Business Tax Debt Help: Time to Call in a Professional?

When you own your own business, life moves at warp speed. There are so many things going on at any given time that it's often impossible to get everything done. Sometimes, the thing that doesn't get done is the taxes. Unfortunately, this neglect can lead to some really tragic situations, and people can lose their life's work over an unpaid tax bill. Business tax debt help is available, and may be well worth it. But before seeking business tax debt relief, take a minute to realize why you're in this situation to begin with.

Why Do You Owe So Much?

As a business owner, you may feel like you pay more taxes than the average worker. And you are probably right. This is because you not only pay income tax, federal and state, but you also pay what's called the "self-employment tax." This is your Social Security and Medicare tax, and the rate is 15.3% of your profit. When you add 15.3% onto your regular income tax rates--28% federal and 5% state, let's say--you can see why business owners lobby Congress so hard for tax breaks.

Meanwhile, you also must pay half of the Social Security and Medicare taxes for your employees. This is called the payroll tax, and you must pay it according to strict IRS code. Not paying or paying this tax late gets you a guaranteed audit and almost certainly a slew of fines. When you have problems with income or payroll taxes, the need for tax debt relief becomes acute--because with business taxes, the numbers add up quickly.

How Can You Get Some Tax Debt Relief?

Now it's time for the important question: what can you do about it?

First, make sure that your tax returns have been filed accurately and to your advantage, as far as the law allows. Especially if you were doing the tax returns yourself, you may have missed deductions you were legally entitled to, such as a home office or mileage deduction.

These deductions can make a big difference, and you have a right to change your tax return for the previous three years. Get a tax debt professional to help look over your tax returns, and amend the years that were done inaccurately.

From there, work with a tax debt relief pro to set up a payment plan and apply for penalty relief if you have a good reason why your taxes went unpaid. And by all means stress to the IRS that if you are granted tax debt relief this time, you won't ever need it again, because you will be in full compliance with everything.

Source
IRS.gov

About the Author:
Andrew Freiburghouse is a freelance writer and editor living in Brooklyn, NY. He has worked in a variety of fields including magazine journalism, tax preparation, screenwriting, copywriting, and real estate. He graduated from Santa Clara University in 1999 with a B.A. in English. A regular contributor at tech blog Edgelings.com, Andrew was born and raised in the City of Los Angeles. He hopes he will survive the New York winter.