What You Need to Know About Taxes – 4 Things
Paying taxes is a responsibility, and you need to file your tax returns and pay what you owe on time. This will help you avoid heavy penalties and interests for delayed payments. Also, if you avoid paying taxes by using misleading financial information, you can end up in prison or pay heavy fines once found guilty of tax evasion. To help you avoid taxes issues, here are 4 things you need to know about taxes.
- Filing tax returns and paying what you owe on time is essential
The IRS has set out dates for filing taxes. Tax filing is opened at the end of January and closes around mid-April every year. For instance, for the coming tax season, you need to file and pay your taxes by 15th April, 2021. This is the deadline and when you file or pay your taxes after this tax day, you are likely to pay heavy penalties and interests. However, you can file for an extension period to file your taxes, but make sure you pay an estimate of what you owe. This will help you avoid interest and penalties. Even if you don’t have money to pay the tax bill for the tax year, it is advisable to file your tax returns on time, and other things follow later.
- Take advantage of tax credits
One thing many people don’t know is that tax credits are more valuable than tax deductions. Tax credits reduce your tax bill dollar for dollar, while tax deductions reduce your taxable income. However, in some cases, deductions can make a difference when they lower your taxable income to a lower tax bracket. Therefore, when filing your tax returns, hire a competent Certified Public Accountant. The tax expert will make sure that all the tax credits, exemptions and deductions you qualify for count when filing your taxes. That way, you will enjoy either a reduced tax bill or get a huge tax refund.
- In case of a huge tax bill, there are solutions
Many people go silent when slapped with a tax notice with a tax debt of an amount they can’t pay at once. This is where they go wrong. If you receive a tax debt that you can’t clear at once, you need not to panic, but talk to the tax authority. After getting the facts from the IRS, and confirming you owe that much, you need to come up with a plan to clear the debt so that it doesn’t double or triple as a result of penalties and interests. You can consider installment agreement payment plan, offer in compromise, penalty abatement, among other tax relief options. That way, you will not face collection actions like asset seizures or wage garnishments.
- Hiring a tax expert is essential
Tax preparation and filing can be a frustrating process. You can make error or even miss some essential tax credits and deductions that can lower your tax liabilities. It is therefore essential to hire a certified public accountant to help you prepare and file your taxes. Also, in case of tax problems like tax audit, huge tax debt, tax-related legal issues like tax evasion or any other issue, a tax attorney can be of great help.
There are many things you need to know about taxes to ensure you remain tax compliant and avoid complex tax problems. Knowing the above things can help you know more about taxes and what you can do in case of a tax problem. Take note of the above, and nothing will go wrong about your taxes.