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Keeping Tax Debt Away

October 15th

Tax debt can be serious business, especially if you aren’t prepared for it. While we may  not always be able to avoid owing the IRS money, there are ways to ensure you aren’t taken by surprise or put into a financial hardship over tax liabilities.

Simple Steps

One of the biggest determining factors in whether you will owe money to the IRS or receive a refund is your tax withholding amount. This is the amount that you claim on your W-4, which is based on your personal status and whether you have any dependents. The higher level of withholding, the more you are essentially prepaying towards your tax bill for that year. This generally means that more will be taken out of your paycheck each time. For many people, having a higher withholding can ensure they won’t owe at the end of the year.

Even if you don’t want to claim a higher level of withholding on your W-4, you can still take measures to avoid IRS debt. First, be sure to know which tax deductions you may qualify for and keep accurate documentation of those expenses, like receipts and billing statements. If you are self-employed, have a tax professional calculate your estimated taxes and make quarterly payments throughout the year. This will prevent you from ending up with a large tax bill at the end of the year. Last, consider setting aside money throughout the year that can be used to cover any gaps in what you may owe the IRS.

If you have any questions about how to avoid tax debt, or to find help with resolving back taxes, contact a tax  debt lawyer to review your case.

 
 
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