Although many people associate tax season with getting a nice refund check, some taxpayers do end up owing a balance when they file. A large balance due can put you in a difficult situation, especially if you weren’t expecting it.
Double-Check Your Return
Once you see a balanced owed, make sure you didn’t make any mistakes or forget to add anything on your return. In particular, look at the following tax items:
- Deductions for ordinary and necessary business expenses
- Tax payments you’ve already made, including estimated tax payments or taxes withheld
- Mortgage interest and charitable donations (if you itemized your deductions)
- Deductions/credits for claiming dependent relatives or dependent children
- Deduction for investment losses
If you are using tax software, forgetting to check a single box can be the difference between getting a refund or owing a balance to the IRS. Consult a professional tax preparer if you need assistance.
File On Time
Some taxpayers don’t want to submit their tax return if it has a balance due. They may think that by delaying their return’s processing, they’ll get more time to pay off their tax debt.
Actually, this strategy can backfire and result in a higher balance owed due to penalties and interest. Even if you request a six-month filing extension, you’ll be charged late payment penalties and interest on your unpaid balance.
Weight Your Payment Options
You don’t need to pay your bill until April 15th, which gives you some extra time if you file your taxes early. If you can’t pay your full balance, you have several payment options to consider.
A tax resolution attorney can help you find your best tax debt repayment strategy. You may qualify for certain types of tax settlement or a payment plan that offers flexible terms.
Find the Underlying Cause
It’s no big deal to owe a small balance at tax time, but a large balance due is a problem. It means you may need to adjust your estimated taxes or withholding allowances.
By finding the cause and fixing it, you can avoid owing a big balance when your file your return and being charged IRS underpayment penalties.
The Gartzman Law Firm offers tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.