5 Things About Tax Debt You Need to Know
Let’s face it, no one wants to be in debt—least of all to the Internal Revenue Service (IRS). But it’s a reality that many taxpayers have. This usually starts with the annual tax filing that all United States citizens must complete.
By reporting your annual income and expenses, the IRS then determines how much you owe in taxes according to most recent tax bracket. Depending on where your net annual income falls within that tax bracket will determine exactly how much you owe the IRS.
1099 Forms and W2 Forms
Now, if you typically receive a W2 or 1099 Form, then that means that you are working for a business or corporation that has paid you more that $500 for that tax year. The difference between the W2 and the 1099 Form is that the latter represents people who work independently as freelancers and are selling their services for a fee.
In a case like this, that company only needs to issue the 1099 Form that states exactly how much was paid to that individual. The W2 is a bit more complicated as it involves the deduction of Social Security, healthcare, retirement savings, and state and county taxes. W2s are required for full and part-time employees.
What to Expect After You File
Once these forms are submitted for an annual filing, your tax preparer will process these numbers to determine where in the tax bracket you fall. The end result will be one of two things: You’ll have a refund coming to you. This means the IRS owes you, or you owe the IRS. If the IRS owes you, congratulations! Read 5 Responsible Ways to Spend Your Tax Refund here. If you owe, here are some valuable things to know about paying your taxes:
1. It is Possible to Pay Your Balance?
No matter how large the amount, you can afford to pay your debt off with monthly installments arranged between you and the IRS.
2. You Can Reduce the Amount You Owe
Depending on the amount you owe and your financial status, you might qualify for an Offer in Compromise.
3. The IRS Has the Right to Seize Property
Ignore your tax debt too long and you might lose your house or car. Even though you might be avoiding the IRS, the IRS will not ignore you!
4. Your Tax Refund Can Go Toward Other Debts
If you have other financial debt like child support, alimony, or other outstanding debts like student loans, any tax refund that you might get will go directly toward that debt without you ever seeing a single cent.
5. You Have the Right to Dispute the IRS
Last but certainly not least, you can dispute the IRS’s claim. However, not too many people know how to go about doing that. If you believe you don’t owe what the IRS claims you owe, it’s highly recommended to get assistance as quickly as possible.
Find a reputable tax relief firm like Success Tax Relief that has been in the business of resolving tax matters for taxpayers just like you. Call us today at 877-825-1179 or fill out our contact form for assistance. You can also email us today!