U.S Students: 6 Common IRS Questions
The documentation surrounding the rules and regulations of the IRS take more than 70,000 pages to explain.
That being said, it's easy to see why so many people struggle to understand the rules and regulations of the IRS.
In this article, were going to review 6 of the most common questions about the Internal Revenue Service.
Through these questions, you’ll learn the basics of dealing with the Internal Revenue Service and your duties as a taxpayer.
1. What do I do if I can't afford to pay my taxes?
No matter how much you owe in taxes, your first step will always be contacting the IRS. In most cases, they will be able to work out a payment plan with you.
In the event that you can’t work out a payment plan, you may face liens or other punishments. Either way, all of this is much better than ignoring the problem and hoping that it will go away.
2. What happens if I file my taxes late?
Let’s start this by saying that paying your taxes late is better than not paying your taxes at all.
The process for paying your taxes late will be the same process you use for filing your taxes.
In addition, the amount you owe by filing your taxes, you will also have late fees to pay.
It’s likely that the IRS will issue you a bill for your late fees quickly, but it’s not a bad idea to look at the late fees and see if you can pay them when you file your tax return.
3. How far back can the IRS audit my tax records?
Typically, the IRS acts fast when it comes time to audit. More often than not, you’ll receive your audit notice within a few weeks of filing your taxes.
The organization claims that they are only looking through the last 2 years of tax filings, but if they choose to audit you on 2018’s taxes they can go back as far as 6 years to uncover any suspicious claims.
This is one of the main reasons your accountant will tell you to always save previous years returns. You can learn more about auditing on the Silver Tax Group site.
4. Can you go to jail for tax evasion?
Long story short? Yes, they can put you in jail for tax evasion.
However, this is typically for those who owe A LOT of money.
For example, Al Capone is one of the famous faces to spend time in jail for tax evasion.
That being said, you need to owe A LOT of money to face jail time for tax evasion.
5. Do I have to file a tax return if I don't make any money?
Technically, no. Anything $600 and below doesn’t have to be reported. However, it is a good idea to file anyway.
The IRS cannot become suspicious of you if you are always being upfront with your financial situation.
This protects you from future audit possibilities as well as keeps you consistent.
You’ll find down the line as you start to invest in your financial future, you’ll be happy you took the time to create a financial footprint.
6. What tax bracket am I in?
Under the current law, there are seven different tax brackets a US citizen can be placed in.
These are the brackets that dictate the percentages we hear politicians talk about in Congress.
Unfortunately, tax brackets are also terribly confusing.
The IRS has a worksheet that helps citizens figure out their bracket, but more often than not you’ll find a conversation with your tax preparer will be easier than fumbling around with the IRS worksheet.
The big takeaway you should receive from this article is that it’s better to talk with the IRS then ignore the problem.
Though it is there job to make sure the government gets their money, they’re a poorly funded organization that would almost always rather avoid the court fees than drag you in front of a judge.