Tax Law FAQ

1. Q. What is tax law exactly?

A. Tax law governs taxes and the payment of those taxes. It also covers penalties against those who do not pay their taxes.

2. Q. What is a tax audit and who is typically audited?

A. A tax audit is when the IRS investigates a business or individual to determine whether or not that person or business paid the correct amount of taxes in any given taxable year. No particular type of person or businesses is audited and it's typically random.

3. Q. Should you prepare for a tax audit and if so, when should you prepare?

A. It is a good idea to be prepared for a tax audit at anytime, since they happen at random times. In order to be prepared, ensure that you have all of your tax information in one place – including receipts and other needed documents.

4. Q. Do I need a tax law attorney?

A. For larger businesses, it's a good idea to have a tax attorney to rely on if you should ever find that you are in need of an attorney's services. Individuals do not typically need tax attorneys unless they feel as if they will be audited or penalized.

5. Q. What are dependants exactly and who can claim dependants?

A. A dependant is someone you take care of – typically a child or someone you have guardianship of. Anyone can claim dependants, unless the person is a dependant himself or herself.

6. Q. What are some of the penalties of not paying your taxes?

A. Individuals could lose their belongings and assets – such as houses and vehicles. Businesses could be fined severely among other penalties. It is best not to let things escalate to this level. Seek a competent tax attorney to help you.

7. Q. What exactly does ‘delinquent taxes' mean?

A. Taxes that are delinquent are taxes from the previous year that have gone unpaid after March of the next year. So, taxes which are due from 2009 are delinquent if they are not paid after March 1, 2010.

8. Q. What happens if I am unable to pay all of the taxes I owe at one time? Will I be penalized?

A. Let the IRS know at once that you are unable to pay all of your taxes at one time. They can set up a payment plan and work with you so that you can get your taxes paid. The trouble comes when you are delinquent and are not paying anything at all.

9. Q. Will I be expected to pay interest on late taxes?

A. In most cases, yes, you will be expected to pay interest. The longer your taxes are overdue, the more interest you are subject to.

10. Q. If I work from home, can I claim certain expenses as deductibles?

A. You may be able to claim certain expenses as deductibles if you work from home, but typically you will have to prove that the area you work in is used for that exclusively and nothing else. You should speak to a tax law attorney to determine what you're able to claim as a deductible and what you're not able to.

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