Monday, April 21, 2008

Why Should I File My Tax Return As Soon As Possible?

* Generally, if a taxpayer is due a refund for withholding or estimated taxes paid, it must b claimed within three years of the return due or risk losing the right to it. Th same rules applies to a right to claim a tax credit such as the Earned Income Credit (EIC). Self-employed persons who do not file a return will not receive credits towards Social Security retirement or disability benefits. Failure to file results in not reporting any self-employment income to the Social Security Administration.

What if I can Pay More?

Even if the taxpayer doesn't have enough money to pay , returns should be filed to avoid further penalties for failure to file. The IRS will assist in finding a solution to the problem.

The IRS has streamlined its policies to offer alternative account resolutions if a taxpayer cannot pay in full with the return.

* The IRS will help to set up installment agreement when the situation warrants.Installment payments allow taxpayers to pay the tax debt over time.

* The IRS will consider whether an offer in compromise is an appropriate solution.

Many people don't file returns because they don't have enough money to pay the tax they owe. They find out after completing their return that their withholding or Estimated Tax payments do not equal their tax liability.

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