Truth About Taxes

Avoid an Income Tax Penalty on the Tax Debt You Owe the IRS

A small delinquent tax debt can quickly turn into a financial nightmare when the government applies an income tax penalty to what you owe the IRS. Penalties and interest increase at a significant rate when you are late on the tax debt you owe the IRS. However, if you believe you have acted honestly, “in good faith,” and with “reasonable cause,” your late income tax penalty could be eliminated when you request an IRS Penalty Abatement.

What is an income tax penalty abatement?

Sometimes it’s just not feasible for you to pay your tax (IRS debt) to the IRS on time. An income tax-penalty abatement is a request to remove all or some of the penalties and interest on the delinquent tax debt that you owe the IRS. On average, an income tax penalty makes up approximately a quarter of the total tax (IRS debt) owed. Most times, individuals become capable of paying the original tax debt they owe the IRS. It’s just that the income taxes’ penalty is way too much. In 2005 alone, the IRS issued an income tax-penalty of over $15 billion to taxpayers. Don’t let the government bully you into paying more than you owe the Federal IRS. Just because you have a tax (IRS debt) doesn’t give them reason to take advantage of you!

Tags: income tax, irs, tax debt, tax penalty

Tags: income tax irs tax debt tax penalty

Important IRS Income Tax Forms You Should Know About

Filing for income tax using the income tax forms by the Internal Revenue can be very confusing. There are several types of IRS income tax forms, each one are dealing with a certain kind of tax for individuals, companies, and other organizations. Trying to figure out which tax form is the one that you should use, and what other tax forms you may need after that, is one of the main reasons people find it especially difficult to accurately file their taxes. There are however, some important IRS income tax forms that one should know about regardless of their type of income. Knowing these enables the person to have an easier time when it comes to pay their taxes.

The simplest tax form available is the IRS Form 1040EZ. Unlike most of the other available tax forms, this proves to be the easiest to file, simply because all you need to do is fill out that one form. This is because the taxes of the people who file for the IRS Form 1040EZ do not have a complicated income to figure out, as eligible applicants include single individuals, or married people filing joint income taxes but with no children or other dependents. This type of tax form does not have any itemized tax deductions or any tax credits, so everything is straightforward. The only requirement is that either individual or any of the spouses are over 65 years of age, and not blind, and with a total income tax of less than $100,000 a year. Moreover, the person must not have any household employment taxes, meaning that he or she does not pay any household employee for any wages.

Another of the IRS income tax forms that people should be aware of is the IRS Form 1040A. While you do need to fill out a little more information than the IRS Form 1040EZ, the form in itself is still easy to use, and also offers more opportunity to list any tax credits or income modifications that you have. This means that you are only eligible to use this tax form if you only earn your income from your wages and salaries, dividends and interests, scholarships and federal grants that have been deemed taxable, any compensation for periods of unemployment, pensions and annuities, social security and retirement benefits, and jury duty pay. Your income must also be less than $100,000, and you do not itemize tax deductions. You may also use this form if you have received dependent care benefits.

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Tags: eligible applicants household employee household employment income tax forms irs form 1040a irs form 1040ez irs income tax irs income tax forms itemized tax deductions tax form

Spending Your Money – How Income Taxes Really Work

Most people are often unaware of how income taxes really work. They know that the government uses these taxes to spend on public utilities and programs that would benefit its citizens, but many claim ignorance when it comes down to how income taxes are processed. Income taxes, although the bane of most citizens’ existence, should be understood about how this affects most law-abiding residents of the country.

When delving into how income taxes really work, many assume that the process starts with the filing of income tax forms. This is not the case; the process actually starts when a person is officially hired by a company. During this period, both the employer and the prospective employee agree on the latter’s current wages, and sign an agreement to that effect.

Once the person is hired, he has to fill out his tax forms, especially the W-4 form, which lists down his salary information, and number of children or dependents. This is then given to the employer, so that he would know how much he would need to take away from his employee’s paycheck for the income tax.

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Tags: charity contributions claim ignorance dental expenses income interest income tax forms internal revenue service mortgage interests prospective employee salary information self employment taxes

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