Are you having issues with the IRS? Fear not, everyone makes mistakes, but you need to correct those.
Common tax issues vary. They can have far-reaching effects, from property liens to lawsuits.
So it’s wise to recognize when you owe money to the IRS and how to fix the matter. You want to pay what you owe, but not risk lasting repercussions because of unpaid taxes.
Consider all the following scenarios to know what to avoid, so you don’t experience tax problems with the IRS.
1. IRS Penalties and Interest
One of the most common tax problems that people face is owing IRS penalties and interest. This can happen if you don’t pay your taxes on time, if you underpay your taxes, or if you file your taxes late.
IRS penalties and interest can add up, and they can be very difficult to pay off. If you think you might owe IRS penalties and interest, find more info and speak with a tax professional to learn how to best avoid them.
2. Late Filing and Payment
Regardless of the reason, it is important to take care of this issue as soon as possible to avoid any further penalties or interest. Filing taxes electronically might be the best way to do this, which will ensure that they are received on time.
If you are unable to pay the full amount owed, you can set up a payment plan with the IRS. This will allow you to make smaller payments over time, rather than one large payment.
3. Estimated Taxes
Estimated taxes are the taxes that you pay on income that is not subject to withholding. It comprises income from rent, interest, self-employment, alimony, dividends, and gains from the sale of assets.
If you don’t pay your estimated taxes, you may be subject to a penalty. The best way to avoid this penalty is to make sure that you pay your estimated taxes on time.
You can do this by using the IRS’s Estimated Tax Worksheet. This Worksheet will help you calculate how much you need to pay.
4. Unclaimed Credits and Deductions
A lot of people don’t realize that they’re entitled to certain credits and deductions, and as a result, they wind up paying more in taxes than they should. If you’re not sure what credits or deductions you’re eligible for, it’s a good idea to speak to a tax professional. They can help you figure out what you’re entitled to and make sure that you’re taking advantage of all the deductions and credits that you’re entitled to.
5. Poor Record Keeping
This can be a major problem if you’re self-employed or have a lot of income from investments. It’s important to keep track of all your income and expenses so that you can report them on your tax return. If you don’t have good records, you may pay more tax than you owe.
Be Mindful of Tax Problems
While it’s important to be mindful of tax problems, it’s also important to take action to avoid them. You can do this by keeping organized records throughout the year, staying current on tax law changes, and using tax software to help with your return.
If you’re having tax problems, be sure to seek help from a professional. A tax specialist can help you figure out what to do and how to avoid future problems.
If you’re looking for more tax advice or other financial guidance, check out the rest of our blog.