5 Common Tax Problems and How to Resolve Them Fast

1. 5 Common Tax Problems and How to Resolve Them Fast Tax issues are frustrating and daunting for individuals and businesses alike. From delinquent tax returns to IRS audits, unresolved tax issues can result in penalties, interest, and even legal issues. The good news is that the majority of tax issues have a solution if caught early and resolved properly. Knowledge of the most prevalent tax issues and how to fix them can assist taxpayers in avoiding financial issues and staying compliant with tax laws. Unfiled Tax Returns Not filing tax returns timely is a widespread problem that can lead to heavy penalties and charges of interest. The IRS does take unfiled returns seriously and will even file a Substitute for Return (SFR) for the taxpayer, which usually ends in a greater amount of taxes due without deductions and credits. Luckily, the IRS permits taxpayers to file voluntarily late returns, and penalties can be waived or minimized in most instances if the delay was caused by reasonable reasons. Initiatives such as the IRS Fresh Start Initiative provide relief alternatives for taxpayers who are having trouble paying their tax liabilities. Taxpayers need to move fast to file any pending returns and seek professional help if needed to prevent further issues. Tax Debt and Delinquent Taxes Most taxpayers are in IRS debt because they are underpaid, made errors in calculation, or experienced financial distress. Delinquent taxes owe interest and penalties, and paying them back may be challenging. The IRS has various options that can assist the taxpayer in taking care of tax debt, among them installment agreements, where installments can be made over some time. Another possibility is an Offer in Compromise (OIC), which lets taxpayers pay their debt for less than they owe if they qualify on certain financial hardship grounds. Taxpayers facing short-term financial hardships may also qualify for "Currently Not Collectible" status, which suspends collection activity. Consulting a tax professional can assist taxpayers in resolving tax debt in the most effective manner possible before it results in severe IRS collection efforts like wage levies or bank levies.

2. IRS Audits and Notices It is frightening to receive an IRS audit notice, but most audits are normal and can be easily handled with the right strategy. Audits usually result from inconsistencies in tax returns, unreported income, or overly large deductions. Acting quickly and offering proper documentation is the way to settle an audit without issues. Taxpayers must take time to examine the IRS request, obtain supporting financial documents, and hire professional help if necessary. In certain situations, audits end with no additional tax, while in others, adjustments need to be made. Having a tax professional work on your behalf during an audit can greatly increase the likelihood of a positive outcome. Proactively maintaining well-kept records can also avoid future audit problems. Tax Penalties and Interest Taxpayers can be charged penalties and interest for several reasons, such as late filing, underpayment, or not reporting income correctly. These penalties can quickly mount, making tax debt even more di?cult to bear. Despite this, the IRS does offer penalty relief options, including the First-Time Penalty Abatement program, which abates penalties for those who have a clean compliance record. Taxpayers are also permitted to obtain reasonable cause relief if they can establish that events beyond their control, like illness or natural disasters, hindered them from fulfilling their tax obligations. To keep from being penalized in the future, taxpayers need to make sure they file their returns, pay estimated taxes if they owe them, and consult with experts to develop a solid tax plan. Identity Theft and Abuse of Tax Returns Identity theft related to taxes happens when thieves use stolen personal data to file false tax returns and obtain refunds. Victims become aware of the fraud when their valid tax return is denied as a return has already been submitted in their name. If you are aware of identity theft, it is essential to move with speed by reporting the matter to the IRS and submitting an Identity Theft A?davit (Form 14039). The IRS provides Identity Protection PINs (IP PINs) to help stop additional fraudulent filings. Monitoring one's

3. financial accounts, keeping passwords secure, and avoiding too freely the divulgence of personal data can decrease the chances of tax-related identity theft. Conclusion & Next Steps Tax problems can rapidly get out of hand if not properly managed, but solutions exist for all problems. Regardless of unfiled tax returns, tax debt, IRS audits, penalties, or identity theft, proactive measures can resolve these issues effectively. Pursuing professional tax help can offer the guidance necessary to navigate complicated tax situations and avoid future problems. Taxpayers should remain aware of their responsibilities, keep accurate accounting records, and take advantage of IRS relief options when needed. By doing so, individuals and companies can safeguard their financial health and stay in compliance with tax regulations. 265 Winn Street, Suite 304, Burlington, MA 01803 7813335544 raj@rajkishan.cpa rajkishan.cpa