Avoid the April 15 Blues - Take a Step-by-Step Approach to Your Taxes This Year
It is no wonder so many Americans dread the April 15th tax filing deadline. The U.S. tax code already contains more words than the Bible, and hundreds of pages of new rules and regulations are often added.
It is common for many people to put off filing their taxes until the last possible minute because of so much complexity. However, taking that approach can create problems and more stress and potentially land you in hot water with the IRS. What if you cannot get it done on time? You can file for an extension, but you are still required to pay the taxes you owe plus interest. In some cases, you can also end up owing penalties too. However, filing for an extension will prevent you from getting hit with a failure to file a penalty for not filing on time if you haven't filed for an extension. How do you know you didn't make a mistake if you file at the last minute? There should be adequate time to double-check the information before your return is filed. It's easy to make a mistake when rushing to meet a deadline. Your last-minute mistake could cause you to be audited.
We focus on helping people who owe $10,000 or more to the IRS or have years of unfiled tax returns, so we've seen our fair share of mistakes made by innocent taxpayers. Contact our firm today if you have any tax trouble or owe more than $10k to the IRS or state but can't pay in full. We help people get their life back from the IRS.
We recommend taking a systematic and step-by-step approach to preparing and filing your taxes. Don't bury your head in the sand on April 15th, and hope this problem will just go away. Think baby steps as the way to solve this problem. With unpleasant and complicated tasks, breaking them down into smaller and more manageable chunks can make things easier. This approach works with dealing with your tax returns, too. This year, vow to take a step-by-step approach to your tax return. If you follow these simple steps, you could be done with your taxes before you know it.
Step 1 - Set Up a Command Center or War Room
Chances are you started receiving tax documents in early January, and you may still be receiving those documents in March. That means you need a convenient place to keep all those documents. Setting up a command center or war room in your home makes it easier to store those documents and keep them at hand. Make sure you get your documents rounded up and saved. Keeping them in a designated place is a big help in dealing with all those papers.
If you have a home scanner, take a few minutes to scan each document as it arrives. Set up a special folder on your computer or cloud storage service to hold all those documents. Those electronic copies can be invaluable if the originals are damaged or destroyed.
Step 2 - Choose A Good Tax Preparation Professional (But Use A Tax Attorney For More Complicated IRS Issues)
While they cannot make the task totally painless, tax preparation professionals make the process much easier. We do not prepare tax returns for clients. That's not what we do. We recommend you have someone who is qualified and attends federal tax update seminars to stay current to prepare your tax return. There is that much information a tax professional has to know to prepare a proper tax return. For years, our firm has sponsored the Indiana CPA Society's Federal Tax Update seminars. It's a two-day seminar.
Keep in mind if you owe multiple years of taxes and have multiple years of unfiled returns, we recommend reaching out to a tax attorney who will understand your unique situation and help you with the tax relief you need. Most tax preparers aren't trained in tax resolution, so find the right firm to help you with your case. We regularly litigate cases in U.S. Tax Court. Tax preparers don't litigate cases. Handling a case that needs tax resolution is a completely different skill set from the skills used to prepare a tax return. We have training as attorneys in advocacy. Get the right kind of help you need.
Step 3 - Enter Your Tax Documents As You Get Them
One of the great things about technology is that you organize and file each tax document as you get it. Often you can download all your tax documents from various online services. For example, your direct deposit payroll service will give you your W2, and different vendors provide statements and 1099's online. If the mailman brings you a 1099-INT or a W-2, you can simply scan things as they come in.
Just open each document, scan it to create an electronic backup, and log on to your favorite secure cloud storage to file your documents. Whether you get five tax documents a day or just one, entering the information now can save you time later on.
Step 4 - Review Your Documents and Final Tax Return
After you think you have all your documents organized and your tax return is ready to file, the next step is to review everything and make sure there aren't any obvious issues. Go through the paper and electronic copies and check each one off on your tax return. If any of those documents are missing or anything is wrong, go back and enter them right away.
Step 5 - Bring It All Together
Now that the final review is complete and all the documents have been entered, it is time to bring it all together and actually file your return. Your tax prep professional should include a series of checks designed to catch common errors and point out audit flags. Be sure to ask questions and correct any problems you might find. Be sure to print off a copy of your tax return and save an electronic version to your computer.
Nothing can make filing taxes fun, and this annual chore will never be pleasant. Even so, you can make the task less "taxing" by breaking tax filing down into its component parts. Following the steps outlined above can help you deal more effectively with your tax return preparation and your final tax bill by having a carefully prepared tax return when it is filed.
OWE BACK TAXES?
Our firm focuses on tax resolution and helping people who owe the IRS or state $10,000 or more. We've seen taxpayers get blindsided every year by a huge tax bill. Many times falling behind your taxes leads to more and more years where taxes are owed but not paid. If that's you, we can help. Contact our firm today to discuss your tax debt settlement option.
