your credit score won’t immediately be affected by your tax debt, even if you’ve entered into a payment plan or worked out an Offer in Compromise with the IRS; simply filing an extension or finding that you owe the IRS a chunk of money come tax time shouldn’t affect your credit reports. It’s only when you don’t have the money to pay what you owe that it can affect your credit.
However, if you don’t work out a solution and your debt remains unpaid, the IRS can choose to file a federal tax lien in court to try to ensure repayment. In order for this to happen, your debt generally has to exceed a certain threshold—right now that’s $10,000
Beware of identity theft as well, because that can affect your credit too
If you file your tax return expecting a refund, but are told by the IRS that your refund has already been issued, you may discover that you are a victim of tax-related identity theft.
It’s a problem that’s expected to reach $21 billion during the next five years and the IRS is not doing a lot at this point to protect taxpayers.
While the fact that you have been a victim of this type of fraud won’t automatically affect your credit reports, you’ll probably want to place a fraud alert or credit freeze on your credit reports. And that will make applying for credit or other services such as a cell phone, utilities or insurance, that much more of a hassle.
Removing a tax lien affects your credit
Tax liens are considered very negative
a tax lien will stay on your credit until it’s paid in full
generally can’t be discharged in bankruptcy
Effect on your credit score depends on how old the lien is
The longer you let past years taxes sit unpaid, the harder it will hit the rest of your life
Until recently, tax liens remained on credit reports for seven years from the date they were paid or satisfied. But under the IRS Fresh Start program announced in early 2011, you can request that the IRS withdraw the lien if you have paid or satisfied the tax debt. This is not something that happens automatically. You must ask.
Keep in mind
the sooner you pay your past tax, the sooner it can stop affecting your life
fill out Form 12277 requesting that the lien be withdrawn
Patience; extremely time-consuming process
If it is withdrawn, the IRS will file the notice of withdrawal with the office where it was recorded and send you a copy
You can also request, in writing, that the IRS notify credit reporting agencies, creditors or financial institutions. It’s up to you to provide the addresses for those parties you want notified of the withdrawal.
Also make request for removal to credit bureau
But don’t be so sure that just because a tax lien no longer shows up on your credit report that it has disappeared altogether
The lien wasn’t on the credit reports, but it showed up in the property records as a lien against the property
The homeowner was required to either show proof it had been satisfied or pay it off before the new loan could be completed