Taxes are to be paid on a compulsory basis. There is not much that you can do in regards to the same. And really the tax day or 15th of April is actually a stressful day for all. This is because this is the day when dues are to be paid to Uncle Sam or the Government in the United States. Either people have to pay huge taxes to the government or they pay a good sum of money to the accountant to complete the tax procedure. People are also willing to pay any sum of money to the accountants if they could save their taxes. Really, paying taxes is something very stressful. And if you have deep tax debt then things are really going to be tough for you. People who owe large sums of money in taxes at the end of the year, or back taxes should not only consult an accountant, but may consider speaking with someone who has an Llm in taxation. Here is a short guide that will help you as to how you can keep the tax debt away or get rid of your tax debt:
Firstly, it is vital to understand the four R’s of Tax paying. Firstly, you must know as to why we are supposed to pay tax before finding out how to get rid of tax debt. Remember, Government does not intend to make your life miserable and take away your hard earned money. Government uses the money you pay as tax in the well being of the country.
1. Revenue: Schools, hospitals and schools along with so many other facilities are developed and built because of the government revenue from the taxes.
2. Repricing: Taxes are levied on the goods too. This makes the goods repriced. The things on which taxes are levied are consumer items, tobacco, luxury things etc.
3. Redistribution: Poor and handicapped people who can not afford the day to day things of basic necessities are helped with this tax revenue.
4. Representation: If you pay proper taxes then you can also demand the accounts from the government as tow here is these tax revenues being spent.
Now, it’s the time to understand what exactly tax debt is. Tax debt is any amount of tax which you have not paid either because you have not afforded or due to some other reason. Even if you pay tax but not on time then tax debt can arise on account o penalties charged to you. IRS takes charge to find out all the people who have been tracked of tax debt along with penalties, if any. And they are supposed to be paid. People who have a tax debt and are already under other debts like credit card payments, mortgages etc. will find this situation really exhausting. It may also happen that the person who is facing the tax debt has it due to unintentional and unavoidable circumstances. It may be due to miscalculations or bad financial situation etc.
The best way to get rid of tax debts is that not to wait for 15th of April. It is better to take the required steps initially before a few days only. Also, one must have the habit of keeping bills, invoices, receipts or other vital documents for tax purposes in proper manner. It is also a good habit to buy books on taxation meant for laymen so that calculations may become simpler. It is better to have good financial habits and avoiding loans which we won’t afford to pay. Good financial habits can save you from tax debts or for that matter any other debt.