The tax filing season often proves to be a stressful time for many people. Filers often find themselves cursed with intimidating situations and tax problems that are extremely difficult to resolve. Since the slightest of errors or compliance issues can severely impact your financial situation, you ought to most certainly take time out to research solutions to solve tax controversies you’re faced with. To help you out, we’ve compiled an inventory of the most common tax problems along with their solutions:
1. Not Filing Taxes in the least
Starting with the foremost common issue, the non-filing of taxes is the worst thing you can do to yourself. It’s considered a sort of tax evasion by the IRS. Non-filing of taxes not only results in hefty penalties and fines but may also lead to jail time. Besides a $10,000 fine, you'll have to serve up to a year in jail.
To avoid these issues, you want to file something even if you can’t afford to pay all the taxes at the moment. To cater to the problem more affordably, you'll submit either the Application for Automatic Extension or the Instalment Agreement request. The Application for Automatic Extension gives you more time to file your tax returns. Although you won’t get an extension on your tax payments through this type, the penalties and interest payable are going to be much lower than what you would pay for not filing.
The Installation Agreement Request form allows you to pay your taxes in installments in order that you don’t have to file the returns altogether. You create a payment schedule for your tax installments. Since you aren’t paying by the deadline, penalties and interest will still be charged, but they’ll be much less than what you’d pay for not filing at all.
2. Making Calculation Mistakes
Depending on how you choose to file your tax returns, you would possibly end up making unnecessary math errors, which may create problems later on. This often occurs once you prepare your taxes at the last moment. The simple solution is to start preparing early so that you have ample time to double-check the calculations to ensure that all figures were added up correctly. Other effective thanks to avoid calculation issues is to use reliable tax preparation software to prepare for taxes. this could at least help you avoid simple addition and subtraction errors.
3. Not Staying Updated with the newest Policies
A common issue with filers who choose to prepare for taxes on their own is that they fail to track the changes in the tax code. Tax policies are subject to frequent changes such a lot so you might not be eligible for tax credits this year that you were entitled to last year. Staying up-to-date with tax updates helps you avoid unnecessary tax problems, saves money, and allows you to require advantage of any available benefits. If you can’t keep track of the tax updates, hiring a tax specialist may be a great option. they're well informed about the latest policy updates and will file your taxes correctly.
4. Being Charged with Interest and Penalties
Facing penalties and interest is the last thing a responsible tax filer would want. Interest and penalties are the additional amounts charged by the IRS and only add to what you owe the government. If you are doing get charged with penalties and interest, the sole viable solution is to request an abatement from the IRS. To get your abatement request approved, you want to have a reasonable cause or an administrative waiver, or a mistake on IRS’s part. Since getting an abatement isn't that simple, it’s best to rent a tax specialist who ensures that your case meets at least one of those requirements and files the abatement request on your behalf.
5. Facing Levies and Garnishment
Suppose you figured out a payment agreement with the government by filing an Installment Agreement Request. just in case you failed to make the scheduled payments or violated the agreement in some way, the IRS can garnish your income and place a lien on your assets. Keep in mind that the IRS doesn’t need a court order to garnish your income.
While states typically restrict creditors to 25% of the defaulters’ incomes, the IRS can even take quite that. actually, the IRS would generally leave enough of your income to support your family, yet its free reign over your income is concerning. If you’re faced with garnishment or levies, filing a garnishment or levy release is often a way out. You’ll probably have to prove how the garnishment or levies are causing financial hardship to you and your family. the
discharge will typically be subject to certain conditions and require you to abide by another payment plan. Given the complexities involved, it’s advised that you simply seek professional help from a tax expert who knows how far the terms of release are negotiable and work out a payment method that works to your advantage.
Today, the bulk of common tax problems arise from a lack of planning and rushing through things at the last minute. Thus, the simplest way to avoid common tax problems is to prepare for the filing season well in advance. Another highly recommended choice to avoid tax problems is to hire a tax professional to handle your case. If you’re faced with any of the tax problems explained above, reach bent a tax specialist who will offer expert tips or handle the problem for you. Remember,
we all make mistakes, especially when it involves numbers, but when fines and penalties are concerned, we've to be extra careful. However, the great news is that with the help of a tax professional, you'll solve all common tax problems, regardless of how difficult the situation gets.