IRS Resolution

4 Things That Can Cause Problems With the IRS

The Internal Revenue Service is an agency that you do not want to tangle with. Just making one small mistake when doing your taxes can get very costly. It seems that every year the IRS imposes more levies, files more liens, and garnishes more wages than in years past. It’s hard to believe that they are now filing more than 4 million levies against taxpayers every year.

JK Harris & Co.Is a large tax resolution firm, and they have made this list of the ways most people get in trouble with their taxes and thus with the IRS.

1. Using too many tax exemptions on their tax return. Because exemptions reduce the amount of tax owed, when someone is trying to get their tax as low as possible, they will often add more exemptions than they are legally entitled to. There are 3 main types of exemptions – one’s self, their spouse, and any dependents they may have.If you are claiming dependents, however, you need to be sure that you follow the rules and do it legally. Otherwise, you can get into trouble with this also.

2. Withdrawing money from a retirement plan early and not paying the taxes on it. The most commonly misused early withdrawal is taking money from a retirement fund before you are 59.5 years old. You will probably be looking at a 10% penalty on the investment, as well as a possible state penalty and having to pay tax on the amount withdrawn.

3. Self-employed people underpaying their taxes. It’s common for accountants to find that people who have started their own business have no idea how much tax they have to pay on their income. Tax laws are complex, even for accountants, so it’s understandable that self-employed people don’t know what they can deduct and the types of taxes they have to pay.

4. Not including gains or winnings in their income. People who gamble or bet have to claim all their winnings, including gambling, casinos, lotteries, horse and dog races, etc, as income.

Fortunately, there are programs to help those who have not paid all the IRS thinks they should, and they get so far behind that they are unable to pay. There is some debt relief for those who qualify. We can help you with the types of programs available and determining which one is the best for you to use. Contact us today for help with your IRS debt.