Dealing with income tax problems, especially those that can lead to owing additional money and a levy on assets, is a position that no tax payer ever wants to be in. The situation is often frustrating and complicated for many people. However, the following five steps can make the process less daunting and help when you don’t know where to start.
Step 1: Review the Tax Notice
Find out what information is under review by the Internal Revenue Service. This usually comes in the form of a letter requesting additional information. This document contains the adjustments that were made to the tax return along with an explanation of why the changes occurred.
Step 2: Get Tax Assistance Early in the Process
Unless the change is something that is fairly simply and to which you can respond on your own, the next step is to contact your team of financial advisors for advice. These individuals will include at least one of the following: Tax Accountant, Tax Attorney, or an Enrolled Agent. You can also seek help from the Taxpayers Advocacy Service for help with payment resolutions to tax problems.
Step 3: Respond Promptly to the Tax Notice
Never ignore the letters that you receive concerning your account. Instead make it a point to contact the income tax authority that is requesting the review as soon as possible. You can do this on your 0wn or designate an authorized representative to handle all matters on your behalf.
Step 4: Get Your Financials in Order
Chances are that you already do this each year but if you do not already have financial documents in order now is the time to start. Organize the paperwork so that you can verify line items and provide explanations for them. Paying taxes can result from a number of scenarios. Some examples include income omissions, calculation errors, and ineligible deductions. Whatever applies to your situation be sure to have a copy of your income tax return, taxable income such as wages, business, and investment income, and expenses to support the information on the return.
Step 5: Pay the Balance Due
If, after reviewing the income tax return, you agree with the changes made to the tax account, then make arrangements to pay the balance in full. There are several options that you can chose when you do not have the available funds to cover the tax liability. Some examples include payments on personal credit cards, liquidating assets to raise money, and making agreements for installment payments over time. Speak with the Internal Revenue Service for assistance with payment options.
Copyright (c) 2010 Benita Tyler
TBS USA is committed to helping small business owners by providing proven financial management strategies to help them achieve their profit goals, minimize tax liabilities, and build wealth. Business advice and tax tips are available at http://www.tbsusa.com
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