Posts Tagged: ‘Tax Refund’

When a Tax Refund Means Bankruptcy

April 4, 2017 Posted by kingcade

A review of the past four years shows that Chapter 7 bankruptcy filings, the most common form for individuals, have spiked during tax season or just after tax season. This suggests that taxpayers are using their refunds to file for bankruptcy and wipe out their debt, rather than funding a vacation or splurging on a big purchase.

Filings in March were 26 to 34 percent higher than the monthly average from 2013 to 2016, according to NerdWallet. Additionally, April’s bankruptcy filings were also 15 to 25 percent higher than other months.

Filing for Chapter 7 bankruptcy costs the average consumer approximately $1,500 to discharge their debts. Attorney fees typically cost $1,200 and other court fees total approximately $335. Due to a 2005 law change that made bankruptcy filing more complicated, fees have increased in recent years.

According to the IRS, the average tax refund in 2016 was $2,860, which is enough to cover the average bankruptcy costs.

When Bankruptcy Makes Sense 

You should consider Chapter 7 bankruptcy if the following applies to you.

  • Your problem debt is greater than 50 percent of your annual income. This usually means medical bills, credit card debt or high-interest loans.
  • You see no way of paying off your debt within five years.
  • Debt is interfering with other parts of your life, such as hampering your ability to buy a car or save for retirement.

 

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

What to Consider Before Paying Christmas Bills with a Tax Refund Loan

December 26, 2016 Posted by kingcade

If you are planning on paying off your Christmas debt with your tax refund check, you may want to think again. The Internal Revenue Service (IRS) announced that some taxpayers will experience delays at the beginning of tax season in 2017 due to a new law that requires the IRS to hold refund checks until February 15th. There may also be delays due to weekends and the President’s Day holiday. As a result, the IRS cautions taxpayers not to count on their refund checks until the week of February 27th.

However, some taxpayers are planning to use tax Refund Anticipation Loans (RALs) or Refund Anticipation Checks (RACs) to tide them over between the holidays and tax season. If you are planning to do so, here are a few things to keep in mind:

  • Interest Rates: In most RAL agreements, the taxpayer agrees to repay the RAL at tax time, plus interest. Some states limit the amount of interest that a lender can charge, however, in some instances, the annual percentage rate (APR) of an RAL can exceed triple-digits.
  • Fees: In addition to high interest rates, RALs oftentimes come with hefty fees that can diminish the remainder of your refund check. According to the National Consumer Law Center, some add-on fees they observed in a 2013 report included application fees; data and document storage fees; document processing fees; e-filing fees; service bureau fees; transmission/software fees; and technology fees.
  • Uncertainty: Keep in mind that you have to repay the entire amount of the loan even if you receive less than you anticipated. This means that you have to estimate the amount you will receive back on your taxes when taking out a loan.

 

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Corinthian College Students Still Waiting for Financial Aid Help

October 14, 2016 Posted by kingcade

Eighteen months after Corinthian Colleges Inc. closed the doors of its remaining locations, Heald College, Wyotech and Everest University, tens of thousands of former students are still waiting to receive some form of relief from the student loan debt they incurred to attend the defunct college.

Nearly 80,000 CCI students are facing debt collection related to the loans they took out to attend the schools. Although the Department of Education’s has the ability to provide defense of repayment discharges, which is a process that would eliminate debt based on the college’s alleged fraudulent actions.

The former student’s attempts to obtain discharges have been filled with issues, most stemming from the fact that the process has seldom ever been used and never to the extent it is needed for CCI students.

Due to the alleged fraud, students may be eligible for loan forgiveness of any federal Direct Loans, according to the Department of Education. The investigation process involving federal prosecutors, attorneys general and other agencies is ongoing. However, they have found evidence of fraud by CCI involving the use of inflated job placement rates and pushing students into high cost loans.

