» » » » Coming to Terms with your IRS Problems

Most people find it unnerving to think about the huge tax burden they may face when they underpay their taxes. However, it is much easier to face your IRS tax problems than to try to avoid the issue. The problem with avoidance is the problem is not going to go away, so the sooner you do something about it, the sooner you can develop a workable solution and put it behind you. The only way IRS tax problems will leave you completely is after you pay off the debt or work out an equitable solution with the IRS. 

Coming to Terms with your IRS Problems
Once you make the decision to come to terms with your IRS problems, you need to develop a plan for eliminating the tax debt. There are several options you can consider in order to accomplish this:

• Work out a payment plan with the IRS

• Hire a tax lawyer to negotiate with the IRS on your behalf

• Hire a third party negotiator to work with the IRS on your behalf

• Pay the tax bill in full

• Make regular payments on the tax debt without setting up an agreeable arrangement with the IRS (will probably come back to haunt you later)

Although the above list provides several potential solutions for facing your IRS tax problems, the first thing you need to do is evaluate your own individual situation in order to determine what why the problems began to occur in the first place. If the problems are because your employer does not take enough taxes out of your paycheck, you need to make some adjustments so that doesn't continue being a problem. A good rule of thumb to follow her here is to avoid claiming all the deductions to which you are entitle during the year in order to reduce the possibility of an underpayment. If you are single and not presently claiming even yourself, you may wish to ask your employer to deduct additional money from your paycheck: the w4 form has a spot for you to fill out any amount you wish.

If you own your own business but are not filing quarterly tax returns because you operate on a 1099 basis, you can set some money aside out of each payment you receive from customers and/or clients to cover your tax liability. This may not completely eliminate any IRS tax problems for the upcoming tax year, you can certainly reduce your future tax liability; many business owners actually pay more taxes than necessary because they do not keep accurate records of tax deductible business expenses. You might want to consider speaking to a tax advisor because they are experts in the tax law and can advice you on allowable taxable business-related expenses. This will help you avoid cheating yourself out of legitimate business related expenses you can deduct from your gross income.

An important thing to always remember is in most cases the taxpayer creates his or her or IRS tax problems because of a failure to claim all business expenses, not filing a quarterly income tax return or claiming more exemptions during the year than is allowable. If you work out a solution that will allow you to correct those problems and work with an accountant or tax advisor to prevent a reoccurrence, you will be well on your way toward coming to terms with your problems with the IRS and thus avoid penalties and interest they tack on when you don't pay your taxes when they are due.

About Denny Jones

Hi there! I am Denny, a personal finance blogger and I love to share tips related to managing finance for a better living. Follow my blog for lots of fresh and exciting tactics to control your finances.
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2 comments:

  1. It's easy to fall into the kinds of traps you're talking about, just through sheer laziness. I've seen it happen to a few people. My experience has been that it's best to get in touch with the IRS as soon as possible and to talk to them.

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  2. Talking to the IRS about your tax problems can be intimidating, and if you don't feel you can go it alone you may want to consider hiring a tax lawyer to intercede on your behalf.

    ReplyDelete