How to Avoid IRS Debt
How People Accrue IRS Debt
Sometimes tax debt occurs because taxpayers simply don’t file. One year passes, they don’t hear anything from the IRS, and by the time year two arrives, the task of filing seems more daunting. When seven years have passed, the obstacles to filing look virtually impossible. Making a few changes in your financial habits can help you overcome these obstacles.
Tax debt and IRS debt often occur when people experience times of financial strain: they may experience sickness, an accident, marital crisis, a layoff or a period of transition in business. With a few changes in your financial lifestyle, you can navigate these periods more gracefully.
Ten Tips to Avoid IRS Debt
- Make time for fun. Recreational activities with friends and family keep you feeling optimistic, which results in a healthier business life and a freer flow of money. Enjoyable activities also help you prevent some of the events that can cause financial stress, such as divorce, accidents or sickness.
- If you’re a business owner, always send in your payroll taxes, even if cash flow is tight. It may mean cutting expenses or becoming creative about sources of revenue, but a little bit of extra effort over a long period of time will make a huge difference in the financial health of your company.
- If you’re self-employed, place a percentage of every bit of income you receive into a separate interest-bearing account, preferably one that’s not easy to access. It’s easy to keep up with this system, and you’ll never need to come up with a large lump sum.
- When you put aside income for taxes, place a little more than you estimate you’ll need. For example, if you’re in the 25% tax bracket, put in 28% of your income. If future tax surprises arise, you’re prepared. After you pay your taxes, leave any extra in your account for a cushion.
- If you’re a business owner, keep all your receipts. If you don’t receive a receipt, write one out for yourself and place it with your other receipts.
- Keep all your financial paperwork in one place. That way, when the time comes to file taxes, you won’t be missing any receipts, and you’ll receive your maximum deductions.
- Make filing taxes enjoyable. So many people attach negative emotions to filing and paying taxes, making the task of filing much more difficult. Taxes are just taxes. Why should you limit your enjoyment of life because they exist? Celebrate the completion of every year’s tax return!
- Talk with your tax accountant about obtaining every possible deduction.
- Look for ways to slightly rearrange your life to make something that was formerly not deductible, deductible. For example, you may be able to turn part of a vacation into a business trip by attending a workshop or connecting with a business colleague.
- File your return early! Make a plan to prepare your return in January. This will give you an amazing amount of mental peace the months of February, March and April. While other people may dread what they will discover, you will feel confident because you know. If you owe more money than you expect, you will be prepared to request an extension or raise the extra funds. If you discover you have extra money in your tax fund, you can enjoy the knowledge of that wealth.
How Tax Matters Solutions Can Help
If you currently owe taxes, the professional CPA’s at Tax Matters Solutions can help you negotiate with the IRS the most workable plan for you. No matter how dim your financial situation may seem, and no matter how threatening the IRS may appear, programs exist to help relieve you from this debt. The partners at Tax Matters Solutions specialize in these IRS debt solutions. Easily accessible and fast-acting, they can help you move beyond the debt to help you create a more secure financial future.