A report compiled by the Department of Education found that there are 79,717 people who are eligible to apply for loan forgiveness, but are instead dealing with debt collectors. Of those former students, 30,000 have had tax refunds, tax credits and other benefits seized, while 4,000 have had their wages garnished.

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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Get your tax refund EARLY! E-filing for Taxes begins TODAY

January 20, 2015 Posted by kingcade

Looking to receive the fastest tax refund possible? You can prepare and e-file your 2014 tax return on efile.com. This will ensure you receive the fastest tax refund the IRS allows; you can even have the funds directly deposited into your bank account. Electronic filing is the safest way to file a tax return and the fastest way to get your refund. Seventy-two hours after your tax return is accepted by the IRS, you can track your tax refund.

As many Americans use their refunds to purchase expensive electronics or long-awaited vacations, the National Bureau of Economic Research (NBER) found that more than 200,000 households use their tax refunds to file bankruptcy. This spike in bankruptcy filings towards the first part of the year has been attributed to the increased cost of filing, after U.S. bankruptcy laws changed in 2005. Families have been forced to delay filing until they can afford to pay the fees, according to the NBER.

Since changes to the law in 2005, the average cost of legal and administrative fees jumped from $921 in 2005 to $1,477 just two years later, according to the U.S. Government Accountability Office. The law was changed to prevent bankruptcy abuse. It was thought that too many people who could afford to pay their debts were taking advantage of the system. Since then, fewer people have filed for bankruptcy, but that does not mean these changes have reduced abuse of the system. The people who really need bankruptcy are the ones who are unable to afford the filing fees.

Last year the average tax refund was $3,096, enough for many distressed Americans to file for bankruptcy and get the necessary help they need.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:
http://www.efile.com/tax-day-deadlines/
http://usatoday30.usatoday.com/money/perfi/taxes/story/2012-04-12/tax-refund-filing-for-bankruptcy/54227664/1

IRS Announces Changes for Taxpayers in 2014

January 9, 2014 Posted by kingcade

The IRS has announced it will stop providing a number of taxpayer assistance services in person or over the phone and will instead shift to serving customers online. According to the IRS, the move is designed to free up employees to help taxpayers deal with issues, such as identity theft, that cannot be resolved through over avenues.

Changes are being made in the following areas:

1.) Tax Return Preparation. The IRS has always provided limited tax return preparation services at its walk-in offices, but beginning in 2014 this help will be further reduced, as taxpayers will be directed to the more than 13,000 volunteer tax preparation sites instead of the 250 IRS walk-in offices.

2.) Transcript Delivery. Beginning in 2014, the IRS will debut its “Get Transcript” service, which will allow individual taxpayers to use their Social Security numbers to view and print a copy of their tax transcript. Get Transcript will be available for the following types of transcripts: tax account, tax return, record of account, wage and income and verification of non-filing.

3.) Tax Law Assistance. The IRS will continue to answer basic questions, such as who qualifies as a dependent, who can take an exemption, etc., but will refer more complex questions to resources found on the IRS website.

4.) Refund inquiries. The most common question taxpayers ask according to the IRS are questions related to the status of a refund. This year, taxpayers will be able to check the status of their refund using the IRS’s online tool, “Where’s My Refund?”

5.) EIN’s: Beginning with the 2014 filing season, the IRS will handle all EIN requests using the Online Assistant, with only those with a previously assigned EIN being referred to an IRS representative.

6.) Practitioner Priority Service: Starting in January, the use of the Practitioner Priority Service will no longer be available to taxpayers; it will be restricted to tax practitioners who are trying to resolve issues for their clients.

7.) Filing season for business tax returns. The IRS announced that the filing season for individual returns will begin January 31. This is later than the originally planned start date of January 21 due to the government shutdown in October. Filing season for business tax returns, however, will not be similarly delayed. The IRS announced that on January 13, 2014, it will begin accepting both paper and electronically filed business and excise tax returns.

Click here to read more on this story.

If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.