- Personal Finance
Taxes, Tips and the Taxpayer
How to avoid owing taxes each year
The number one tip to getting out of tax debt: pay your taxes! The entire year you're receiving income you can control the outcome of how much you're paying into taxes-whether you are under paying or over paying you have that control.
Adjust your W4 certificate-the number of allowances you're withholding has everything to do with how you file your return. The number of deductions, exemptions you will claim needs to match up to how many allowances you are claiming on your W4 certificate with your employer.
Utilize the withholding calculator on www.IRS.gov. This tool assists you with determining how many allowances you should be withholding.
Call the IRS 1-800-829-1040 to speak with a representative trained in the area of withholding compliance. These trained professionals will assist you with how to prepare/fill out your W4 certificate.
*The IRS has the authority to enforce withholding compliance to the maximum amount by sending a 'lock in' letter to your employer.
Self Employed/Commission Income Earners
You are required to pay estimated tax payments. Pay your quarterly estimated tax payments to avoid those additional penalties that will be assessed against your tax liability when reporting your earned income.
Fill out the 1040 ES form to become more knowledgeable on how much in quarterly taxes 'based on your earned income' you should be paying each year.
*Estimated tax payments are required if you are self employed/contractor.
Large Dollar Wage Earners
Withhold the maximum amount of allowances-you may have to request an additional amount to be deducted each pay period. Seek assistance with the help of the 1040 publication and worksheet to determine your tax rate if your income is higher than 100k. Pay the taxes you owe in the year you receive your income to avoid paying high penalties and interest fees-after the fact.
Offer in Compromise
The www. IRS.gov site offers great assistance if you are willing to become more knowledgeable about what you can do to get out of tax debt. The 656B booklet will give you insightful help on what you can do to get your 'back taxes' reduced. "Pennies on the dollar" is the phrase if you are seeking a way to get out of debt by paying a reduced amount of the taxes you currently owe.
If you are having financial difficulties paying back the taxes you owe- an Offer in Compromise is the best solution for you. The application fee is $150.00 and you may qualify to have that fee waived if you fall within the 'low income' wage earner criteria. Call the IRS 1-800-829-1040 to speak with a trained representative for more assistance.
You don't have to pay additional monies on top of the back taxes you owe to a tax professional. Gain the knowledge you need by referencing the materials and site referenced here for assistance.
Fees and services stated here may change due to constant changes in tax law and regulations, please reference the site and call the IRS directly for assistance to your questions and inquiries.
I am a taxpayer with experience in tax law and knowledge of how to gain help without paying out of pocket expenses that are available to the public at no cost.