How To Steer Clear of Creating IRS Problems
Whether you are currently dealing with tax problems, just cleared yourself and are starting fresh or have never had an issue with the IRS you can benefit from taking steps that will help you avoid problems with the IRS in the future.
Below you will find a few simple reminders and steps that will help keep you out of tax trouble.
File Your Tax Returns on Time
Making sure you file your taxes correctly every year for yourself as well as your business will help you avoid the slippery slope to larger IRS problems. Filing on time helps you avoid penalties and fees. Also if the IRS ever audits your returns the fact that you filed on time will be in your favor.
Pay Future Taxes
The number one reason taxpayers have IRS problems is due to the fact that they didn’t pay taxes they owed. If you want to avoid tax problems you must make sure you “Pay As You Go”. This means that if you are employed make sure that your current tax withholding is enough to pay this years taxes! If you do not know how to figure this out then you must find a competent professional who can help you.
If you are self-employed you can really hurt yourself with the IRS.
Since no one is taking out tax withholdings from your checks you can make the mistake of not setting aside and paying the correct amount of taxes needed for you to be safe at tax time. In order to avoid problems with self-employment pay you need to pay Estimated Taxes. By doing this you will also be showing the IRS that you have good intentions to pay and this may work in your favor if there are any problems.
There is an easy way to pay the IRS during the year. Basically, whenever you get a check or cash from a customer as payment you should immediately take 20% of the check or cash and send it to the IRS for this year’s taxes. The percentage may be a little high or low but it is a starting place and can be adjusted later. By sending in an estimated tax to the IRS you can avoid owing more at the end of the year then you can afford. Make sure you send the check or money order with you name, social security number and the words “1040ES Tax Year 20XX”(“XX” is the year in question) written in the memo area. Make sure you keep a clear record and copies of the checks or money orders that you do send.
If you follow these simple tips you can avoid a lot of future problems with the IRS. If tax issues do arise the IRS is more likely to look kindly on your case since you showed a certain amount of good intention in regards to your tax responsibilities.
Again, if you are confused by your taxes make sure that you get competent help from a professional. If you find that you have not done so well with your taxes in the past, owe tax debt, have not filed in awhile or have the IRS pursuing you for unpaid taxes make sure you find a reliable tax attorney to help you take care of your tax problems the right way. http://www.irsallstar.com/