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Learn How IRS Decides Your Ability to Pay Taxes in Calabasas, CA

If you earn any income, you must be aware of the IRS. This federal authority is responsible for making sure you pay taxes in prescribed manner. It would be ideal if you pay your taxes on time and the complete amount. You may get in trouble for paying later, not paying at all, or even not filing returns on time. If any problem arises, such as you claiming inability to pay taxes, the IRS shall have the final say. 

So, the question arises how the IRS determines whether or not you can pay taxes. For starters, the taxman has complete knowledge of your financial standing. Learn how the IRS decides your ability to pay taxes in Calabasas, CA.

Learn How The IRS Decides Your Ability To Pay Taxes In Calabasas, CA

As a tax filer, you provide complete financial data to the IRS in the form of financial statements. It should include your income, assets and liabilities. Any increase or decrease in assets over the concerned period is also reported in the returns. Same is the case with your liabilities. 

If you purchased an asset, say a car, or disposed of an asset, say a property, it is included in returns. So, the IRS has a clear picture of your overall financial situation for the year. 

The IRS primarily uses this information to determine your ability to pay taxes. Ideally, it would include your assets (cars, properties, bank accounts), long and short term liabilities and expenses for the year.

If the IRS has reasons to believe that you hid certain information from them, it can summon you. 

The IRS may demand additional documents or evidence to support your claim. Additionally, it can also shortlist your IRS audit to deeply analyze your returns. Overall, it is on the basis of all this data that the IRS determines your ability to pay.

This determination of ability to pay becomes important when you have filed for tax relief. Installments plan and Offer in Compromise (OIC) are the most common relief options. Both of these provide huge relief to the taxpayer. 

In OIC, you get to settle your tax liability for lower than the owed amount. 

On the other hand, you may get to pay your liability in a number of installments instead of a lump sum. In both cases, however, the IRS will need to determine your ability to pay. The taxman will use all the available data to settle for a deal that is most beneficial for the IRS. 

Remember that failure to disclose any crucial information, such as income, may lead you in hot waters. Hence, it is important that you ensure that your tax returns reflect the fairest and accurate information. Moreover, it is also recommended to hire yourself a professional tax attorney. 

Tax evasion is punishable but tax avoidance is within legal boundaries. So, you want to set your returns in a way that it minimizes your tax, but without pushing the limits.

It is also important that you understand tax matters for better decision making. Make sure you are aware of the implications of various steps and options that you consider taking. Always make best efforts to not upset the taxman. 

You would want to avoid IRS audits at any cost. Tax audit at any stage would result in huge paperwork and headaches for you. So, make sure you present a true and fair position on the returns. 

The IRS will use these returns and the provided information to determine your ability (or inability) to pay taxes. Lastly, getting professional help when filing returns or dealing with the IRS always comes handy.

USA Tax Settlement strives to help taxpayers get out from under their IRS tax debt. Unlike other so called Best Tax Resolution Companies in Calabasas, CA that charge outrageous fees and don’t deliver on their promises. USA Tax Settlement employs tax professionals, tax attorneys and IRS enrolled agents so we can provide IRS Tax Debt help in Calabasas, CA. Stop stressing over your tax debt and let our IRS Tax experts in Calabasas, CA settle your IRS tax debt for a fraction of a cost. USA Tax Settlement can help with various IRS Tax Relief Programs or Tax Debt Forgiveness Programs. If you need IRS Tax Relief in Calabasas, CA then call USA Tax Settlement today for a Free Consultation. Remember, having one of the Best Tax Relief companies in Calabasas, CA on your side is your best first step.

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