Business owners and celebrities are not the only ones who can owe the Internal Revenue Service (IRS) money. Even you can get in trouble if you make a tax mistake. The only letter you’d want to receive from the IRS is a tax refund check. If you, unfortunately, receive a tax audit, make sure to read, understand, respond, pay, and keep your records.
The good news is that it is not the end of the world if you receive a notice from this government agency. You can always ask help from a legal professional, and they will be responsible for negotiating with the IRS. Want even better news? There are things that you can do to stay on the good side of the IRS.
Double-check your figures
Some people are too careless when it comes to their taxes. But one of the best ways you can prevent a tax audit is by making sure that any information you submit is accurate and complete. Ensure that everything matches with your record and that of the IRS. Doing error checks will help you detect discrepancies and reduce audit risks.
Avoid willful tax blunders
There’s a big difference between willful and non-willful tax mistakes. Taxes are a complicated matter. The IRS can be forgiving to taxpayers who have made innocent flubs. They may even give you no penalty, depending on the tax case. However, if proven guilty of a willful tax error, you can face costly penalties or even jail time. In an article written by Robert Wood, you can find out more about what the IRS calls willful mistakes.
Pay your trust fund taxes
Trust fund taxes are what businesses collect from their customers and employees. Sales tax payments are what you receive from your customers, while employment taxes are the cash you collect from your staff. Businesses are required to put the trust fund taxes in a separate bank account. The IRS expects you to report all trust fund taxes you have collected and settle the amount to the right taxing authority.
Know what tax deductions and breaks you can claim
Tax deductions are the amount you can legally subtract to your adjusted gross income (AGI). By taking breaks and tax deductions, you get to lower your tax bill. You have the option to itemize the deductions or make a standard deduction instead. But before you claim tax deductions, make sure that what you deduct is within the regulations of the state and the IRS. Otherwise, you can be evading your taxes and risk yourself of receiving a tax notice.
File your return even if you can’t afford it
The top mistake of taxpayers is the failure to file their returns at all. Each year, millions of Americans dread the tax season. With such a considerable number of the population having no means to afford their tax bills, many are just opting to skip filing their returns. Avoid doing this as the penalty you need to pay for failure to file entirely is more expensive than paying late.
This article entails some of the best things that you can do to avoid costly penalties and letters from the IRS. You may not enjoy paying your taxes. But fulfilling your tax obligations is a better choice than having to face costly tax penalties. If you get in trouble with the IRS, don’t hesitate to seek help from a reputable tax attorney.