In theory and in fact, the IRS is not your enemy. It has its obligations, as do you. But, it does not seek to press you to the wall. It is a bureaucracy created to fill a need. And, it has grown unwieldy over time.
It has 7,000 pages of tax code to monitor and enforce, and the average citizen presents no threat. For many political and budgetary reasons, the IRS has seen its budget cut. And, that hampers its ability to be aggressive.
CNN Money points out, “Fewer than 1% of taxpayers are audited these days, and as the budget cuts continue, this rate will likely drop further.” This IRS headache does not license you to cheat, lie, or misrepresent your situation. Fraud is fraud, whether they catch you or not.
5 important facts about taxes that you may not know:
You don’t always have to pay
Forbes reminds you, “You may not have to file a federal income tax return.” You don’t pay income taxes at will or at whim. What you pay is a function of your income filing status, source, and age. The IRS allows for standard deductions, so if you can identify that break, you can find your tax obligation easily. For some people, that match excuses them from paying and may even mean a refund of taxes withheld.
Filing on time is a must
You must file a tax return even when you can’t pay your bill. You are subject to penalties for not filing as well as not paying. If you talk to the IRS, you might have options. For instance, you might pay by credit card or work out a payment plan. But, you must file by the tax deadline.
eFile just makes sense
More than 20 percent of paper filings have errors that delay the processing, increase the chance of audit, and/or postpone any refund. Even the IRS admits, “Most people find that filing their taxes online gives them the chance to take advantage of more tax credits and tax deductions.” So, the refund you’re expecting may be larger than you thought.
Just about everything is taxable
You owe taxes on money you make on anything you sell on Amazon, Craigslist, or eBay. Your winnings from casinos, lotteries, or online gambling are considered taxable income. Unemployment payments are taxable and so are alimony payments. Cash received as an Uber driver, payments realized from Airbnb rentals, and even scholarship awards are considered income.
Get help in time
Troubled taxpayers may need help from a tax lawyer from the start is they anticipate problems. But, receiving notice from the IRS is a red flag to get help. Tax audits and other IRS actions are not always fatal, but when you receive notice, you should not answer on your own. They may only be looking for a clarification, a correction, some documentation, and so on. But, you want to be in position to address them correctly and pursue solutions that serve you well.
Handling the IRS is stressful
The IRS can worry you, especially if you are fault. But, with or without cause to worry, you can secure help through a qualified and experienced tax lawyer.
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