Unless you have a keen eye for numbers and formulas, there’s a good chance you get a bit confused about taxes. In fact, it’s this very reason as to why many people choose to take their taxes to a tax specialist each year to have their returns completed. As most everyone knows, a simple mistake on your tax return can cost you thousands of dollars. With help from a tax specialist, though, this type of mistake can be avoided. If you have questions about your taxes, there’s no need to feel uneducated.
Here’s a look at a few common tax questions that many people find themselves too embarrassed to ask.
Can the IRS really hold my refund?
Yes, the IRS is allowed to intercept your refund in certain cases. There are generally four different situations in which a refund can be held by the IRS, with each one of them being unique:
- When you’re behind in paying federal student loans
- When you’re behind in paying child support
- When you’re behind in paying state income taxes
- When you have received too much subsidy to pay toward health insurance that is found through a federal or state exchange
Does everyone get audited by the IRS?
No, not everyone gets audited by the IRS. In fact, the audit rates are rather low these days. If you own your own company, however, there is a greater chance you will be audited. People who own their own businesses tend to claim multiple tax breaks and to ensure these breaks are legitimate, the IRS will audit them; this doesn’t mean every single business owner gets audited each year, but there is a higher number of self-employed people who get audited than those who aren’t self-employed.
If I owe money and lack the means to pay it, should I still file my taxes?
Yes, you should always file your taxes. The number one reason for filing is because it is the law. As long as you show that you are making an effort to keep your taxes current and pay back any that you owe, the IRS is usually fairly simple to work with in relation to repayment terms. You will find that speaking with a qualified tax accountant can be of great benefit. If you decide you’re not going to file, be aware that you will receive a failure-to-file penalty; this penalty can be very costly. If you find that you owe more than $10,000 in taxes, hiring a tax attorney is advised as this will provide you with representation when setting up a repayment plan with the IRS.
Taxes are constantly changing. While this blog is meant to help you best manage your finances, it’s for informational purposes only and shouldn’t be seen as tax advice. Talk to your tax professional if you have questions about your taxes.