Tax season is upon us, and while many individuals anticipate sizable refund checks, some may be met with disappointment. To navigate the complexities of taxes and mitigate the risk of surprise bills, it’s crucial to employ proactive measures. In this article, we provide valuable tips for avoiding unexpected tax bills and offer advice on what to do if you find yourself facing one.
How to Avoid a Surprise Tax Bill
Monitor Income and Expenses Regularly
Stay ahead of the game by meticulously tracking your income sources, including wages, self-employment earnings, and investments. Additionally, retain all relevant receipts and documentation for deductible expenses to strengthen your case in case of an unexpected tax bill.
Adjust Your Withholdings
Ensure that your employer deducts the appropriate amount of taxes from your paycheck. Major life changes such as marriage, childbirth, or career transitions may necessitate adjustments. Utilize the IRS withholding calculator to determine the correct withholding amount.
Pay Estimated Taxes
If you’re self-employed or receive income without tax withholdings, it’s vital to pay estimated taxes throughout the year. The IRS provides forms and instructions for calculating and submitting estimated tax payments.
Review Your Previous Year’s Tax Return
Thoroughly examine your previous year’s tax return to identify any overlooked deductions or credits. This proactive step can prevent overpayment of taxes and mitigate the risk of encountering a surprise tax bill.
What to Do If You Receive a Surprise Tax Bill
Carefully Review and Identify the Reason
Scrutinize the tax bill to ensure its accuracy. While reviewing, determine the cause behind the bill, which could be an error on your tax return, an unexpected income change, or a modification in tax laws.
Evaluate Your Options
If the bill appears accurate and you acknowledge your liability, consider the available options for resolving the debt. In case full payment is not feasible, explore alternatives like negotiating a settlement, setting up a payment plan with the IRS, or other applicable solutions. It’s crucial not to disregard the tax bill, as the IRS is persistent in collecting what they believe is owed.
Seek Professional Assistance
Engaging with the IRS can be intimidating and overwhelming, making it beneficial to seek guidance from professionals. Consulting with a CPA, Enrolled Agent, or a tax relief attorney can provide you with the necessary expertise and support to navigate the situation effectively. The dedicated and skilled team of tax attorneys and EAs at McCauley Law Offices has years of experience helping taxpayers just like you resolve IRS and State tax problems and negotiating the best deal on your behalf. If you owe the IRS money, contact us now for a consultation to learn about your options.
By implementing these strategies to avoid surprise tax bills and understanding the necessary actions if one arises, you can minimize the financial impact and prevent future surprises. Stay organized, review your tax returns diligently, and seek professional assistance when needed. Take control of your tax situation to ensure a smoother and less stressful tax filing experience. Contact us now for a consultation to explore your options if you owe money to the IRS.