Don’t Let Tax Issues Ruin Your Finances

As a law-abiding citizen, you might file your tax return each year by April 15. And since you know it’s your responsibility to pay taxes, you might send the IRS a check for any taxes owed. But unfortunately, even if you do everything right, mistakes on your return can result in owing additional taxes.

Unless you’re an accountant or a professional tax preparer, you might have limited tax knowledge. This is why you hire a professional to complete your return. Or if you file your own return, you may carefully read instructions. But even if you take these measures, problems with your return can arise.

For example, the person hired to complete your tax return might make a few careless mistakes. They may add deductions or tax credits that you’re not eligible for, or they may place figures on the wrong lines, triggering a much larger refund. Unfortunately, the IRS will eventually catch their mistake. And if you receive a bigger refund in error, you’re required to pay back this money.

Also, problems can arise when you file your own tax return. If you’re itemizing your return or have a multiple schedules, filing your own return might be cost-effective and faster. However, there’s a greater chance for errors.

Receiving a notification from the IRS in the mail can invoke panic. Most of the time, these are not friendly correspondences. They might indicate an upcoming audit, or state that you owe additional taxes. If you don’t have the financial resources to pay the IRS, you might push correspondences aside and delay paying your tax bill. However, “prolonging the issue only makes matters worse,” says the tax attorneys at Authority Tax Services.

Depending on the situation, you may disagree about owing additional taxes. In this case, it’s better to dispute than ignore.

The IRS is relentless, and they will take additional action to collect all money owed to the agency. There’s always the option of setting up a payment plan with the agency. However, you’ll pay a lot in interest, depending on how much you owe.

If you don’t seek help and ignore your bill, the agency may take action to garnish your wages. This is when they contact your employer and deduct money from your paycheck. They can also take action to place a lien on your bank accounts. As a last resort, you may serve jail time for any outstanding balances.

Given the potential seriousness of the situation, it’s important that you seek professional help. Professional help not only provides peace of mind, it can save you money when dealing with an IRS tax debt. If you dispute a tax bill, handling the situation yourself can prove challenging. This requires a lot of back-and-forth communication with the agency; and honestly, you may not have this kind of time. For this matter, some people give up trying to resolve issues themselves, and they simply pay what the agency says they owe.

However, you shouldn’t give in if you question the debt. Rather than spend the next few years paying off questionable debt, work with a professional to resolve your tax issue. Don’t let the IRS garnish your wages or place a lien on your bank account. Both actions can have a tremendous impact on your finances. If you don’t have access to your cash, you can’t pay your mortgage, your auto loan, your credit card bills, or perhaps put food on the table. But the sooner you address a tax issue, the sooner you can resolve the debt and move on with your life.

In the end, you can’t put a price on peace of mind. And since a tax debt is unlike other types of debt, ignoring an IRS issue will only make the situation work. But with a tax professional on your side, you’ll have everything you need to dispute a claim or work toward a resolution.

 

Tags: Accounting, Internal Revenue Service, IRS, Tax, Tax refund

Category: Taxes