We are entering that dreaded time of year that some of all hate,” TAX SEASON”.
Most small businesses dread taxes, but most taxpayers have similar fears about preparing their taxes and having them accepted. The top five tax fears may be understandable, but they really are unfounded.
1. Fear of Being Audited
Only about two percent of all tax filings are audited on an annual basis. Audits are completely random, and you are not being singled out. While there are some taxpayers who may be at higher risk of being audited, it is important to remember you will have plenty of warning and you have the right to have a tax professional and/or an attorney present during the review of your records.
2. Fear of Errors on Returns
It might surprise you to know that the IRS is not going to penalize you for an honest mistake. Depending on whether the mistake impacts your tax return materially or not you may have to file an amended return. When an amended return must be filed, have your tax professional reach out to the IRS – they may be willing to waive any penalty, particularly if this was merely an oversight.
3. Fear of High Deductions
The tax code is full of tax deductions that taxpayers are entitled to take. Oftentimes, we find that many people are loathe to take full advantage of some deductions because they are afraid that showing high deductions will result in an audit or mean their return is subject to more scrutiny. The fact is, if you are not taking legitimate deductions because you are worried about any of these, it’s foolish and you could be paying more in taxes than you should. Document your deductions and take every deduction you are entitled to.
4. Fear of Being Unable to Pay Tax Bill
While it is also worrisome when the tax bill exceeds your bank account, you need not be afraid. The IRS is more than willing to work with taxpayers to pay their bill over time and if the bill looks like it’s insurmountable, they may also work with you on an Offer in Compromise. Never skip filing your taxes because you cannot pay the bill; work with a tax professional to make sure you file your taxes when due and have a discussion with them about options for paying amounts owed.
5. Fear of Seeing IRS Mail in the Mailbox
Mail from the IRS should always be opened immediately. Even if you’re terrified of what might be inside. The fact is you may have missed a form, or the IRS may have made an adjustment to your refund or amount owed. Open the letters right away; most letters have a deadline and if the deadline was an increase in the amount owed, it’ll be far less painful to address it right away.
Self-employed individuals and small business owners are often very anxious about their taxes. However, if you work with a tax professional, they can help you prepare a tax return and help request a payment plan if you owe more than you can pay immediately.
There is help here in the world to complete your taxes. Here are some suggestions from Certified Provides here ate ServiceTitan. The first step is to prepare, we will talk about tax execution in a later blog.
https://bench.co/blog/tax-tips/prepare-tax-season/
https://bench.co/blog/tax-tips/tax-preparation-for-business/
