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Defeating Tax Debt

March 21st

Tax season brings much stress and anxiety for the average tax payer. Besides all of the paperwork and records required to complete taxes, many people are surprised to learn they may actually owe the IRS money this tax season. While there isn’t much we can do about owing taxes, there are ways to reduce the financial impact that tax liabilities can bring and prevent ourselves from ending up in tax debt.

The All Year Plan

There is really one good way to prevent tax debt, save and plan the whole year. While this sounds easy, many people find it difficult simply because they don’t plan ahead. Following a few simple steps can help reduce the impact that potential tax debts can bring:

Keep Your Records–While tax liabilities can be surprising, they aren’t always accurate either. The IRS allows for taxpayers to request a review of tax liability if they suspect there might be an issue with accuracy. It is important to keep good tax records all year long to ensure the calculations are reviewed correctly to reflect the most accurate tax liability. Important documents to keep are paycheck stubs, any receipts or invoices for itemized deductions and previous tax returns for at least three years.

Save Money–Cash flow is important when it comes to resolving unpaid taxes quickly and easily. This means that every taxpayer should have money saved or set aside for the potential to owe taxes at the end of the year. Even if it is suspected that enough money is being withheld from a paycheck, there are some changes to tax laws and deductions that can significantly impact one’s tax liability. While the IRS does offer an installment plan for resolving tax debts, most find it easier to pay their liabilities in cash at the time of filing.

 
 

 
 
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