4 Reasons People Get Into Trouble With the IRS
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
4 Reasons People Get Into Trouble With the IRS
Dealing with the Internal Revenue Service (IRS) is no laughing matter. Even a minor mistake in managing your finances can lead to significant consequences.
In recent years, the IRS has ramped up its enforcement actions, such as filing levies, liens, and wage garnishments. For instance, in 2004 alone, about 2.5 million levies were filed. Here are some common reasons individuals find themselves in trouble with the IRS, according to experts at JK Harris & Co., a leading tax resolution firm:
1. Claiming Too Many Exemptions
Exemptions can significantly reduce your taxable income, which tempts some taxpayers to claim more than they should. You can only claim exemptions for yourself, your spouse, and your dependents, who must meet specific criteria. Ensure you adhere to IRS guidelines to avoid mistakenly claiming ineligible exemptions.
2. Overlooking Taxes on Early Retirement Withdrawals
Withdrawing from retirement funds like a 401(k) or IRA before age 59½ can result in a 10% federal penalty, plus potential state penalties and income taxes on the withdrawn amount.
3. Underpaying Taxes When Self-Employed
Self-employed individuals often struggle with tax requirements. The tax structure for the self-employed is complex, covering what to pay, how to pay, and what can be deducted. It's easy to become confused, so staying informed is crucial.
4. Ignoring Taxes on Winnings
All gambling winnings, whether from lotteries, casinos, or horse races, must be reported as income. Failing to include these earnings can lead to trouble.
For those facing IRS issues, various programs offer debt relief if you qualify. JK Harris assists clients in determining eligibility for these programs. Their team includes former IRS agents, certified public accountants, attorneys, enrolled agents, and other professionals who provide tax services, financial planning, small business services, and more.
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