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Property Tax Bill Too High? Here’s How to Appeal

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Many homeowners have seen the value of their homes rise dramatically over recent years. As a result, property taxes are generally trending upward too. You can’t always avoid a tax increase based on the higher value. However, if your new property tax bill is unreasonable in comparison to appreciation in your region, you might have grounds for an appeal. If your appeal is justified and determined to be sound, your property tax bill may go down. If you believe your property tax bill is too high, here’s what you need to know about appealing.

When You Can Appeal Your Property Tax Bill

Once you receive your new property tax bill, you only have a limited amount of time to appeal. Exactly how much time you get depends on your jurisdiction, so it can vary from one state or county to the next.

In most cases, you have 90 days to appeal after you receive the new assessment. However, some locations only give you 30 days, so it is best to act quickly.

If the appeals window closes, you will have to pay the amount on your property tax bill. Failing to do so comes with consequences. First, you’ll have penalties and fines for missing your payment. The government can also put a tax lien on your home. In the worst-case scenario, a tax lien can lead to a foreclosure.

Thoroughly Read Your Assessment Letter

Before you initiate an appeal, read your property tax bill carefully. Make sure the details about your property are accurate and take a look at the value assigned to your home and land. If there is an error in the property description, such as an incorrect lot size, the wrong number of bedrooms, or similar error, then that could lead to a high bill that is fairly easy to appeal.

Then, if you don’t spot a blatant error, look over the calculations that determined your property tax bill. How a jurisdiction assigns value for tax assessments differs from determining fair market value for home sales. In most cases, the math itself will be sound. However, it is always wise to learn how the numbers are calculated before you appeal.

Get the Lowdown on Neighboring Properties

You never want to appeal your property tax bill without having a reasonable case showing that it is too high. While appealing without just-cause won’t necessarily lead to a penalty, it does mean you could waste valuable time on a fruitless venture.

Often, the easiest way to make sure you have a decent case is to explore comparable nearby properties, or “comps,” as realtors call them. Research your neighborhood and identify nearby homes. Look for houses with similar features to yours, including the overall size, style, condition, and the number of rooms. Additionally, make sure you compare lot sizes as well, as differences in the amount of land can lead to dramatically different tax assessments.

Once you find a few comps, you need to look up the tax assessments on those properties. Usually, local governments maintain publicly accessible databases, making the information relatively easy to track down. Head to your local Tax Assessor’s Office or Land Records Office website to see if the database is available. If not, you may need to speak with a real estate agent or those neighbors to see if they will share the details.

If you discover that your property tax bill is higher than the comps, you may have a good case. However, even if theirs are similar, if you can demonstrate that those properties are better than yours, you may also be able to get your tax bill lowered.

Present Your Case to the Local Assessor

Once you have built your case, you’ll need to contact your local assessor. Usually, your property tax bill will have instructions on how to proceed with an appeal. However, if you need additional guidance, contact the assessor’s office to discuss the next steps.

Most appeals processes are incredibly formal. You need to follow them precisely if you want your appeal to move forward. Typically, you’ll need to complete a form and submit your evidence. Once complete, the review period can take several months. When they have rendered a decision, you’ll usually receive notification in writing.

Appealing the Decision

If the initial appeal didn’t go your way, you could opt to appeal that review. Usually, you’ll have to pay a small filing fee and submit a request to the appeals board. Then, you can challenge the decision and hope for a better outcome.

Appealing the review can be a lengthy process, especially in larger jurisdictions. In some cases, it may take a year to get a decision.

Risks of Appealing Your Property Tax Bill

Appealing your tax bill can come with risks. While the chance is fairly small, the assessor or appeals board could determine that your property assessment was too low, leaving you with an even higher tax bill.

At times, even if your bill is lowered, the amount is so small that it may not be worth the effort. Similarly, if the change is slight, you may come out financially behind if you paid more than your bill was lowered when you filed for an appeal.

Finally, if you intend to sell your home soon, a drop in the assessed value of your home could hurt you. You may get stuck with a lower sales price since the assessor or board reduced the value.

Have you ever had to appeal your property tax bill? Share your experience in the comments below.

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What Happens If You Don’t File Taxes?

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what happens if you dont file taxes

Tax day is April 15, 2019. If you don’t file your taxes, or get your return postmarked by that date, you might face some serious consequences. This is true even if accidentally don’t file. If you are wondering what happens if you don’t file your federal tax return by the deadline, here’s what you need to know.

Failure-to-File Fees

If you don’t file your taxes, you will have to deal with failure-to-file fees. Essentially, you are stuck with a costly financial penalty.

