1. File Taxes Within the Provided TimeSometimes, you may not have enough money to pay all the taxes you owe the IRS. Regardless, it is essential to ensure you provide your revenue information by filing back taxes. This step indicates that you acknowledge owing money and will pay when possible. It also allows you to apply for various IRS programs to stop penalty accumulation. These may include an offer in compromise, installment payment, and currently not collectible. If you do not file past taxes before the provided deadline, you may raise suspicion with the IRS leading to a financial audit. It also affects your chances of qualifying for relief programs to help you repay what you owe in the long run.
2. Claim the Right Deductions and ExemptionsClaiming a higher deduction or an exemption you do not qualify for can cause trouble with the IRS. Protect yourself from tax bills and penalties by ensuring the exemptions you claim are correct. If you have limited knowledge about this procedure and its requirements, consult a professional. By taking this measure, you can determine what you qualify for and avoid an IRS audit. These experts will also ensure that all the details you provide when remitting taxes are correct. For instance, they will counter-check your W2 and Form 1040 to ascertain that the information provided by your employer matches yours.
3. Submit Payroll WithholdingsIf you are an employer, it is essential to remit all employee tax deductions to the IRS. Besides that, ensure you submit payroll reports to indicate how much your workers earn and their total tax payable. Since processing this information manually is challenging, it is advisable to get payroll software. Such platforms can reduce the chances of making tax errors related to payroll, protecting your company from audits.
4. Provide the Right DocumentsWhen claiming a tax refund or deduction, you should attach supporting documents to avoid fines, penalties, and audits. Some of the needed items are:
- Form W-2 for the employed
- Form 1099-G for the unemployed
- Records of additional income
- Records of expenses