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Articles Posted in Tax Penalties

You may want to file an amended tax return if you have already filed but need to make changes.  One reason is that taxpayers commonly go to their tax preparer to have their taxes filed without having all of the information or documentation that needs to be considered when filing. This type of situation can bring on a host of negative implications, such as increased balance. Or it can cause an audit. Neither of which you want to be dealing with after you have filed.

Why Amend a Tax Return?

To put it simply, a taxpayer or a business should file an amended tax filing if filing the amended tax return will help their bottom line. For example, filing incorrectly by overstating income, or forgetting to subtract deductions that would have lowered the taxable income. Another common reason is if you would like to change your filing status. This is especially important since the Tax Laws Jobs Act came into effect.  And finally, to correct error that has resulted in you owing more money. These are just a few, but there are many reasons why one would want to amend a tax return.

Due to the COVID-19 pandemic and all its surrounding circumstances, the IRS chose to shift the tax filing deadline. This essentially moved the usual filing date for 2019 taxes from April 15th to July 15th. Whether you owed taxes to the IRS or they owed you a refund for that year, the applicable deadline was still July 15th , giving all taxpayers a few extra months to get their affairs in order. However, now that that date has come and gone, some people may have filed their returns but not paid any amount owed. In addition, others may not have sent in their return at all, either waylaid by the pandemic or afraid of having to pay the IRS an amount that they cannot afford. No matter which category you fit into, it’s important to know that you still have options.

Now Is the Time

If you haven’t already filed your 2019 return, regardless of whether you owe taxes or not, now is the best time to file. Don’t be afraid of having to face the penalties and other fees handed down by the IRS. They will work with you. However, they cannot do anything if you haven’t filed your return.

Failing to file taxes, and more specifically, owing taxes for the year in which the return has yet to be filed, often leads to a number of different penalties assessed by the IRS. The Federal Government of the United States often grants both individuals and businesses a valid extension when requested, which allows them more time to file a tax return. However, when an extension is not requested, or one is requested, yet a tax return and moneys due are not submitted by the new deadline, serious problems can arise that are best dealt with by an accounting or legal professional.

What Constitutes a Failure to File?

To put it simply, a failure to file occurs when a tax return is not submitted to the IRS by the deadline set forth by them every year. This is usually April 15th, but it can be extended for six months. Companies and individuals can both request an IRS extension, which pushes back that filing deadline. While this gives them more time to compile documentation and pertinent return information. In some cases, that deadline is also missed, that becomes what is known as a failure to file, and penalties are assessed by the IRS according to the guidelines that they have put into place.

Winning money at a casino, sportsbook, or via the lottery is a rollercoaster ride with its inevitable up and downs. Yes, it is undeniably exciting to win and stash a little extra cash in your pocket. But the downside that many forget in the heat of the moment, is that you owe taxes on those winnings, and if those taxes are not disclosed on your annual tax return or paid in full, you could end up with plenty of problems with the IRS. They will not hesitate to collect what is owed to them and more, should you profit from gambling winnings.

What Constitutes Gambling Winnings?

The IRS only requires people to pay taxes on a certain amount of the money that they win through gambling. These amounts vary, based on how the money is won. Here is a general breakdown to keep in mind when at the casino or racetrack:

Life can get busy, and sometimes, things slip your mind, especially when you’re moving in eighteen different directions at the same time. However, when that “something” consists of your tax returns, you could be in quite a bit of trouble with both the state and the IRS. Even if you regularly pay taxes and should be receiving a refund every year, you still need to file your returns by the deadlines set forth by both the Federal Government and the government of the state in which you reside. Otherwise, you face having to pay steep penalties, having your refund check delayed, and other serious issues. If you owe back taxes, you could face even more severe financial ramifications, such as having liens placed on your property or having your bank accounts levied.

What to Do If You Haven’t Filed Your Taxes in Years

No matter the reason is as to why you haven’t filed your taxes, it’s important that you take the first step necessary to remedying the situation. Although you should always seek the help of a professional tax expert who can walk you through the situation and negotiate with the IRS or state on your behalf, there are some initial actions that you can take on your own.

