Tax Refund or Tax Debt?

It's fair to say that most people really only look forward filing a tax return in order to receive a refund. It's also reasonable to expect a certain amount of procrastination when a liability is going to be due. But what happens when you wait too late in tax season – or miss the deadline completely – and you're scrambling to prepare your return?

Whether you're expecting to pay in or get a check from Uncle Sam, there's ample reason to get it done as early as you can. The longer you wait, the greater the potential for problems. Don't assume you'll have plenty of time to play with this tax season; you may be in for an unfortunate surprise.

Errors Made in Haste

There's nothing worse than making a mistake because you're in a hurry. When you're trying to get your return in at the eleventh hour, it's far too easy to slip up. This can include something as seemingly innocent as transposing Social Security numbers or income data. Even a basic error can trigger an alarm with the IRS. Although you may wind up only needing to amend your return, a recalculated liability can be inflated by penalties and interest.

Missing Costly Details

In your race to file your return, it's entirely possible that you'll overlook important credits and/or deductions that would lower your liability. When you miss the opportunity to realize a savings from, say, itemizing rather than taking the standard deduction, you could end up paying far more than you need to. The longer you wait to file, the less time you will have to effectively examine your tax break options.

Surprise Liabilities

You might assume that what will be due for your taxes will be very little, or that you should be expecting a refund. The problem is that you don't know for sure until you file. You may prepare your return just under the wire only to find out that your balance is far greater than you were expecting. And remember, if you don't pay the sum by the filing deadline, you'll be held responsible for penalties and interest. The sooner your file, the sooner you can begin saving what you'll potentially need to pay in, on time.

Handling a Tax Debt

The end result of far too many neglected liabilities is back taxes. When you have a delinquent balance, the total is quickly and steadily increased by the addition of interest and penalties. This means that what you might have paid for by the due date will end up costing you far more with every passing month. Such a tax debt also empowers the IRS to take collection action against you, should you choose not to pay it. Not to mention that any future tax refunds you might be due will be taken to satisfy your balance.

If you've begun receiving notices for a tax debt, don't hesitate in researching your resolution options. You can request a no-cost consultation with a tax resolution company to learn more. Determining an affordable solution will be far less objectionable than paying a tax debt bloated by additional fees, or enduring an IRS wage levy or bank garnishment.

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