Taxes. That dreaded word that comes at certain times during the year. And, apparently, that happens a lot everywhere in the world. Why do you owe taxes?
Taxes are definitely a good thing for the most part. They are the main source of income your government should use to allow many projects to happen for your society. Filling them and taking so many things into account can lead you to the wrong path.
What is that wrong path? Owing money that would go to pay taxes. Today let’s explore some of those ways you can end up owing taxes. You need to be on top of them. Avoid getting trapped into this whirl spin. It can be way more problematic than you may anticipate.
Is it really bad if we owe taxes?
While talking about taxes, you may have a roller coaster of emotion. The recollection of taxes is handled by your country revenue agency. In Venezuela, it is handled by the SENIAT. While in Singapore it is handled by the Inland Revenue Authority of Singapore. And, just for simplicity, let’s take some of the examples from the Internal Revenue Service, or the IRS. They really feared the United States revenue agency.
So, let’s talk about owing taxes. Is owing taxes really that bad? Well, yes. It is just like owning a service you are using. But without the immediate effects of a service suspension or something similar.
But you have probably heard about tax evasion, right? So many artists, athletes, and business people getting massive penalties. They did not pay their taxes the way they were supposed to. In many countries, that can lead them into even imprisonment which is scary as it sounds.
However, owing taxes have ways to get out of trouble. In the case of the IRS, the opportunity of paying back taxes is there when you forgot. For some reason pay taxes in previous fiscal periods. They also allow for installment plans which you can apply to make small payments. In this way, you get rid of the debt.
There are also way more accountants in this world that can help you. They will help you better understand what all the gibber jabber words mean and how to proceed in those situations.
What can cause you to owe taxes?
Sometimes it is not you, it is your employer, the system, or whatever. You may be so good at remembering when to pay and how much. But if you do not have everything in check, many things may pass. It will go under the radar that you would not notice.
Withholding little from what you get paid can cause you to owe taxes. In that case, your employer maybe is not doing the homework the way they supposed to.
Another thing that may happen is to not file your taxes on time. You know this due date already. In countries like Venezuela, it comes every March 31st, while in the United States is on April 15th. Save those dates, but do not go and file the taxes on that same day. You have lots of others to choose from.
And maybe some changes have occurred. Any change in the tax code or even in deductions can trigger a debt you were not expecting. In this case, you would need to be checking the agency’s sites to see what is the cause. And see what can you do about it. Again, accountants are your friends.
How can I avoid owing taxes?
And now to the good question. If you somehow got yourself into the mess of having a tax debt and wonder how to avoid owing taxes.
Fear not, there are many ways to avoid being in that situation. Mainly they come with the help of more information. Being illustrated on how to manage your finances, including taxes may be a good start. You can also use the help of an accountant or tax specialist. That is ideal if you do not want to deal entirely with the technical stuff.
Another way is to just be aware and stay on your toes when the filling is nearing. Do not let things happen at the last minute. Normally, this is when everything starts to go wrong. So you may be caught into paying back taxes later on the situation. Though may not be the end of the world, can hinder so many plans.
And finally, try to understand your tax situation. It is not the same for everyone, because not everyone earns the same. IOr does not have the same job. Others go for multiple jobs. Just like the first recommendation, a specialist could do wonders.
Paying taxes is not like birds that suddenly appear during migration that may caught you by surprise. Avoid being surprised with debt, ensure to have a system that will prompt you to start working on paper works on time.
So, why do I owe taxes? You may ask. In short terms, there are many instances and examples were getting tax debt may happen. Some of them out of your control while others you should be aware of.
The thing is, it does not matter if you owe or not. The thing is always being able to fill your taxes in time. Avoid letting that happen to the last minute, and requesting all the help you need to do it properly. Many specialists can do this job for you while you give them all the information they need to fill it.