Why Procrastinating Should Never Apply to Taxes
In these days of high prices for gas, food and practically everything, it may be tempting to increase you exemptions on your W4 and have less taxes taken out. While this may seem like a great solution to put more money in your pockets today, it will create major problems for you tomorrow. What happens when you have to file your taxes in April and you end up owing a large sum you cannot pay?
If you are like some taxpayers your solution maybe to not file. As I have said in previous blogs, remember that while it is not illegal to not pay your taxes, it is illegal not to file your taxes. You may not realize that the choice not file will cost you in non-filing and non-payment penalties. These penalties along with interest on unpaid taxes can add up quickly.
Keep this information in mind if you are considering reducing your exemptions on your W4. You are just taking a bad situation and making it worse. I see people every day in my job as an Enrolled Agent who have made these errors and now owe twice (or more) than what they owed to begin with. This puts them in a situation where the IRS can put liens on their homes and cars and require payment plans that require they drastically reduce their standard of living.
As long you as you are paying your taxes, your standard of living is your business. Once you owe the IRS, the IRS can dictate that standard. The IRS has national standards of living based on where you live. They can require that you adhere to that standard if you have unpaid taxes. For some this means selling their homes, cars and not being able to fund their retirement plans.
Taxes are a pay as you go system. If you choose to ignore this law you risk your financial future. So don’t be tempted by what seems like a quick fix, and is really a recipe for financial disaster. If you do find your self in this situation, contact Effectur to help you navigate the rough waters of the IRS.