The standard failure-to-file penalty rate is 5 percent of your unpaid taxes for every month that you don’t file. This starts accruing once you miss the 11:59 pm April 15 deadline. Although there is a cap of 25 percent, it will add up quickly.

Failure-to-Pay Fees

If you don’t file your taxes and owe an IRS tax debt, you also get stuck with failure-to-pay fees. This penalty is on top of the failure-to-file fees, increasing your tax debt even more.

The standard failure-to-pay fee is one-half of 1 percent every month. These fees also start accruing once you miss the 11:59 pm April 15 deadline. There is no cap on this penalty, so it will keep adding up over time, increasing your IRS tax debt.

IRS Notifications

Once the IRS notices that you didn’t file, they will send a notification letter. It lets you know that you will be paying penalties and provides guidance on how to square things away.

In some cases, the IRS may even create your return for you, using information they collect from your employer, banks, investment accounts, and similar entities. However, the IRS doesn’t consider whether or not you qualify for certain deductions, so your tax bill may be much larger than if you just file on your own.

If you don’t respond to the IRS notifications, then the agency might take more drastic steps. This can include seizing your financial assets, putting a lien against your home, or garnishing your wages. Plus, all of the penalties are increasing your tax debt during this time, so you’ll still have to pay them even if the IRS takes these measures.

Criminal Charges

It is important to note that the IRS does not jail people for owing taxes. If you file your taxes and have an IRS tax bill, you won’t go to prison for the debt.

However, failing to file could land you in jail. Willfully not filing your return is a misdemeanor while tax evasion is a felony. The IRS does have a high burden of proof to show that you intentionally didn’t file, so jail time isn’t really common. It is technically possible though, especially if they can prove that you made the decision not to file on purpose.

How the IRS Catches People Who Don’t File Their Taxes

The IRS is a large organization and handles millions and millions of tax returns. In just one week in March, over 84 million returns were received. Many people would assume that the IRS isn’t going to notice a single missing return, but that isn’t necessarily the case.

One of the things the IRS has one its side is information. For example, if you work for a company, that employer sends the IRS a copy of your Form W-2. Even if you don’t file personally, the IRS knows you had income. Banks and investment companies submit copies of your Form 1099 to the IRS as well, for recording purposes.

While the IRS might not catch your failure-to-file immediately, they will in the future. They will know you didn’t file, and calculate the penalties based on the deadline of April 15, 2019, not when they happened to notice.

What to Do If You Can’t File Your Taxes On Time

Even if you can’t pay the taxes you owe immediately, it is crucial that you file your federal tax return by 11:59 pm on April 15. There are options to help people who can’t pay all that they owe right away, including payment plans and Offers in Compromise.

If you simply need more time, then make sure to file for an extension before the filing deadline. While this won’t help you avoid failure-to-pay fees, it does prevent any failure-to-file fees from accruing as long as you file before the extension deadline of October 15, 2019.

Have you ever forgotten to file your taxes? Share your thoughts in the comments below.

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10 of the Best Ways to Use Your Tax Refund

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It’s that time of year; families across the country are receiving their tax refunds, and they are trying to figure out what to do with the influx of cash. While it may be tempting to splurge on a big ticket item, that isn’t always the best financial move. There are plenty of other options that can benefit your financial situation. Here are 10 ways you should be using your income tax return.

1. Build Up an Emergency Fund

Most experts agree that having three to six months of living expenses stashed away in a savings account is smart. It gives you a level of protection against the unexpected, such as a job loss or medical emergency.

However, even if you don’t have that much available, something is always better than nothing. Consider using your tax return to get started, or at least save $1,000, which is enough to cover most insurance deductibles or handle a small emergency.

2. Pay Down High-Interest Debt

If you have high-interest debt, like a credit card, paying it down with your tax refund is financially wise. Not only will this help you lower your monthly bills, but it also saves you a ton in interest.

Considering the average credit card APR falls between 16.86 and 23.73 percent, depending on the kind of card, paying off balances sooner rather than later is a good idea.

However, if you don’t have high-interest debt, that doesn’t mean you should use your tax return to pay down balances. If you are paying more in interest than you could earn from the money, such as by investing the cash, then you should consider sending your tax return money to a creditor.

Just make sure that you check your account in advance. Some loans charge early payment penalties. If yours does, then making extra payments or paying off the loan early could result in a pretty large fee, offsetting some of the benefits In those cases, you need to do the math and make sure that you are saving enough in interest to make paying the fee seem reasonable. Otherwise, you might want to explore other options.

3. Fund Your Retirement

Even if you invest in a 401(k) through your employer, that doesn’t mean socking your tax refund away in an individual retirement account (IRA) isn’t a great way to use the money. Almost anyone can open one form or IRA or another, even if you contribute to a retirement plan at work.

