IRS Tax Debt - Common Tax Problems and Their Solutions - Keep Your Head Above Water
It's Your Turn: Most people experience a problem with the IRS at least once in their lives.
Think about it, the IRS is the biggest collections agency in the world.
It touches everyone you know.
So make sure you know some common Tax Problems people experience.
That way, you can stay one step ahead of the game and avoid IRS Debt.
Underreporting: A lot of people think it's completely legal to underreport your income on your tax returns.
But this couldn't be further from the truth.
If you were not already in debt, getting caught underreporting on your tax returns can easily land you in debt.
You'll not only owe back taxes, but penalties and interest as well.
Solution: Report your income as accurately as possible on your Tax Returns.
Do this by filing"Profit or Loss from Business.
" Remember, the IRS has access to your bank account.
They can see the amount of deposits you made and compare it to the amount of income your reported.
If things don't add up, you'll be in hot water with the IRS.
Payroll Taxes: If you own small business, filing your payroll taxes on time is crucial.
The IRS can make you pay back 100% of the payroll taxes not filed, plus interest (Internal Revenue Code 6672).
Solution: Hire an Accountant or CPA who can handle this issue for you.
There are also banks out there that will file your payroll taxes on time for you.
Consider any of these options if you're strapped for time and can't report on your own.
Unable to Pay: Many people cannot afford to pay their IRS debt in full.
Some people have lost their jobs, become ill, had a loved one become ill, or have become disabled.
There's still hope if that is the case for you.
Solution: The IRS may suspend collections activity and allow you to get back on your feet.
This a "Grace Period" or "Suspended Collections" You have to prove that paying the IRS would create an economic hardship for you.
It's hard to make the IRS relent.
So you have to provide your complete financial information along with supporting documentation.
Stay on Top: It only takes one small error to wind up in debt with the IRS.
It's a monster of a system, and not even IRS personnel understand all of the rules.
If you have a problem that you cannot solve on your own, try to look for professional help.
Now You Have The Smoking Gun...
Use it!
Think about it, the IRS is the biggest collections agency in the world.
It touches everyone you know.
So make sure you know some common Tax Problems people experience.
That way, you can stay one step ahead of the game and avoid IRS Debt.
Underreporting: A lot of people think it's completely legal to underreport your income on your tax returns.
But this couldn't be further from the truth.
If you were not already in debt, getting caught underreporting on your tax returns can easily land you in debt.
You'll not only owe back taxes, but penalties and interest as well.
Solution: Report your income as accurately as possible on your Tax Returns.
Do this by filing"Profit or Loss from Business.
" Remember, the IRS has access to your bank account.
They can see the amount of deposits you made and compare it to the amount of income your reported.
If things don't add up, you'll be in hot water with the IRS.
Payroll Taxes: If you own small business, filing your payroll taxes on time is crucial.
The IRS can make you pay back 100% of the payroll taxes not filed, plus interest (Internal Revenue Code 6672).
Solution: Hire an Accountant or CPA who can handle this issue for you.
There are also banks out there that will file your payroll taxes on time for you.
Consider any of these options if you're strapped for time and can't report on your own.
Unable to Pay: Many people cannot afford to pay their IRS debt in full.
Some people have lost their jobs, become ill, had a loved one become ill, or have become disabled.
There's still hope if that is the case for you.
Solution: The IRS may suspend collections activity and allow you to get back on your feet.
This a "Grace Period" or "Suspended Collections" You have to prove that paying the IRS would create an economic hardship for you.
It's hard to make the IRS relent.
So you have to provide your complete financial information along with supporting documentation.
Stay on Top: It only takes one small error to wind up in debt with the IRS.
It's a monster of a system, and not even IRS personnel understand all of the rules.
If you have a problem that you cannot solve on your own, try to look for professional help.
Now You Have The Smoking Gun...
Use it!
Source...