Taxes can be incredibly difficult to understand. As such, if you owe taxes, many people end up waiting because they are not sure how they are going to pay or if they are even filling out their paperwork right. If you have past due taxes, filing past due tax returns as quickly as possible is certainly to your benefit.
What are “Due Taxes”?
Due taxes are just what they sound like, taxes that you as a tax payer owe to both the federal government and the local state government of the state where you reside. These taxes are going to be based on the amount of money that you made in the previous filing year and how much taxes you paid in during the course of the year.
The goal of income taxes is to break even, or owe zero taxes at the end of the year. This means that you were in control of and had access to all of your money the entire year. When you get an income tax return, this means that you paid in more money than you owe and that the government had control of and use of the extra money that you paid in all year. When you owe taxes and you are required to pay them at the end of the year, these are due taxes and it means that you did not pay in enough through the course of the year and that you now owe that amount.
What is the Tax Filing Season?
Tax filing season is the span of time in which the government is accepting tax return paperwork and will then process that paperwork and either give you a return or expect you to pay in your owed taxes. The return season does shift a bit each year but for the year 2022, tax forms began to be accepted on January 24th, 2022 and they will be accepted until April 15th, 2022. This means that you have approximately three months to get your tax paperwork filed and either pay what you owe then and there or set up a payment plan.
Tax filing season is important because it prevents those individuals that owe taxes from sitting on them and not filing all year long. You do have a limited amount of time so that the government can be sure that you are going to pay and that you know when the deadline to pay is. If you do not owe any money or if you are set to get a refund, you do not have to file your taxes at all.
If you do owe money and you have taxes that you need to pay, you have to file by the deadline or you will be penalized. When you do not file by the time that you are required to file and do not set up a payment plan or pay in full, you will get a penalty and you will get fees added to what you owe. This is, again, there to help encourage people to file and to start paying their taxes during that filing season.
Why File Your Due Taxes Now?
If you owe taxes, it is always best to file as soon as you can. The reason for this is that it allows the IRS a chance to look over your taxes faster and see if there are any issues or any problems that may result in your having to pay in less. Another reason is that when you file early, this gives you more time to start paying and more time to figure out how you are going to pay your taxes.
The federal government does have a repayment plan which allows you to pay a little at a time instead of having to pay it in a lump sum, all at once. If you file early, it does allow you the chance to figure out how to pay and if you do want to set up a payment plan, it does allow you the time you need to get your payment plan figured out so that you can get your taxes set straight.
We have all heard of people that owe back taxes from years and years ago, that is not something that anyone wants. When you do wait and do not pay your taxes on time or if you do not file when you should, you can still get penalties added to what you owe which can compound and make it so that you owe more and more each year that passes. Though you might be tempted to avoid paying your taxes and you might think that not filing is going to save you, you still owe that money and you are still going to be liable for it even if you wait for years to file.
How to Avoid Owing Taxes
The best way to avoid owing taxes at the end of the year that you then have to pay in is to make sure that you are paying attention to the withholding that you are taking out of your check each month. The amount of taxes that you owe each year is determined based on a few key factors. The first is how much you make and what tax bracket you fall into. The more money you make, the more money you are expected to pay in.
Each individual is required to pay a certain amount of taxes and this money then goes toward things like infrastructure, road, public buildings and more. When you file you are allowed deductions, these deductions work to reduce the gross income that you have made through the year and is money that is not going to be taxed. If you have children, you get deductions for each child, you get deductions for yourself and your spouse, you get deductions for home expenses and for interest on your mortgage and more.
These deductions are going to work to help reduce the amount of money that you then have to pay taxes on at the end of the year. When you get paid you are asked how many withholdings you want to list. This is a number that is going to determine an amount that the federal and state government is going to take out of your check before it is paid to you that is going to go toward what you owe in taxes.
You generally withhold one for each dependent that you have. This is going to help ensure that you are paying in enough taxes each year and that you are not going to have to pay in for not paying enough through the year. These withholdings can change and you should pay attention to them as you switch jobs or if you change them in any way during the year.
If you are unsure about what your withholding should be, you can always talk to a tax professional about what is the right number you should have listed and what you should not.
Why File, even if You Are Not Owed a Return and Do Not Owe Money
When you are filing your taxes, it was mentioned that if you do not owe money and if you are going to get a refund, you are not legally obligated to file. This is not something that you want to do, however, you should be filing no matter what each year. Filing is a great way to keep track of how much money you make each year, to make sure that you are going to get your social security payments when you retire and more.
Filing if you are going to get a return is going to allow you to get the money that you earned back and it will also help you learn if you need to adjust your withholding and such when you do start the next tax year. If anything, taxes are a great way to get an accurate look at what you have made and how you have paid in the entire year.
If you do not owe anything and you are not going to get a refund, it is important to file as well so that there is an official record of the fact that you do not owe and so that there is also a record of how much you have paid in through the year. The federal government is a bureaucracy, it runs on paperwork and evidence. It is important that no matter what, you are filing so that there is that paper trail of what you have paid in and such through the years.
What are Estimated Taxes?
For those that work from home or that are their own boss, you are going to be required to pay something called estimated taxes. These taxes are based on how much you make each year and the formula can be found on the IRS website. If you get a form from your employer that is called a 1099 form, this means that the amount listed on the form is the amount that was reported to the IRS. This means that this is the amount of money that you will pay taxes on.
With estimated taxes, you pay quarterly at predetermined days of the year throughout instead of paying with each paycheck. You can still get a refund with this method of tax payment and you do still need to file a return. This is a potentially tricky tax type as not all people know how to report this type of income. A tax professional is a great asset in this regard as they are going to be able to help you file your estimated taxes easily and help you determine who much you should be paying in each month as well.
Do you Need a Tax Professional?
Not all filers are going to need a tax professional to help them file their taxes. That being said, it is also important to take the time to figure out if you need a tax professional or if there are other options that might work for you. If you have complicated taxes, if you have more than one person that you are filing for and you are filing a joint return, if you are paying in taxes yourself that are estimated and so on, a tax professional might be just what you need.
With tax professionals you do have the added benefit of being able to know that your taxes are going to be filled out correctly and that there are not likely to be any issues that you need to worry about. Instead of worrying about if you filed this right or if you missed a deduction that could possibly save you money. It is always best to talk with a tax professional if you have any worried about your taxes or if you want to ensure that you get your full refund if there is one.
With any type of taxes, it is always going to be beneficial to at least have a tax professional glance over your return to make sure you are filing correctly. If you owe money, paying up front or filing early can give you more time to figure out how you are going to pay your taxes. Taxes are complicated, but with the right help they can be simple.
