Income Tax Problems

Given its complexity and inconvenience, it is not surprising that millions of Americans face income tax problems every year. Even with recent changes designed to make the process simpler, it is still quite complex and time consuming.

What follows are the typical issues faced when filing your taxes. By being better prepared, you can avoid the problems that may cost you money.

Get tax help today at 1-877-788-2937.

Failing to File on Time

One of the most common issues is that upwards of 20% of taxpayers fail to file their taxes on time. The inability to meet the deadline may lead to paying penalties or facing other issues that can cause even more stress. Furthermore, the longer you wait, the more the problems will start to pile up. For those who have not filed their tax returns in years, they may be facing even more issues. Plus, they are missing out on valuable credits and potential refunds on their past returns.

Failing to Fill Out the Income Forms Correctly

A common issue with many, especially those who find it a chore to fill out their tax forms is not following the instructions. This usually means putting the wrong information or no information at all in the areas that need to be filled out. The usual culprits include the following.

  • - Wrong social security number, bank account, and routing number information
  • - Not putting in the date where indicated
  • - Failing to sign forms where indicated
  • - Wrong address or no address

One way to help avoid such issues is by e-filing. The online system is not only easier to follow; it helps you avoid making basic mistakes when filling out your income tax forms.

Not Checking the Math

Another common issue is not double-checking the math when you are filling out your tax form. It’s easy to overlook simple math problems when you are in a hurry or do not bother to go over the tax forms again just to be sure. While you may not be able to avoid all mistakes, it pays not to be in a hurry when you are filling out your taxes. A good practice if you are doing the preparation yourself is to fill them out, let them sit overnight, then double check the math again with a fresh mind.

Not Knowing Changes in the Tax Code

Millions of Americans fail to take advantage of new tax laws that might save them money and get more on their returns. Changes happen every year which means that you may find yourself eligible for tax credits that did not exist before. You can visit the IRS website to see what new credits are available which might make your refunds larger.

Just being aware of the most common income tax problems can help you avoid them. Set aside the time needed to either do them yourself or have a trusted, reputable tax firm do them for you. Either way, you can get your taxes completed properly and have more peace of mind when having them filed.

Failure of Individual to Pay Estimated Income Tax K1, 1099: Problems affecting self-employed and partners relating to estimated tax payments

For partner’s K1 problem:

A partnership pays no tax. For this reason, the partnership is not required to make estimated tax payments. But the partners combine their shares of the estimated income from the partnership for the tax year with their estimated income from all other sources to determine whether or not they are required to pay estimated tax.

Reg. §1.6654-2(d)(2) requires that, in determining the applicability of the 90 percent exceptions provided in Items (1) and (3), there shall be taken into account the partner's distributive share of partnership items under Code Sec. 702, the amount of any guaranteed payments, and gains or losses on partnership distributions which are treated as gains or losses on sales of property.

Under Reg. §1.6654-2(d)(2), in determining a partner's taxable income for the months in their tax year which precede the month in which the installment date falls, the partner must take into account items for any partnership tax year ending with or within their tax year to the extent that these items are attributable to months in the partnership tax year preceding the month in which the installment date falls. By the same token, a partner will include in their taxable income for the months in their tax year which precede the month in which the installment date falls guaranteed payments from the partnership to the extent that such guaranteed payments are includible in their taxable income for such months.

For the self-employed with 1099 income problem:

Form 1040-ES and its instructions along with IRS Publication 505, both of which can be accessed from the IRS website, provide the basic rules for paying estimated tax and avoiding the estimated tax penalty.

Estimated tax payments are generally made four times a year using Form 1040-ES payment vouchers. Payment can be made as a lump sum on April 15 of the tax year or in four equal payments on April 15, June 15, and September 15 of the tax year. The fourth payment can be made on January 15 of the following year or as part of the entire balance due paid with the tax return filed by January 31. For dates falling on a Saturday, Sunday, or holiday, payment on the next business day is considered timely.

Estimates can be amended and changes made in subsequent payments. Amended estimates will not generate a refund prior to the filing of a return showing a refund. Unpaid estimates will not result in an assessment prior to the filing of a return showing a balance due. In some situations, generally involving taxpayers with delinquent accounts, the IRS may require monthly payments of estimated taxes for the current year to help ensure that additional delinquencies do not occur. If payments are clearly identified as estimated tax payments for a particular year and the Social Security number is shown, they will be properly applied as such.

Get tax help today at 1-877-788-2937.

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