Hatfield Harris, PLLC Hatfield Harris, PLLC 2026-04-29T20:17:07Z https://www.hatfieldharris.com/feed/atom/ WordPress /wp-content/uploads/sites/1303181/2020/03/cropped-HH_SITEICON_512x512_MAR20-32x32.jpg On Behalf of Hatfield Harris, PLLC <![CDATA[Are retirement savings at risk when people file for bankruptcy?]]> https://www.hatfieldharris.com/?p=69135 2025-04-13T14:25:07Z 2025-04-13T14:25:07Z In a Chapter 7 bankruptcy Some people refer to Chapter 7 bankruptcy as liquidation bankruptcy. This name comes from the fact that the courts sometimes require that people sell off or liquidate high-value resources before granting a discharge of their eligible debts. Thankfully, there are exemptions available that allow people to preserve certain resources despite needing bankruptcy relief. In a Chapter 7 bankruptcy, retirement accounts protected by the Employee Retirement Income Security Act of 1974 (ERISA) are generally exempt from creditor claims. Under both federal bankruptcy laws and Arkansas state rules, retirement savings are often exempt from liquidation. 401(k)s, pensions and even IRAs are all accounts that people do not have to worry about losing simply because they request bankruptcy relief. Just like creditors could not acquire those resources through litigation, the banks cannot force their liquidation as part of a bankruptcy filing.

In a Chapter 13 bankruptcy

The good news for those contemplating Chapter 13 bankruptcy because of their competitive income or above-average assets is that liquidation is generally not a component of Chapter 13 bankruptcy. Instead, the filer works with the courts and their creditors to try to arrange for a reasonable repayment plan. They allocate their disposable income, not their current assets, toward the repayment of their major debts. Their retirement savings are typically not at risk. Reviewing the resources an individual has accumulated, the debts that have become unmanageable and other details about personal circumstances with a skilled legal team can help people select the best type of personal bankruptcy. The sooner that people consult about their bankruptcy options, the better their chances of optimizing their protection and financial relief.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[How does bankruptcy impact tax debt?]]> https://www.hatfieldharris.com/?p=69132 2025-03-12T18:06:52Z 2025-03-12T18:06:52Z of these filings are not the result of poor or reckless spending but unforeseen or surprise expenses. One potential surprise expense that could lead to debt: taxes. Whether dealing with a surprise or unmanageable tax bill, it is wise for taxpayers to consider whether bankruptcy could help them find their financial footing. One of the first steps in this conversation is to gain a basic understanding of bankruptcy options. There are many forms of bankruptcy, but the most common are Chapter 7 and Chapter 13. Key distinctions between the two include the following:
  • Chapter 7 Bankruptcy: Often referred to as liquidation bankruptcy, Chapter 7 allows for the discharge of many debts, including certain tax obligations.
  • Chapter 13 Bankruptcy: This type is a reorganization bankruptcy for individuals, which includes a repayment plan.
It is possible to use a petition for relief through bankruptcy to help manage tax debt, but approval is contingent upon several criteria.

When can a taxpayer get relief from tax debt through bankruptcy?

The answer will depend on the type of tax, the age of the tax debt, and the chosen chapter of bankruptcy. There are situations where a taxpayer could receive a discharge for income taxes through a Chapter 7 bankruptcy while a Chapter 13 may result in a more manageable repayment plan spread over a specified length of time.

What are my next steps?

It is important to reach out to a legal professional with experience in this niche area of law. A bankruptcy attorney can review your situation and discuss the benefits and risks of filing for bankruptcy to address tax debt. Bankruptcy can provide a fresh start for those overwhelmed by debt, but it comes with complex implications for tax obligations. Whether considering Chapter 7 or Chapter 13 bankruptcy, it is important to understand the overall impact on your financial situation. By staying informed and consulting with professionals, you can navigate these challenges more effectively and better ensure a more stable financial future.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[Charitable contributions and tax benefits]]> https://www.hatfieldharris.com/?p=69125 2025-02-18T21:12:46Z 2025-02-12T17:09:05Z Types of donations eligible for deductions To get tax benefits from your charitable contributions, you need to donate to a qualified organization. These are typically 501(c)(3) nonprofits, such as charities, religious organizations and educational institutions. You can donate money, property, or even stocks. Cash donations are the most straightforward, but non-cash donations like clothing, furniture, or vehicles are also eligible for deductions. Just be sure to get a receipt or written acknowledgment from the organization for any donation over $250. Impact on taxable income When you donate to a qualified organization, you can deduct your donation amount from your taxable income. This means that if you donate $1,000 and you are in the 24% tax bracket, you could save $240 on your taxes. However, to claim these deductions, you need to itemize your deductions on your tax return instead of taking the standard deduction. This can be beneficial if your total itemized deductions exceed the standard deduction amount. Tips to Maximize Your Charitable Contributions Here are some common strategies for making a charitable contribution:
  1. Plan your donations: Consider making larger donations in years when you expect higher income. This can help you maximize the tax benefits.
  2. Donate appreciated assets: If you have stocks or other investments that have increased value, donating them can provide a double benefit. You can deduct the current market value and avoid paying capital gains tax.
  3. Keep good records: Always keep receipts and written acknowledgments for your donations. For non-cash donations over $5,000, you may need a professional appraisal.
  4. Bunch your donations: If your total itemized deductions are close to the standard deduction, consider "bunching" your donations. This means making two years' worth of donations in one year to exceed the standard deduction and itemize your deductions.
Additional strategies may be useful as well.

