Preventing possible tax liabilities as an individual or a business owner is imperative if you want to avoid costly, headache-inducing IRS issues. We can easily incur a financial liability with the IRS when we are not properly prepared to pay our taxes. It does not take much to rack up a few fees and fines for filing late, filing incorrectly, or neglecting to file at all. Additionally, if enough time passes, more serious consequences can occur, including significant damage to your financial standing and even prison penalties.
Fortunately, the IRS provides a wealth of information for every kind of taxpayer to ensure everyone has access to the resources they need to address their tax responsibilities. To avoid trouble in the first place, put the following three practices into action to stay ahead of the game:
1.Stay on top of your Withholding allowance. As an employee, your withholding allowance helps your employer (and you) keep track of how much money to withhold from your paycheck to account for tax payments. Use the IRS withholding calculator when filling out a W-4 form for your employer to make sure the right amount of Federal income tax is being withheld from your paycheck. The calculator may not work for those who are self-employed or those who owe other types of taxes, so be sure to consult with your accountant and tax law attorney if you are unsure.
2.Determine whether or not you should be paying estimated taxes. As a general rule of thumb, every individual must pay estimated taxes if they expect to owe one thousand dollars or more when they file their return. Taxes are usually paid either through withholding or via estimated tax payments, which are paid over time, as income is accumulated. If you do not pay enough estimated taxes, you face a range of penalties, including possible fines if those estimated payments are late, regardless of whether or not you are owed a refund. Make sure you know if you are required to pay estimated payments, and if so, clarify how much and when they are due. This will save you a lot of hassle when it comes to dealing with the IRS.
3.Keep your business information and employment tax information up to date. Employment taxes are not something you want to mess around with. Get off to a good start by first confirming that the IRS has your correct, most current business address on file. This allows them to notify you and gives you the chance to respond in a timely manner in the event you owe a bill, or if there is an error with a bill. Do not make it difficult for the IRS to contact you. If you are an employer, make sure you understand the types of taxes you are responsible for depositing and reporting, and the corresponding due dates. If you are self-employed, make sure you are clear on your tax obligations and which forms you will need to file.
Tax liabilities happen and they are never fun to deal with, but working with a competent Cook County IRS issues lawyer can help you clean up the mess and protect your rights in the process. If you are experiencing trouble with a personal or business-related IRS issue, call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a consultation.