As a Fort Wayne Tax Attorney office and Professional Tax Service, we are often asked “How Can I Owe That Much To The IRS?”
The scenario is. A letter arrives from the IRS, a client opens the letter and the IRS says they owe an astronomical amount of money?
When the client calls the office, what they want to know is, how this can happen as chances are this is a very high amount and hard to imagine paying back.
To understand how it got to be this much, have a professional tax service examine the components.
Base tax + penalties + Interest = Huge amount of money that you cannot repay.
If you haven’t filed your taxes in several years, and you haven’t paid the base tax that you owe, there are 2 penalties that are hitting you right away. Failure to file (FTF) & Failure to pay (FTP).
Each of these penalties take the base tax that you owed and increase the amount by 25%.
So if you haven’t filed and you owe taxes, the IRS increases the balance by 50% right away, and then they start adding on interest.
An independent contractor that made $50,000, wonders why he owes $20,000 per year?
As a tax CPA and Fort Wayne Tax Attorney, we talk to people like this often. The contractor has 13.3% for self employment taxes, he is in the 25% tax bracket add to that penalties and interest and bam, the client owes 20k per year.
If you are having issues with tax penalties and need either a professional tax service or Fort Wayne tax attorney. Please contact us today at 877 489 8999.