IRS requires accurate recordkeeping

Keeping accurate records of your charitable contributions is crucial. The IRS requires documentation for all donations, especially those over $250. This includes:
  • Receipts
  • Canceled checks
  • Written acknowledgments from the charity
For non-cash donations, you need to keep records of the item's condition and value. Good recordkeeping ensures you can substantiate your deductions if the IRS questions them.

Understanding IRS rules

The IRS has specific rules for charitable contributions. For example, you can generally deduct up to 60% of your adjusted gross income (AGI) for cash donations. There are also limits for non-cash donations, typically 20% to 30% of your AGI. Understanding these rules is important to ensure compliance and maximize your tax benefits. You can find detailed information in IRS Publication 526. You can make the most of your charitable giving by understanding the types of donations eligible for deductions, the impact on your taxable income and how to maximize your contributions. Remember to keep accurate records and stay informed about IRS rules to ensure you get the full benefit of your generosity.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[How to calculate your taxes if you are self-employed]]> https://www.hatfieldharris.com/?p=69082 2025-01-22T17:44:06Z 2025-01-22T15:46:09Z Understanding self-employment tax Self-employment tax is a federal tax that covers Social Security and Medicare. It is essential for anyone earning $400 or more from self-employment in a year. Unlike regular employees, self-employed individuals must calculate and pay this tax themselves. It includes the following key components:
  • Social Security Tax: 12.4% of your net earnings
  • Medicare Tax: 9% of your net earnings
  • Additional Medicare Tax: 9% if your income exceeds certain thresholds
To calculate your self-employment tax, you must determine your net earnings. To do this, subtract your business expenses from your total income. Then, multiply your net earnings by 92.35%. This adjusts your income to reflect the portion subject to tax. Finally, multiply the adjusted earnings by 15.3% to find your self-employment tax amount. For example, suppose you earn $60,000 from your freelance business:
  • Net Earnings: $60,000
  • Taxable Amount: $60,000 x 92.35% = $55,410
  • Self-Employment Tax: $55,410 x 15.3% = $8,475.73
Even though these calculations can help you do your taxes independently, remember that you could be penalized if you do not do this accurately. Remember that you can hire a professional to ensure that you meet all the requirements that apply to you.

How to file your taxes

Once you know the taxes you must pay, you can start filing the forms. To report and pay your self-employment tax in Arkansas, you need to complete several forms:
  • IRS Form 1040: Your main tax return form.
  • Schedule C: Reports your business income and expenses.
  • Schedule SE: Calculates your self-employment tax.
You must fill out these forms correctly and follow all the due dates. Failing to do so can result in penalties and additional fees. Remember that your business structure can also affect the amount of taxes you pay. This guide can help you understand the basics of self-employment tax, but you will need to dig deeper into the law to understand which requirements apply to you.

Deductions and benefits

Thankfully, self-employed individuals can take advantage of various deductions to reduce taxable income:
  • Home Office: Deduct a portion of your home expenses if you use part of your home for business.
  • Health Insurance: Deduct premiums paid for health insurance.
  • Business Expenses: Deduct costs like supplies, travel, and marketing.
Identifying these expenses and keeping track of them can help you reduce the amount of taxes you need to pay. As you can see, managing your self-employment taxes does not have to be overwhelming. By understanding the components and steps you need to take, you can meet your tax obligations while maximizing your deductions. Remember to keep accurate records and seek professional advice if needed. Being informed and organized is key to a stress-free tax season.  ]]> On Behalf of Hatfield Harris, PLLC <![CDATA[How can you keep debt collectors from harassing you?]]> https://www.hatfieldharris.com/?p=69057 2024-11-06T20:05:38Z 2024-11-06T18:54:54Z What is creditor harassment? Creditor harassment occurs when debt collectors aggressively pressure you into paying. These tactics can include repeated phone calls, threats and other intimidating behaviors. The federal Fair Debt Collection Practices Act (FDCPA) protects consumers from harassment. It sets clear guidelines for debt collector practices. Here are some behaviors that violate federal laws:
  • Using threats or violence
  • Using obscene language
  • Misleading you about the debt
  • Implying you could be arrested
  • Calling repeatedly to annoy or harass
  • Discussing your debt with others without your consent
If you experience any of these tactics, it may be considered harassment under the FDCPA.

