I made a mistake on my tax return, what should I do?

If you made a mathematical error on your return, often times the IRS will automatically fix the error.  After correcting the mistake, the IRS will send you a notice that shows the changes made to your return (usually a CP11 or CP12).  Before correcting your return for a mathematical error, you may want to call the IRS at 1-800-829-1040 to see if they have fixed it for you.

If you forgot to include a form or schedule to your return, it is very likely that the IRS will send you a notice requesting just the missing form(s) and/or schedule(s) which means you will not need to do anything other than send in the requested items. (more…)

What Is A Homestead Exemption?

Debtors often ask us what will happen to their home if they file for bankruptcy protection.  Fortunately, federal bankruptcy law and most states provide for what is often called a “homestead exemption”.  A homestead exemption acts as a shield against the claims of certain creditors.  It does this by protecting up to a specific dollar amount in real property.  Homestead exemptions are particularly important for debtors with equity in their home.  On the other hand, where a consensual lien on real property, such as a mortgage, exceeds the home’s value, the homestead exemption does not apply since there is usually no equity in the home to protect.

There are certain requirements for the homestead exemption to apply.  For instance, the real property typically must be kept as the debtor’s residence.   And depending on the state where the debtor resides, the debtor may elect to apply the federal homestead exemption over their state’s homestead exemption.  As of April 2010, the federal homestead exemption was $21,625.  Federal exemptions are not generally available to Oregon residents.  However, Oregon has protected much more home equity for its residents. (more…)

Nine Things The IRS Says about Penalties

Many of my clients come to see me about penalties assessed against them by the IRS.  For example, if you don’t file your return on time or if you do not pay your tax by the due date you may be assessed a penalty. The following is a list of nine things the IRS wants you to know about the two different penalties you may face if you do not pay or file on time. (more…)

Are Bankruptcy and 12-Step Programs Compatible?

In my view, there is no question that they are – and that lay counselors in these programs who advise otherwise do not understand the bankruptcy process.  Steps 8 and 9 of the program of Alcoholics Anonymous (copied verbatim by most other 12-step programs) are, respectively (8) Made a list of all persons we had harmed, and became willing to make amends to them, and (9) Made amends to such people wherever possible, except when to do so would injure them or others.  The book Alcoholics Anonymous talks about moral and spiritual bankruptcy, but what about plain old financial bankruptcy?  Many people recovering from alcoholism and other addictions are in serious financial difficulty.  Should they consider filing for bankruptcy through the court system, or would this somehow be “weaseling” out of debts, jeopardizing 9th step amends?

In fact,