Type of Tax Problems and How to Resolve Them?

You are a law-abiding citizen, and you prove that by filing and paying all your tax on time. However, tax problems are so complex that even the best of us can fall prey to. Tax filing is a stressful process, and even without those problems, it is a hectic process for a layman. So what happens when these problems occur? You don’t need to worry about that, as we will cover the most common tax problems and the ways to resolve them.  

Types of Tax Problems & Their Solutions 

Here are the tax problems, along with their remedies, that a common man can face:

• Unable to File Taxes: 

The most common issue faced by taxpayers is failing to file income tax returns. Being a taxpayer, this is the worst you can do to yourself because as much innocent as this mistake might seem to you, the offence is, in fact, quite serious. The income tax return is a main correspondence medium between taxpayers and authorities. If a taxpayer does not file returns, it is considered an attempt to evade taxes. You can face heavy penalties, at least, if you did this innocently.

To avoid this rather simple problem, you must remember when is the tax filing deadline and submit the returns when there is time. Even though forgetting to file tax returns is not a good habit, failing to pay taxes is even worse. If you just failed to submit your returns but paid taxes in full, you may also get an automatic extension to file returns. 

• Calculating Taxes Wrongfully: 

The second most common mistake taxpayers make calculating the tax wrongfully. Although, IRS facilitates taxpayers by simplifying the tax filing system, calculating tax amounts can still be hard for many taxpayers. However, this mistake can mostly be avoided if you do it before time. Last-minute preparations leave you very little time to double-check the returns, and any mistakes that you make in haste are never corrected.

• Penalties and Interests:

When you make mistakes in tax returns or don’t file returns, the IRS charges you with heavy penalties and interest for the period during which you failed to submit taxes or didn’t file returns. 

The best solution to this problem is to avoid it before it occurs. Be proactive rather than reactive and don’t provide the IRS with any reason to put penalties against you. You can also challenge the penalties or interest charged by the IRS if you provide one of the three reasons, which include reasonable cause, IRS error or administrative waiver.

• Wage Garnishment and Levies:

If you are thinking about what would be worse than penalties, you are far from reality. The IRS has something in their arsenal to collect what taxpayers owe to them but doesn’t comply positively. Wage garnishment and tax levies are the most lethal tools the IRS uses against taxpayers with tax debt.

You can avoid both of these tools if you contact the IRS beforehand and agree to pay what you owe in easy monthly installment. 

The most common problems, along with their solutions, are discussed above. However, there is a long list of problems that need expert consultation for remedy. You can hire our tax consultancy services to solve all tax-related problems. Contact USA Tax Settlement today!