It is important to note that the tax benefits of an IRA vary depending on the type and your modified adjusted gross income (AGI). Additionally, your annual contribution limits can also vary based on your unique circumstances.

4. Open a 529 College Savings Plan

If you have a child who will likely go to college one day, or you are considering heading back to school yourself, putting your tax refund into a 529 College Savings Plan is worth exploring. These investment accounts are designed to help financially support certain educational expenses, like college tuition.

Plus, if you or your child ultimately don’t go to college, there is no penalty for withdrawing your contributions. Just keep in mind that you would need to pay taxes on any earnings you pull and may be subject to a 10 percent penalty depending on how the funds are used.

5. Start Investing

If you have your emergency fund in place, retirement squared away, and no high-interest debt, then it might be time to start investing. You can use your tax refund to open a brokerage account, allowing you to invest in stocks, mutual funds, index funds, and much more.

Investing can be a way to see your tax return grow over time. While there is some risk involved, certain approaches do limit the risk. For example, index funds are a great place to start if you are new to investing. They offer an inherent level of diversification and typically perform better than when a person tries to pick and choose stocks on their own.

6. Improve Your Home

If you are a homeowner, using a tax refund to update or repair your home might be the right choice for you. Some improvements can increase the value of your house while others simply make daily life more comfortable. However, if you have been putting off a major repair, that should be where you start.

Your home is a major asset with a financial value. By increasing its value and making it more enjoyable to live in, you almost can’t go wrong.

7. Take Care of Your Car

Vehicles require a lot of maintenance over the years, and some of it can be costly. New tires, replacing a serpentine belt, or flushing the radiator all come with a price tag.

If you have been putting off any car maintenance because you couldn’t afford it, use your tax return to handle the expense. That way, your vehicle is in the best shape possible. Plus, it could help it last longer, which saves you money in the long run.

8. Prepare for Medical and Dental Costs

If there is an expensive medical or dental treatment in your or your family’s future, consider saving your tax return to handle the cost. That way, you can pay the bill off immediately, and you don’t have to worry about finding the cash.

This is especially true if treatment will be ongoing. For example, orthodontic care can add up fast, and most people have braces for at least a handful of months, if not a couple of years. By setting your tax return aside, you know the treatment plan can go forward without any financial hardship.

9. Invest in Yourself

There are tons of ways a professional can invest in themselves. Maybe you want to take a class to add a new skill or have your eye on a particular certification that can increase your earnings potential.

If there are options that can help you develop your skills or talents, or enhance your experience, then use your tax refund to support your growth. Then, you might be able to increase your income faster, making it a worthwhile investment.

10. Treat Yourself (Responsibly)

If you have already handled everything above, then there is nothing wrong with using your tax refund on something fun. For example, you could save it for a vacation or replace a worn out television.

Just make sure that you are conscientious about your choice. If you want to purchase a new tv, look for sales and make sure you buy a quality model at a great price. That way, you don’t spend any more than you have to, ensuring your tax return goes as far as possible.

Are you getting a tax refund? Do you already know how you want to use it? If so, share your thoughts in the comments below.

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Tax Season 2019: 5 Things You Should Do Now to Prepare

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With 2018 coming to a close, now is a great time to start preparing for tax season. Since there were multiple changes to the tax rules, you could be one of the lucky individuals whose taxes are more complicated this year. Early preparation now can make filing taxes a little less stressful. Here are five things you should do to get ready for tax season 2019.

1. Gather Basic Information

Although tax documents aren’t in the mail yet, there’s still a lot of information you can start gathering today. For example, locate the Social Security cards for yourself and, if applicable, your spouse and dependents. This ensures that, if you don’t find them and don’t know the numbers, you have time to request new cards.

Similarly, track down your copy of your tax returns from last year (2017 taxes filed in 2018) – being able to refer to them will speed up your filing this year.

There are various other items you can start collecting now, including, but not limited to:

  • Receipts for business or self-employed expenses
  • Records of rental property expenses
  • Property tax records
  • Educational expense records
  • Charitable donation records
  • Medical costs information

Any details that you can pull together today will make your filing day easier. Then, you can put the information into a folder and make sure it is ready.

2. Plan for Incoming Documents

While employers and various other entities have until January 31 to send tax documents to filers, that doesn’t mean you shouldn’t start planning for their arrival. Begin by figuring out which companies should be sending what, and create a list to track the information.

In some cases, you can refer to your previous tax filing for guidance. However, you can also create a simple list based on your situation.

