One of the hardest parts about paying taxes is navigating the often complex and intricate tax law behind the deductions, rules, and consequences. The easiest way to avoid trouble with the IRS is by paying what is due the first time around, but for many mistakes happen and circumstances come up.
While getting back in the IRS’s good graces can be challenging, it is not impossible. Take a look at these rules to keep you (or get you back) on the good side of the IRS.
- Paying taxes later. Tax planning is everything. That means not decelerating tax deductions. Deferring tax payments is your right, and is the better option for some in the long run, but you are still going to be taxed right now.
- Everything you have is considered income. Gambling winnings, lottery winnings, finding a car in the ravine. It is all taxed. Deductions and offsets will never be as inclusive as income, unless you get very lucky.
- Reply to each IRS notice. Records are everything. When you fight the IRS, do so with attrition. Choose your battles wisely. Small bills? Pay them. You never want to risk bigger disputes or audits because you ticked off the government over a small bill.
- A 1099 Form does count. The IRS pays attention to every single form even if you don’t. Remember that.
- Watch the statute of limitations and keep great records. Three years is the usual statute of limitation for the IRS after you file a return. However, if you make the mistaken of understating your taxes by 25% or above, the IRS will have six years to pursue you.
- If the IRS visits, don’t say a word. You have the right to council if the IRS comes to your business or home. A lawyer is the best way to go in this instance. Don’t risk saying the wrong thing.
- Don’t talk too much. Always file your returns even if there’s a chance you can’t pay. You can work out a payment plan later through installment agreements. There may be penalties attached but it is worth it. Keeping your returns to the point is always the best bet. All attachments should be IRS related and should be concise. The IRS does not want to go through more paperwork than it has to.
- Avoid amending your returns. Returns that are amended have a higher chance of being audited especially if there is a refund involved. The IRS wants you to amend a return only if you discover there are mistakes involved.
- Watch yourself with large refunds. Big money catches the IRS’ eye. The government does not like to give money back. If you see that you are getting a large refund, try applying some of that to tax payments or next year’s return.
- Hire professionals. Always hire someone that is reliable in tax relief and is guaranteed to handle your taxes with care.
Whether filing your taxes or fighting the IRS, a tax professional is often the best way to get the tax relief you need. Don’t put off finding representation, however. The earlier you find help the better a chance you have of settling your tax debt quickly.