Every year, Americans all over the country dread tax season. While income tax used to be voluntary, these days it’s necessary to pay the Internal Revenue Service (IRS) a portion of your income to avoid penalties and potential jail time. If you aren’t careful, however, you could make mistakes with your taxes that have serious consequences; learn more about the five most common tax disasters you should avoid and why you’ll need to work with a qualified tax attorney if you want to stay on the good side of the IRS.
1. Failing to File
Failing to file is one of the most obvious ways that tax season can turn into a nightmare practically overnight. The IRS is very careful to extract the amount of taxes that each American owes, and if you don’t pay your dues to keep the country afloat, you could face serious penalties.
While most of the penalties imposed by the IRS constitute less than 1 percent of the taxes you owe, the penalty for failure to file is 5 percent of your owed taxes. Depending on how much you make per year, this penalty could take a big toll out of your expected income. If you continue to fail the IRS what you owe, you could end up paying a penalty of as much as 25 percent of your unpaid taxes.
2. Bad Calculations
If you think that you can wing it when you pay your taxes, you’re wrong. In fact, it’s important to be as accurate as possible when you calculate your income, deductible expenses, and other figures that you use to file an accurate tax return.
While tax preparation software can help you avoid making bad calculations, this software is only as good as the numbers you put into it. If you aren’t careful, you could end up under audit by the IRS.
3. Overpaying the IRS
While taking stock of all the deductions you can claim on your tax return can be a hassle, if you don’t claim all your deductions, you could end up paying money to the IRS that you don’t owe. There are more potential tax deductions than you think, and keep in mind that you can also get a credit from the IRS for each of the children you count as dependents.
Tax preparation software can help you find out which deductions you’re eligible for, but you should also find out which deductions you can claim ahead of time. Working with a tax attorney can help you get ready to save as much money as possible on your taxes.
4. Choosing the Wrong Tax Form
The IRS uses lots of different tax forms, and many of the numerical designations of these forms sound and look very similar. Therefore, it’s easy to file the wrong tax form if you aren’t careful, but doing so could get you on the bad side of the IRS faster than you’d think. While the IRS gives you some time to correct any errors you might have made, this federal agency’s patience only lasts for so long.
5. Working with an Unqualified Tax Preparer
Trusting the wrong tax preparer is more dangerous than you might think. If you work with the wrong person to file your taxes, you could lose your refund, your financial well-being, or even your identity.
When someone commits tax fraud in your name, you’ll need to get to the bottom of the situation immediately before things get worse. To protect yourself from the potential legal turmoil surrounding tax fraud committed by the wrong preparer, you’ll need to work with a qualified tax lawyer who can walk you through the process of receiving justice.