As you start to plan, include potential records relating to income, such as:

  • Form W-2 for wages
  • Form 1099-G for unemployment benefits received
  • Form 1099-Misc for freelance work
  • Form 1099-R for annuity, IRA, or pension income
  • Form 1099-D for earned dividends
  • Forms 1099-B and 1099-S for the sale of property or stocks
  • Form W-2G for gambling winnings

In most cases, you won’t have documents coming in all of those categories, but that can give you an idea of what may be arriving. This decreases the odds that you will file before you have all of the documents on hand, as it is easy to accidentally overlook a potential incoming document during this hectic time.

3. Max Out Your Retirement

Both 401(k)s and traditional IRAs can result in tax breaks, depending on your situation. If you haven’t hit your annual contribution limit, then you may want to stash extra cash in your retirement account.

This could potentially increase your deductions, lowering your tax liability. Plus, it can make your retirement more secure.

For a traditional IRA, you can contribute $5,500 annually or less if you are age 49 or younger. For those 50 and older, the maximum amount is $6,500. Those limits do not apply to rollover contributions, so keep that in mind if you want to add more to your account and make sure you are calculating properly.

4. Figure Out What You Need to File

While all taxpayers essentially have to file a federal return, only some also need to submit a state return. If you haven’t moved and your financial situation is largely the same as last year, then you can use your previous tax returns as guidance.

However, if you have relocated to a new state or had a significant change in your financial situation, then you may need to file a state return even if you didn’t previously.

There are only seven states which don’t require a state income tax return. They are:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

Two states only need returns if you had income from interest or dividends. They are:

  • New Hampshire
  • Tennessee

If you live in any other state, then anticipate filing a state return as well, even if your move was recent. Additionally, be aware that you may have to file a nonresident tax return if you earned money in a state with state income taxes, even if you don’t live there.

5. Don’t “Spend” Your Tax Refund Before You Have It

Many people anticipate tax refunds each year, especially if they had one the year before. However, the tax law has changed significantly, so your tax burden may have changed even if much of your financial life remained steady.

If you want to use your refund for a big purchase, don’t spend the money now based on the assumption that you will get it back. You can’t be certain about your tax liability until you prepare your documents with all of the information on hand.

Ultimately, as the adage goes, don’t count your chickens before they hatch. Instead, wait until you know exactly how much you owe or how much you are getting back. Then, and only then, should you make a spending decision for your refund.

Do you have any tips for preparing for tax season 2019? Share them in the comments below.

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If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

What are the Best Online Tax Services?

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Best Online Tax Services
Many people have begun to file their taxes for 2015 to get their returns early and some have already received refunds. However, everyone has until April 15 to file their taxes. So, if you are still waiting to file, you may already have a tax broker in mind or maybe you are looking for a new way to do your taxes. Well, look no further because there are a number of spectacular online tax services available to everyone who has access to the Internet.

Turbo Tax

Turbo Tax is one of the most popular online tax services around and for a good reason. The best reason of them all being Turbo Tax is free for most of its users. However, those who have had to pay because they are in need of an upgrade have all said even paying for the services is worth it. Why? Well, it has been described as a simple and easy way to file your taxes yourself.

Another great thing about Turbo Tax is the program gives everyone some support. Each of us knows how painful it can be to file taxes, however, Turbo Tax provides people with a bit of encouragement and provides notes like, “You’re almost there!” when you are close to being done. Compared to other online tax services, Turbo Tax provides the best support as well as the easiest services around. However, if you don’t think you want to go with Turbo Tax, there are plenty of other online tax services you can benefit from.

H&R Block

H&R Block offers the same things as Turbo Tax, but they charge for state tax filing. However, H&R Block has been voted as having the “Best Customer Support” by Reviews.com. H&R Block, unlike Turbo Tax, offers in-office face-to-face assistance for its customers. Its instant chat support and phone support was also readily available and did not have long waits to get a live person on the other end. The design of the website and the company’s other online services are easy to use though and, if you get audited, H&R Block will send a representative to speak on your behalf.

Tax Act

Tax Act is a newer online tax service compared to H&R Block and Turbo Tax. Tax Act is also extremely budget friendly. Of course, Turbo Tax is free and H&R Block only charges for your state tax filing, Tax Act is the best deal of the three. It is comparable to Turbo Tax. The only thing Tax Act doesn’t do is give you periodic congratulations. If you have a more simple filing to get done, Tax Act is likely the cheapest option around. Tax Act also provides its users a PriceLock guarantee. Unlike Turbo Tax, Tax Act will not change its charges when you are halfway done with your taxes.

Other Online Tax Services

If none of these appeal to you, there are still a few online tax services you may want to take a close look at. Other reputable online tax services include eSmart Tax, Jackson Hewitt Online and TaxSlayer. You can go to any of their websites to find out more about their tax services.

Photo: Flickr: 401(K) 2012