Tax season is approaching, and it can be a daunting time for many individuals and businesses alike. Navigating the complex landscape of tax regulations and ensuring compliance can be overwhelming. Fortunately, tax professionals, like those at Optima Tax Relief, are here to provide expert guidance and assistance. We spoke to three of our long-standing tax professionals about actions taxpayers can take (or avoid) to improve their tax situations. Vice President of Resolution and Lead Tax Attorney, Philip Hwang, Director of Resolution, Carlos Maggi, and Audit Tax Professional, Rafael Garcia, draw on their wealth of experience and offer eight invaluable pieces of advice to help you navigate the intricacies of tax season.
If You Own a Business, Treat the IRS Like a Silent Partner
The IRS is your silent business partner. That said, always remember to save a percentage of your earnings in order to keep your business partner happy! In other words, set aside and pay your estimated tax payments. Also make sure you keep well organized income and expense records. The more organized you are with your expense records, the less you pay your silent partner, the IRS.
Make Sure You’re Withholding Enough Taxes
Make sure you are withholding the proper amount or making the correct amount of estimated tax payments for both federal and state. That is unless you live in a state with no income tax. If you owe taxes year after year, it is time to increase your withholdings or estimated tax payments. Set aside additional withholdings from retirement distributions. Most retirement plans withhold the bare minimum required by law. However, this amount is usually not enough to cover most taxpayers’ resultant tax liability.
Pay Down Your Tax Balance ASAP
Interest will continue to compound and accrue on your tax debt until it is paid in full. As such, make every effort to pay your balance off. If you have the affordability, make voluntary payments even if you are on an installment agreement. Any amount above your installment agreement payment will help save you interest in the long run. The quicker you pay off your balance, the less interest you will pay.
Always File Your Tax Return on Time
File your returns on time, regardless of whether you owe or will get a refund. If you owe, the IRS will charge you a failure to file penalty of 5% of the amount owed on the return for every month the return is late. The penalty caps out at 25% of your total balance. If you are due a refund, you have three years from the date the return was due to claim the refund. If you don’t claim it within this timeframe, you lose it.
Don’t Be Tempted to Stretch Items on Your Tax Return
Be accurate when preparing returns. It may be tempting to stretch to claim additional credits as well as deductions, but it’s not worth the accuracy penalties or stress during an examination. Keep your tax returns and all supporting documentation for at least 3 years after filing. If you are audited, you will be prepared to provide all your information to your representative.
Take Tax Planning Seriously
Tax planning is the best legal strategy to lower your tax liability. If you strategically plan your taxes, you can not only reduce your tax liability but also ensure you comply with tax laws and regulations. This will help you avoid penalties, fines and any future legal issues. Working with a trusted tax professional is always highly recommended.
Let Your Tax Professional Handle the IRS
If you hire a representative, refer any IRS agents to your representative when they contact you. Do not allow the agent to pressure you into making decisions or providing information without first consulting your representative. It is your right as a taxpayer to have representation. Additionally, do not contact the IRS without your representative’s knowledge as you may inadvertently cause delays to your account.
A lot of tax issues are time sensitive. The sooner you act or find help, the better off you will be in getting optimal outcomes. Don’t lose out on the key taxpayer’s right to appeal and more importantly, act today to mitigate those failure to pay penalties and compounding daily interest. Taxes can be a daunting topic, but action is the first key step in setting yourself up for success.
Tax Help from Optima Tax Relief
Tax season doesn’t have to be a source of stress and anxiety. By following the advice of Optima Tax Relief tax professionals, you can navigate the complexities of the tax landscape with confidence. From staying organized and honest to seeking professional advice from a tax professional and taking tax planning seriously, these tips can help ensure a smoother and more successful tax season for individuals and businesses alike. Remember, the key to financial success during tax season lies in preparation, knowledge, and proactive decision-making. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.
If You Need Tax Help, Contact Us Today for a Free Consultation
This content is made available for informational and educational purposes only. Nothing included in the content should be taken as a guarantee, warranty, prediction, or representation about your specific situation. This content is not intended to be a substitute for professional advice and services. We encourage you to consult with a tax professional to discuss your specific tax matters. Individual results may vary. We do not provide tax, financial, bankruptcy, accounting, or legal advice and nothing contained in this content is intended nor shall be construed as such.
Optima Tax Relief is a tax resolution firm independent from the IRS.