How does filing for bankruptcy affect collection tactics?

Bankruptcy can provide immediate relief from aggressive debt collection efforts. Filing for bankruptcy protection puts an automatic stay in place, which halts most collection actions against you. Here are some protections that result:
  • Stopping wage garnishments
  • Halting foreclosure proceedings
  • Ceasing debt collection calls
  • Preventing legal actions against you
Working with a skilled bankruptcy lawyer can protect your rights. An experienced attorney can guide you in finding the best way to handle your debts, ensuring you understand your options. It’s essential to remember that bankruptcy is a legal tool designed to help you regain control over your financial situation.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[Understanding tax law and preparation]]> https://www.hatfieldharris.com/?p=69038 2024-03-27T19:13:06Z 2024-03-27T19:13:06Z Defining tax law Tax law encompasses the rules, policies and procedures that oversee the legal process of taxation. This includes taxes on income, property and sales. Additionally, governments use tax law to collect revenue for public services. It is important to understand the basics of tax law to fulfill your obligations and possibly save money.

Key concepts in tax preparation

Preparing taxes involves several key concepts, the first of which is income. You must report all forms of income, including wages, interest and profits from selling goods or services. Another aspect of preparation is finding deductions. For example, some expenses can reduce your taxable income, such as charitable donations or business expenses. The last factor to address is tax credits, which directly reduce the amount of tax you owe. These can include credits for education expenses or for investing in renewable energy.

Steps for tax preparation

There are a few ways you can proceed as you prepare your taxes. Gather your documents: Collect all necessary documentation, such as W-2 forms from employers, 1099 forms for other income, receipts for deductible expenses and records of tax credits. Understand your filing status: Your status, such as single, married filing jointly or head of household, affects your tax rates and deductions. Choose the right form: Most taxpayers use Form 1040, but there are different versions depending on the complexity of your finances. Fill out your tax return: Calculate your taxable income by subtracting deductions from your gross income. Then, apply the relevant tax rates to determine how much you owe or your refund amount. File your taxes: You can file electronically or by mail. Electronic filing is faster and reduces the risk of errors. Following these steps will help you stay organized and ready when it is time to file your taxes.

Common mistakes to avoid

Failing to report all income can lead to penalties and interest. Furthermore, overlooking deductions and credits can result in paying more tax than necessary. Another common but avoidable mistake is missing the filing deadline. Late filing can result in penalties and interest charges. Understanding how tax law and preparation work can help you successfully navigate tax season and possibly reduce your expenses.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[Can you keep your home after your divorce in Arkansas?]]> https://www.hatfieldharris.com/?p=69021 2024-01-26T03:45:44Z 2024-01-26T03:45:44Z Considering your children's well-being Staying in the family home after divorce can offer children a sense of stability. Familiar surroundings provide comfort during a challenging time, helping them adjust to the changes. The continuity of their living space, school and neighborhood can mitigate the emotional impact of divorce, offering a stable foundation for their well-being and development.

Determining financial standing

Take stock of your joint financial assets and liabilities. Compile a comprehensive list, including income, debts and expenses. Analyzing these figures will give you a clearer picture of your financial standing as you approach divorce proceedings.

Evaluating home equity

For many couples, the marital home is a significant asset. Calculating its current market value and subtracting outstanding mortgage debt provides the equity. The equity in your home influences the division of assets during divorce.

Consideration of Arkansas laws

Arkansas operates under equitable distribution laws, meaning that the marital property division is fair but not necessarily equal. The court takes various factors into account, such as each spouse's financial contributions, earning capacity and child custody arrangements.

Budgeting for post-divorce homeownership

Once the divorce is final, maintaining the marital home comes with ongoing financial responsibilities. Budgeting becomes imperative—consider mortgage payments, property taxes, insurance and maintenance costs. Ensuring you can afford these expenses post-divorce provides a smoother transition.

Exploring options

If the financial burden of keeping the marital home proves challenging, exploring alternative solutions is wise. Selling the property and dividing the proceeds may be a viable option, providing both parties with a fresh start. You may find another residence in the same neighborhood and school zone to help reduce the impact of moving for your children.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[How to handle an IRS audit]]> https://www.hatfieldharris.com/?p=69020 2024-01-12T15:54:22Z 2024-01-12T15:54:22Z Understanding why audits occur The IRS conducts audits to verify the accuracy of a taxpayer's returns and ensure compliance with tax laws. Audits do not always imply wrongdoing. They can result from random selection or because something in your return may have raised a red flag. IRS audits are relatively commonplace. The IRS conducted over 700,000 tax return audits during the financial year of 2022. Triggers may include unreported income, excessive deductions or discrepancies between your return and information the IRS received from other sources, such as employers or banks.

