An Overview on Tax Law

Understanding taxes and when you may want to talk to a lawyer

Taxes are unavoidable, so it’s important that you understand them.

Federal, state and local governments need revenue to function, and that revenue is paid to governments in the form of taxes. Every year, Americans report, to the government, how much money they paid in taxes. Lucky Americans get money back.

Ordinarily, tax season is routine. But once in a while you might have some complicated tax questions and want trusted advice. Or you may have gotten notice that the IRS is auditing you, and you don’t know what that means or what you should do. Maybe the county determined your house is worth more than it is, and you want to challenge their assessment. In these scenarios, you might find it helpful to speak with a tax lawyer.

Overview

The money you pay in taxes is used to fund government services. State income taxes are usually used for roads and parks and hospitals, while federal income taxes are used to pay for things like national defense, and veterans’ social programs. Property taxes, meanwhile, are used by cities and counties to fund school districts and other local public services.

Income Taxes

Income taxes are generally based on how much you earn in a year. Your income includes your salary, dividends, rents paid to you, lottery winnings, unemployment and business earnings. Tipped workers are also subject to special rules about when they need to report their tips as income. The income taxing system is pay-as-you-go, which means that you pay a little bit from each paycheck. If, at the end of the year, you have paid more than you owed, you will get the excess back in the form of a tax return. Alternatively, if you did not pay enough throughout the year, you will be responsible for covering the difference.

Taxes need to be filed with the IRS by April 15 each year to avoid a penalty. If you incurred a penalty for filing your taxes after the deadline or for another reason such as a dishonored check, you may qualify for penalty relief. You also have the option to challenge a notice of penalty.

Property Taxes

Property taxes vary widely depending on where you live—because, as implied in the name, they are dependent on your property. Generally, your property value will be determined by a county assessor and the tax rate is set by the local taxing authority. The combination of these two values will create the property tax amount you owe.

If you believe the county assessor valued your property incorrectly, you can dispute the assessment, though you only have a small window during which you can challenge the assessment. Generally, you will need to meet with the assessor and state your case for a lower value. You may be asked to attend other hearings and produce proof that the assessor was wrong, such as a sales contract showing you paid more than your house is worth or descriptions of similar properties with lower values.

Audits

If you received notice of a tax audit, that means that the IRS is looking more closely at your tax returns to ensure they are correct and free of fraud. There are four kinds of audits.

Random audits

The IRS will occasionally select random returns and review them more closely. If your returns are being randomly audited, it doesn’t necessarily mean there was a red flag.

Correspondence audit

These types of audits are sometimes called mail audits. If the IRS has questions about your return or needs documentation to explain an out-of-the-ordinary deduction, you will get a letter. This type of audit is the least serious, because you can respond with the requested information and the problem is typically quickly resolved.

Office audit

Office audits are more serious than correspondence audits. If you receive notice of an office audit, you will be required to go to a local IRS office and speak with an audit officer. Your audit notice will include information about the documentation you will need to provide, and you are entitled to have a lawyer with you.

Field audit

These are the more serious audits, as they are typically broader than the others and are about more than some unusual deductions. During a field audit, the IRS will send and agent to your home or office and review your entire return. You have the right to have an attorney present at this meeting.

After an audit, the IRS might change your return or leave it as is. If they leave it the way it is, or you agree with the changes, then the process is finished. If, however, you disagree with the changes, you have the right to appeal the determination. A lawyer will be able to help you evaluate the IRS’ determination and understand the appeals process.

Common Questions

Below are some common questions you might want to consider when meeting with an attorney.

  1. What is an IRS audit?
  2. Can I appeal an IRS determination?
  3. Can I deduct child support?
  4. Do I need to pay taxes on money I inherited?

Finding the Right Attorney for Your Needs

It is important to approach the right type of attorney—someone who can help you through your entire case. To do so, you can follow this link to the Super Lawyers directory and use the search box to find a lawyer based on your legal issue or location.

To help you get started, you may want to consider looking for a lawyer who specializes in tax law.

Why Should I Talk to a Lawyer?

The tax code is a complicated piece of legislation, and it can be hard to understand—especially if you have a unique situation that online filing programs don’t account for. If you have a question, or if you made a mistake and are being audited, it is important to get advice from someone who understands the law. A tax lawyer will know how to answer your questions and solve your problems, and they will know about nuances in the law that can affect your situation.

A lawyer will further be able to anticipate potential problems with your case and advise you on how to approach them. He or she may even be able to help you avoid potential problems altogether. Your lawyer will also keep track of deadlines and file all the paperwork with the necessary courts and agencies, giving you one less thing to worry about.

Why Super Lawyers?

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. As Super Lawyers is intended to be used as an aid in selecting a lawyer, we limit the lawyer ratings to those who can be hired and retained by the public. You can learn more about the selection process here.

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