Tax Refunds & Advice

What are you going to do if you find that you owe money to the IRS? While many taxpayers receive a refund, there are many who are unlucky and instead receive a tax bill. As you can imagine, this is a situation that you never want to find yourself in. But if you do, knowing how to proceed is very important. After all, the IRS is very serious when it comes to collecting the money that is owed to them. In other words, you are not going to get away with not paying or waiting for years on end.

Generally speaking, the IRS encourages tax payers to pay their entire outstanding “bill” on time. In other words, if you have a tax liability, you should do everything you can to send the appropriate payment by the date set forth by the IRS.

But I received a bill for late taxes and wasn’t expecting it? If this happens, and you already missed the deadline for payment, you may have to send in penalty and interest as well.

Many people think that paying the IRS back in installments is the way to go. This is definitely an option, but before you decide on this, you should keep in mind that you will be charged quite a bit in penalties and interest. In most cases, you will be able to save money by taking out a loan to pay your back taxes or using a credit card. This usually allows you to save money; even though you will have to pay interest to your lender.

Owing money to the IRS is a serious situation. It would be in your best interest to pay your entire tax liability before the due date. This way you can avoid penalties and interest.

Starting on July 1, 2008, the standard mileage rate for business related driving is set to increase to 58.5 cents per mile. This is much more than the current rate of 50.5 cents per mile. Why is the IRS making such a big change this time around? Simply put, they are doing their best to keep up with the ever increasing cost of fuel. Although they have raised the standard mileage rate by 8 cents, most experts agree that the IRS is still far behind where they should be. After all, gas has topped $4/gallon in most parts of the United States and there is no reason to believe that this will be reversed anytime in the near future.

Why is the standard mileage rate important? Well, this is what businesses use to reimburse employees who drive for work related purposes. To go along with this, self-employed professionals also use this rate when driving for anything that has to do with their job.

If you currently take advantage of the standard mileage rate or will be in the near future, it is important that you keep this rate increase in mind. Those who work for a company will not have to worry about this because their employer should make this change come July 1. But if you work for yourself, this is something to keep in mind if you will be filing your own tax return.

Remember, you need to keep accurate records so that you can get what is coming to you without lying on your tax return. Anytime that you are driving for business, record both your beginning and ending odometer reading.

All in all, an increase in the standard mileage rate deduction was a long time coming. Fortunately, the IRS did the right thing and made this change effective July 1, 2008.

Many people think that it is a good idea to hide income from the IRS. After all, this is a great way to save on income tax, right? Wrong! When it comes down to it, you need to be 100 percent honest with the IRS at all times. Although you may think that you can hide income in one way or the next, you are not likely to get away with this year in and year out. Somewhere along the way the IRS will begin to catch onto your tricks, and in the end this could mean a lot of trouble for you. Are you really willing to risk owing tons of back money and the possibility of jail time? Hopefully, your answer is no.

Who are the people who try to hide income from the IRS? One group who thinks that this is easy is those who work two jobs; especially if one is as a self-employed professional. They feel that since they are paying income tax at their primary job that the IRS will never look at what they are doing on the side. Of course, this is a huge mistake. Any income that you earn is income that you should report. Sure, mistakes can happen, but if you knowingly try to deceive the IRS you are not doing yourself any favors.

Before you ever consider hiding money from the IRS you should first consider the ramifications that this will have on your life if you are caught. Sure, it can be a pain in the neck to pay a lot of money in taxes. But guess what? This is something that hundreds of millions of Americans have to do. As long as you stay honest about your income, you should not have any problems in this area. And that is a good thing!