Avoid Serious Income Tax Problems

Do you have a serious income tax problem with the IRS and/or California Franchise Tax Board (FTB)?  If so please contact our office so that we can help, but you’re obviously much better off avoiding these problems to begin with.  Some tax debts can be dealt with in bankruptcy, but if that doesn’t work for your tax debt, the other option would be making a deal with the IRS and/or FTB.  We can help either way.

First and most important, always file your income tax returns on time.  If you don’t have enough money to pay the income tax, just file the return without sending all of the money; send what you can because, the IRS and FTB will add interest and penalties to the unpaid amount.  But even if you cannot afford to send any money, file the return.  You will not be eligible for any of the IRS’s repayment programs if you have not filed all of your tax returns that are due, and there are additional penalties for failure to file your tax returns.  If you don’t file a tax return, the IRS will eventually file one for you without any deductions, meaning that you will owe a lot more tax than if you had filed a return.

If you are self-employed, as more people are today, make sure to pay your quarterly estimated tax.  The IRS form for the estimated tax is 1040-ES and can be found here.  The bare minimum to pay is 15% of your net income to the IRS in each quarterly payment to cover your Social Security and Medicare payments, even if you are low-income.  You are responsible for determining how much tax to pay, and remember that 15% is the bare minimum.  If you pay too little in quarterly estimates, you will be assessed a penalty and will owe a large amount when April 15 comes around.  It’s therefore best to pay the entire amount you owe at the time of the estimated payment.

If you have serious income tax problems, contact a bankruptcy lawyer who can also help with tax problems outside of bankruptcy law.