2012 IRS Tax Year – How to Avoid a Situation Where You Can’t Pay Back Taxes
As Christmas rolls around, and the new year begins the deadline for W2 and 1099 filings near. Tax Season begins early as by law employers must send their employees copies of their W2 and 1099 wage earning reports before February 1st, allowing the taxpayer significant time to meet the April 15th filing deadline. Taxpayers who do not ask for an extension beyond the April 15th deadline, and fail to file their tax returns on time will be subject to IRS Penalties and Interest for failing to meet filing requirements.
Many taxpayers are eager to file their tax returns, hoping for a nice refund check in the mail shortly thereafter. Others though face an entirely different situation, knowing that they owe back taxes and realizing that due to lack of funds they can’t pay back taxes. Often once a tax bill is assesed, and finally calculated and delivered to the recipient IRS Penalties and Interest have already begun to accrue. If this is the case then the taxpayer must act fast or seek professional help to resolve this back tax problem, so that the IRS Penalties and Interest do not continue to build unnecessarily.
One way to avoid having a large tax bill at the end of the year is to limit the number of exemptions you claim on your w4 forms. In doing this the taxpayer will have a forced savings coming out of every paycheck, and will likely qualify for an end of year refund after filing their tax returns. The opposite of this would be to claim many exemptions initially having less taxes go out to the IRS during the year, leaving the taxpayer owing a balance after filing a tax return. This often results in a situation where the taxpayer then can’t pay back taxes, and the cycle of IRS penalties and interest working to increase the balance owed begins. The results can be costly.
The best way to avoid IRS Penalties and Interest and avoid getting into a problem where you can’t pay back taxes is to avoid owing back taxes at all. Much of the time this is easier said than done. All of us at times get into trouble – we forget to file a tax return, experience an audit, claim too many exemptions and end up with a bill we can’t pay…but solutions exist. When you owe back taxes and can’t pay back taxes there are options. Tax defense companies and tax relief companies employ tax attorneys who can find an affordable solution to your problem, thereby limiting the amount of IRS penalties and interest you will face by avoiding the problem all together.
When it comes to dealing with the IRS one must be diligent. The best thing you can do is file every year, file on time, and manage your exemptions properly. If your employer has failed to send you the proper documentation such as your W2 forms or 1099 forms, you must contact the IRS to let them know. It is the taxpayers responsibility ultimately to seek out the information, as they will be the ones stuck footing the bill in the end.
Prince Ahmed writes for Community Tax Helpers which offers IRS or State Tax problems with a wide range of services e.g. IRS Penalties and Interest and Release Tax Lien
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