More than five million United States citizens live outside of the U.S., according to estimates by the federal government. Regardless of where they live, all citizens are required to pay federal income tax to the IRS. Federal law provides several methods for renouncing or relinquishing U.S. citizenship, but doing so comes at a significant cost. The U.S. Department of State (DOS) requires citizens seeking to renounce their citizenship to pay a substantial fee, and the IRS imposes an expatriation tax on some former citizens and others living abroad. Recently, the IRS announced new procedures, known as the Relief Procedures for Certain Former Citizens (RPCFC), that streamline the process for certain former U.S. citizens to resolve tax compliance issues.

Under the Fourteenth Amendment to the U.S. Constitution, any person born on U.S. soil is a citizen by birth, or natural-born citizen. The only exceptions are children born to foreigners who are in the U.S. in diplomatic capacities, and therefore subject to diplomatic immunity from U.S. laws. Immigrants to the U.S. can become naturalized U.S. citizens by following the procedures set forth by the Immigration and Nationality Act (INA).

Section 349(a) of the INA, codified at 8 U.S.C. § 1481(a), identifies seven ways that a U.S. citizen can lose their citizenship. The U.S. Supreme Court has ruled multiple times, such as in 1967’s Afroyim v. Rusk, that the government cannot involuntarily strip a person of their citizenship. Under § 349(a)(5), an individual can renounce their citizenship by voluntarily and knowingly “making a formal renunciation of nationality” at a U.S. consulate or embassy abroad.

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Nearly every adult in the U.S. must file an annual federal income tax return with the IRS that discloses their income, identifies tax deductions and credits, and states the amount of tax that is owed. What happens if a taxpayer fails to file on time? The consequences could include penalties and interest, as well as limits on the ability to obtain relief if they cannot afford to pay their tax bill.

What Are the Tax Deadlines?

Federal income tax returns are due on April 15 of each year. If the 15th falls on a Saturday, Sunday, or federal holiday, the due date is the next business day. California has the same deadline for state income tax returns.

Taxpayers may be able to obtain an extension of up to six months to file their federal tax return. This typically requires filing an extension form, and paying their estimated tax owed, prior to the April deadline.
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Our tax system requires most taxpayers to make regular payments to the IRS throughout the year. The tax return that is due to the IRS every April 15 shows the final amount of tax owed for the year, as well as the amount of tax already paid by, or on behalf of, the taxpayer. If the amount paid is less than the amount owed, the taxpayer could be liable for underpayment penalties. In January 2019, the IRS announced that it was expanding eligibility for waivers of underpayment penalties. Taxpayers who paid at least eighty-five percent of their final tax bill can have their entire underpayment penalty waived.

Ongoing Tax Payments

Federal income tax is a “pay-as-you-go” system. Taxpayers must pay tax on the income they earn as they earn it. Payments are due every quarter.

Employers can withhold taxes from their employees’ paychecks. The amount of withholding is based on information provided by each employee on Form W-4. Every quarter, employers must remit all amounts withheld from payroll.
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Businesses are required to file annual income tax returns with federal and state tax authorities, and they may also have to file payroll and sales tax reports. Failing to file a return on time can lead to penalties, interest, and other consequences. Even if you or your business is not able to pay the full amount of tax owed, it is better to file a return on time. For most types of tax, the IRS and state authorities are willing to allow a payment plan. The most notable exception is federal payroll tax. To avoid any penalties, you should promptly consult a California tax lawyer who can advise you on your obligations.

What Taxes Does My Business Have to Pay?

Businesses in California must pay federal and state income tax. The federal form they must use depends on the type of business entity, such as a corporation, limited liability company (LLC), partnership, or sole proprietorship.

If a business has employees, it must pay payroll taxes and file a separate return with the IRS. Employers must also pay into federal and state unemployment insurance funds. Businesses that sell goods or provide services deemed taxable by state and local law must collect sales tax from customers and file reports with the state.
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