Responding to an audit

Upon receiving an audit notification, it is important to read and review it carefully. This letter outlines the reasons behind the IRS's selection of your return. It also tells you which documents you need to provide. Responding in a timely manner is essential. If you delay or ignore the request, it can lead to additional penalties or a more in-depth investigation. To substrate the items in question, gather all relevant documentation, such as receipts, bills, employment documents and bank statements. Organizing these documents will help you present your case effectively and efficiently to the IRS.

Navigating the audit process

You have the right to understand the purpose of the audit and to know what the IRS finds during the process. Do not hesitate to ask for clarification if you have questions or concerns. Cooperation and transparency are key. The audit might take place through mail, at an IRS office or at a location of your choice, such as your home or office. The complexity of your case often determines the type of audit you undergo. Remember, an audit is not an accusation of wrongdoing but a process to ensure tax compliance. Learning about this process can provide valuable guidance if you are facing an audit.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[4 reasons mediation offers a kinder approach to divorce with kids]]> https://www.hatfieldharris.com/?p=69015 2023-12-29T01:40:20Z 2023-12-29T01:40:20Z 1. Puts children first One of the primary advantages of divorce mediation is its child-centric focus. Unlike traditional divorce proceedings, where legal battles can become emotionally charged, mediation places the children's well-being at the forefront. The process encourages parents to collaborate in crafting solutions that prioritize the needs and emotions of their children, fostering a sense of stability during a period of significant change.

2. Encourages open communication

Divorce mediation promotes open communication between parents, allowing them to discuss and decide on key issues related to the children's lives. From custody arrangements to visitation schedules, parents actively engage in constructive dialogue under the guidance of a neutral mediator. This approach often results in agreements tailored to the unique needs of the family, creating a more flexible and adaptive framework for co-parenting.

3. Promotes emotional resilience for children

Children may experience more stress and anxiety when their parents divorce. Mediation is collaborative. It helps shield children from the adversarial dynamics often present in court battles. When parents work together to find common ground, children are more likely to see a united front.

4. Offers cost-effectiveness and timely resolutions

Arkansas has 4.1 divorces per 1,000 people. Divorce mediation is often more cost-effective and efficient than a court-based divorce. The streamlined process typically requires fewer resources, saving both time and money. This financial relief can contribute to a more stable post-divorce environment. That directly benefits the children involved. In Arkansas, the shift toward divorce mediation reflects a growing recognition of its potential to alleviate the stress children experience.]]> On Behalf of Hatfield Harris, PLLC <![CDATA[What you should know about filing for bankruptcy in Arkansas]]> https://www.hatfieldharris.com/?p=69014 2023-12-06T16:56:06Z 2023-12-06T16:56:06Z The basics of bankruptcy in Arkansas Bankruptcy is a legal process designed to help individuals or businesses overwhelmed by debt find relief. In Arkansas, like in other states, bankruptcy laws provide a framework for managing financial crises. Chapter 7 bankruptcy. This involves liquidating certain assets to pay off debts. Certain essential items are typically exempt, ensuring individuals can maintain a basic standard of living. Chapter 13 bankruptcy. This option allows individuals to reorganize their debts. This involves creating a repayment plan that usually spans three to five years, allowing the individual to catch up on missed payments and regain financial stability. Not everyone qualifies for bankruptcy in Arkansas. Factors such as income, expenses and the type of debt determine eligibility. In 2022, 5,454 people filed for either Chapter 7 or Chapter 13 bankruptcy in Arkansas. This figure is above the national average.

Bankruptcy pros and cons

When someone files for bankruptcy, it triggers an automatic stay. This prevents creditors from pursuing collection activities. Debtors gain breathing space to assess their financial situation without constant pressure from creditors. While bankruptcy offers a fresh start, it does impact an individual's credit score. However, the adverse effects are not permanent. With responsible financial behavior, individuals can rebuild their credit over time.

Bankruptcy and assets

Many people wonder about the fate of their assets during bankruptcy. The type of bankruptcy you pursue can determine whether you can keep some or all your possessions. Individuals filing for bankruptcy can usually keep some exempt assets.

Bankruptcy offers a fresh start

The financial struggles leading to bankruptcy may evoke feelings of failure and shame. Individuals may question their ability to manage finances and fulfill responsibilities. However, bankruptcy is a legal and financial tool designed to provide a fresh start. Seeking support, understanding the process and focusing on rebuilding can help restore confidence and self-respect over time.]]>