Busted! Don’t Believe These Tax Myths!
In one way or the other, every taxpayer in the United States has had to deal with the IRS or the Internal Revenue Service. The IRS ensures taxpayers comply with the Internal Revenue Code and those that disobey the federal tax laws face the consequences by paying their fair share.
When resolving a tax problem with the IRS, it is advisable to seek assistance from a qualified tax accountant or firm. They can analyze your fiscal situation and help you lower any tax obligation. However, new provisions and laws have left Americans unclear and confused about the system while others have misunderstood their personal liability or fallen prey to urban myths.
To help you steer clear of these misconceptions and hire the best tax attorney, John P. Jones Inc. a certified public accountant in Chicago, IL has debunked a few of the most widely believed myths about taxes.
Myth 1: I don’t think I owe taxes, so I don’t need to file tax returns.
Over the years, I have heard this from many people. Often, these people are self-employed and think they have enough payments and credits to cover the income tax, and they are usually correct. However, they forget about the self-employment tax which is an extra 15% tacked onto the income tax. Many businesses also don’t pay income taxes like partnerships and S corporations, but taxpayers must file returns to avoid non-filing penalties. Those penalties are $195 a month per shareholder or partner which can add up.
Myth 2: Taxes can’t be discharged in bankruptcy.
For a Chapter 7 filing, taxes for which a tax return was due to be filed within three years before the date of filing bankruptcy. For example, the tax return for 2013 income taxes was expected to be submitted on April 15, 2014, and therefore, these income taxes cannot be discharged by filing bankruptcy on or before April 15, 2017. Taxes assessed by IRS after an audit can’t be eligible for discharge until 240 days pass. Under a Chapter 13 bankruptcy, dischargeable taxes are treated as general, unsecured debts while payroll taxes are not dischargeable.
Myth 3: If my business is a corporation or LLC, IRS can’t come after me if I don’t pay payroll taxes.
The protection from liabilities that business owners enjoy because their business is incorporated or an LLC does not apply to payroll taxes. An individual responsible for paying these taxes is personally liable. The same is true at the state level.
For a certified public accountant in Chicago, IL, reach out to John P. Jones Inc. I provide tax preparation and planning, business accounting, strategic planning, tax resolution services, and retirement planning. I use my experience, education, and background to guide clients and taxpayers through the challenges of complying with federal and state tax laws adequately.