We all want to avoid tax problems. However, on some occasions, tax problems arise due to a lack of understanding of tax obligations or how to respond to various tax situations. In this article, we’ll examine the various tax issues that can arise and answer the central question: How do I fix my tax problems?
Understanding Your Tax Problems
One of the most critical aspects of navigating taxes in the United States is understanding federal and state tax regulations, including the various taxes that exist, which ones apply to you, the tax deadline, and, if there is an issue, identifying the problem and resolving it effectively.
Common Tax Issues
Below, we’ve listed the most common tax issues:
Unfiled tax returns: An unfiled tax return occurs when an individual fails to meet the deadline for filing their tax returns. The good news is that the IRS offers opportunities for taxpayers in various challenging situations to extend deadlines or make payments on their debts over time.
Back taxes owed to the IRS: Back taxes refer to tax debts from previous years that are typically caused by underreporting income, underpaying estimated taxes, and failing to file tax returns on time. Back taxes mean you will be charged interest and penalties until the debt is paid.
IRS notices and collection letters: The IRS sends notices to taxpayers about outstanding tax issues. The IRS will send several notices to individuals, allowing them to acknowledge and communicate to resolve the issue. Failure to respond to the notices may result in more complex tax issues, such as liens and levies.
Tax liens and levies: If taxpayers fail to respond after receiving multiple notices, the IRS will take action, including the issuance of tax liens and levies. This is a serious problem that can lead to various issues, including asset seizure.
Wage garnishment or bank account seizures: When a taxpayer fails to pay their tax debts, the IRS can garnish wages or seize funds from bank accounts to collect the unpaid taxes. This usually occurs after multiple notices and a failure to resolve the debt.
IRS audits or audit appeal: An IRS audit entails the IRS reviewing your tax returns. It’s important to note that being audited doesn’t always mean you’re in trouble. Some audits are performed as part of a routine to ensure that individuals meet their tax obligations, so anyone can be audited. If you are audited and have issues as a result, you can still file an appeal if you believe the findings are incorrect.
Why It’s Critical Not to Ignore Tax Problems
The most important aspect of avoiding trouble with the IRS is to file your taxes correctly and on time. Ignoring IRS letters and other communications will only exacerbate the problem, potentially leading to more complex situations that can cause financial disruption.
When contacted by the IRS, respond promptly and accurately. For the best results, seek professional assistance to ensure effective communication and that any necessary negotiations are conducted with best practices.
How Do I Fix My Tax Problems?
Step 1: Understand What You Owe
The first important step in resolving your tax problem is to fully understand your tax debt. This is because if you don’t know what you owe, it will be challenging to plan effectively and find the best solution to your problem.
In this step, you should gather all necessary documents (such as IRS notices and other correspondence) and review their content. Look for information such as the amount you owe and any applicable penalties or returns.
You should also identify the tax years for which you owe money or the tax returns that you have yet to file. Typically, the IRS prioritizes debts incurred within the last three to six years, but it may also collect older debts.
If you do not already have an IRS account, you can create one through their website. Once that is completed, check your account. It will display your tax balance, payment history, and any penalties and interest owed.
Step 2: File Any Missing Returns
If you have not filed your tax returns, do so as soon as possible. Filing prevents the failure-to-file penalty and demonstrates good faith.
However, before proceeding, you should ensure that you have all required documents, such as W-2s, 1099s, receipts, and other income or deduction records. If any records are missing, you can request wage and income transcripts from the IRS or contact your employers or banks.
Once you have all of the supporting documents, file your information correctly. This is critical because errors can lead to further problems.
Step 3: Evaluate Your Options for Tax Relief
The next step in resolving your tax issues is to determine the most suitable option for your specific tax situation. Once you have determined how much you owe and filed all of your returns, select one of the options available to you as a taxpayer.
Depending on your circumstances, this option could be a payment plan, such as an Installment Agreement (IA), an Offer in Compromise, a Currently Not Collectible option, or Penalty Abatement. Ensure you select a resolution that is within your means and puts you in the best possible position for the future. This is when a tax attorney can be extremely helpful.
Step 4: Respond to IRS Collection Actions
If you have received a notice from the IRS regarding collection actions, time is of the essence, and you must make a decision promptly. Understand what is on the notice (for example, an action to levy or lien) and be aware of your rights.
Another option available to you is to request a Collection Due Process (CDP) Hearing. This allows you to challenge the action or propose alternative resolutions.
When to Contact a Tax Attorney
Having a tax attorney on your side is the best course of action when dealing with various tax issues. This is especially critical if you have received an IRS notice or summons, owe more than $10,000 in taxes, or are unsure or overwhelmed by your current situation and don’t know where to start.
A tax attorney can assist you in understanding the issue at hand, presenting the options available to you, determining the best resolution for your case, and negotiating on your behalf. Having an expert by your side will make the entire process less stressful and more effective in terms of achieving the best results.
End Note
So, how do I fix my tax problems? The most important thing is understanding the tax issue you are dealing with, what it entails, what options you have, and what the best course of action is. Finding yourself with tax issues can be a stressful experience. If you have tax issues, contact Greenberg Law Group. Our team will help you find the best strategy to resolve your issues and prevent future problems!