Tax Relief Options for Small Business Owners
If you are running a small business, you have something that digs into your pocket every year, it’s the IRS. Unfortunately, you don’t get to choose whether the IRS can do so. By law you have to pay taxes and you have to file reports - tax returns - at specific times of the year. The IRS wants to know what you are doing, how much you are earning, and most importantly how much you are paying in taxes. Because some people cheat and others don’t pay, the IRS has gotten aggressive. While the audit rate for individual returns is about a little less than 1%, the audit rate for small businesses can be as much as 10 times higher.
It does not matter if you operate as a sole proprietor and use Schedule C to claim your income, or if you are set up as a C-corp, S-corp, or LLC - the IRS is watching what you do. It monitors whether you report all of your income reported by third parties as paid to you. Every year if they think you are not paying your fair share, they will certainly come calling. When that demand letter from the IRS arrives, knowing what to do next can make all the difference. The more you educate yourself, the easier it will be to deal with and eliminate tax debt.
Note: As a tax law firm, we always recommend that you reach out to a professional who knows the rules and will aggressively negotiate and defend you against the IRS. If you owe back taxes or are under audit, our firm can help negotiate with the IRS and potentially settle your tax debt. Call us today. Our tax attorneys can navigate the IRS maze so that you have nothing to worry about.
Small business owners are increasingly the target of enforcement efforts by the IRS. If you end up owing money to the IRS, it does have some programs to make paying easier. In some cases those small business tax relief and tax resolution programs let you settle for less than what you owe. However, qualifying is not as straightforward as you might think.
For businesses that may be eligible, the assistance of a tax attorney is absolutely critical. Remember, you as the owner of a business can be personally held liable for payroll taxes regardless of what kind of business entity you may have. As tax attorneys we can help guide you through the process and make sure you qualify, so you can rest a little easier and get back to building your business.
Payment Plans/Installment Agreements
If the amount your small business owes to the IRS is relatively small , paying off your tax bill as quickly as possible makes sense. You avoid penalties and more interest. However, many people don’t have the ability at once to immediately pay all of it. If paying in full would be a hardship, the IRS does offer payment plans. Setting one up can make paying back what you owe easier and more financially palatable. However, not all payment plans are the same. You have to have enough to be able to keep operating your business. Many times that means a slow and steady payment plant is what is really needed.
Keep in mind that interest will continue to accrue while the debt remains outstanding. That is something to think about. However, it is just one of many factors that have to be weighed. So, getting the right payment plan is critical to solving your tax problem if you cannot pay all at once the taxes owed.
Offer In Compromise
If you’re under a lot of financial hardship, it may make more sense to try for an offer in compromise, a special IRS program that could allow you to pay back less than you owe.
The offer in compromise program is a popular one with individual taxpayers and small business owners. If paying the entire amount would create a financial hardship for you, your family, or your business, a tax attorney can help you make the case to the IRS that you deserve a break.
Fair warning, the IRS just doesn’t agree to accept a set percentage on the dollar of what is owed. You can’t just throw a number out there and see if the IRS will accept it. It doesn’t work that way. There are lots of standards applied and considerations made by the IRS in evaluating an Offer in Compromise. The devil is in the details. If something sounds too good to be true, it likely is too good to be true. If someone hasn’t done the work necessary to work up your individual situation, they can’t know whether this is a viable solution. The Offer In Compromise program can be a great solution in the right case. A skilled tax attorney can evaluate whether this is right for you.
What’s the best option?
Each of these options has its pros and cons, and it is important to understand how these programs work and who qualifies to use them. If your small business is in trouble with the IRS, taking the right action right away could reduce the amount you owe, give you some breathing room and allow you to focus on your customers - not on your taxes.
Running a small business has its challenges, but those difficulties are nothing compared to the stress and anxiety small business owners feel when dealing with the IRS. Many when faced with the IRS have not had a good night's sleep in months. With so many small business owners now in IRS crosshairs, it has never been more important for small business owners, freelancers, gig workers, and the self-employed to have an advocate in their corner.
If you find yourself on the wrong end of an audit, a tax bill, or an enforcement action from the IRS, the steps you take next are absolutely critical. Trying to take on the IRS on your own is dangerous and potentially expensive. You not knowing a rule, regulation, requirement or deadline could literally ruin the rest of your life. You are gambling with your future if you try to represent yourself. A tax lawyer works to protect your future.
By working with a tax lawyer, you can gain access to vital information about small business settlement programs the IRS offers. You can gain access to the knowledge, skill, and ability by hiring a tax lawyer. Time is of the essence when the IRS comes calling, and with the interest and penalty clock ticking you do not have one second to waste. Call us, tax attorneys, for a case evaluation.