There are really many things we want to do in life like at the top maybe sailing a boat on any coastal line let’s say the Californian one and at the bottom being poked by a pencil in our back. The act of taxpaying comes somewhere after eating a bowl of something you really don’t like (broccoli for instance, right?)
It’s an obligation for everyone. Not just once every 5 years but every single year. It has become a tradition just like the fireworks on New Year and the mistletoe in December, in the same way the tax man arrives in the month of April.
We all hope for an accounting mistake and maybe a big refund by it, but it’s a fact that almost everyone owes some taxes at the end of the year.
Reasons you may owe some taxes:
Following are some of the reasons why you may be owing taxes at the end of the year to the IRS:
Withholding Too Little Money from Your Paycheck:
At the start of your job you probably filled out a form so that your boss would be informed about Federal Income Tax amount to hold back from all of your checks. People are asked to predict their average income but they normally don’t do it right. So depending on what you estimated in this form there is a wide possibility you had less taxes withheld in your payments which means you will now owe some money for the shortfall which was made.
Getting Caught by cheating:
Over the last four years IRS has prioritized to take back money from people including businessmen and individuals who are cheating with the IFA and stating false incomes.IRS is closely monitoring people to keep a check if they are true or not. From 2008 IRS started paying people who reported such people and they will get a 15-30% from the violating person.
Tax cheaters include people who does following
- false deductions
- false documents
- unreported income
- organized crime
Not filing a tax return:
Maybe you essentially forgot to document a tax report of the most recent year, or former years, and now have discovered that you ought to have completed so.
Actions for ignoring the IRS:
If you don’t pay off IRS tax debt, the IRS has some defined penalties and actions to perform against you.
The Failure to Pay Penalty is one-a large portion of 1% of the unpaid assessment for every month the expense is owed (not surpassing 25%). The Failure to File Penalty is 5% of the unpaid charge, and the investment rate is the Federal Short term rate in addition to 3%.
The IRS can put a stop on your financial balance and also empty it to pay the bill. In the event that you have property, then they can put a charge lien on your property. Additionally, they can put a toll on your wages of between 30-70%, which depends upon your living expenditures.
How to pay off IRS tax debt:
The best way to pay off your tax is by just paying all of it in one go. But there are possibilities you may not have that much amount. The IRS offers many payment methods to pay off IRS tax debt. Some are as follows:
Online Payment Agreement:
If you owe the IRS lesser than or equal to $25000 then this option is the best for you. For this you can easily use the OPA- Online Payment Agreement which gives you the opportunity to request for 30-120 days to pay off IRS tax debt.
Installment Agreement Request:
If you owe the IRS lesser than or equal to $25000 plus you need about 6 months for repayment then it is possible for you to set up this plan. For more than $25000 you will be obliged to finish a financial statement to focus the monthly scheduled installment sum for an installment plan.
Offer In Compromise:
There is a possibility that the IRS may think of permitting you to pay less than what you actually owe to the IRS by Offer in Compromise. The IRS will offer you “generally support an offer in compromise when the measure offered speaks to the most we can hope to gather inside a sensible period of time.” Your capacity to pay, pay, liabilities, and possession value will all be considered for this plan.
If you want to avoid getting under IRS tax debt in the future then you have to be sure to negotiate your options and situations with your HR Manager. Try to make sure that you fill out Federal Income Tax return and keep some extra saved cash in your accounts for taxes you might owe at the end of the year.