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Inspiring Success on the Road to Recovery

Wednesday, September 6, 2017

A Glance and a Smile

By Renee Sieradski, EA

As I was mowing the lawn one Sunday morning, a neighbor and her son passed by. The mom was looking at her cell phone and her son was on his tricycle in front of her. As they passed, I glanced at her in hopes of greeting her with a smile. She briefly looked up  and smiled back. In my peripheral view, it occurred to me the little boy was grinning at me from ear to ear, yet I had never met his gaze. I wondered if this was a normal thing we adults do; overlook the little ones. Did this happen to me as a child? I definitely felt unseen as a kid. There wasn’t much of a connection between me and my extended family, and I don’t recall a real conversation with any of them.
So I’ve discovered a way to boost my self-esteem — go on a well-traveled hiking trail and greet and make eye contact with every one on the path. They respond with a friendly hello, and it helps me feel seen. It’s therapeutic and as bonus it’s a positive way to take care of my inner child and body at the same time.

On to Taxes

Many people wonder why they owe taxes. As an employee, the main reason may be you didn't have your paycheck tax withholdings correct.

When starting a new job, we are required to fill out tax paperwork, including a W-4 form to choose dependents. You can claim one dependent exemption for yourself and one for any children. If married, make sure your spouse doesn’t double up on the kids. If you're married with two children, each of you could claim yourself plus one child. The more dependents you claim, the less taxes are taken out of your paycheck, but this may result in owing the IRS at tax time.


Shouldn’t I always get a refund?

The IRS revealed that 80% of tax returns are refunds. If you receive one, you're having more than what you need withheld each paycheck and giving it to the IRS interest-free. There are two schools of thought on this:

If you're not a good saver, then it's not a bad strategy to put away a little extra and get a refund in April and use the IRS as your “piggybank.” When filing your return, you'll get a refund to use for things like paying real estate taxes, going on a vacation, or paying down debt.

If you are a good saver, then you should have a goal of breaking even with taxes at the end of the year. This means claiming the exact number of dependents in your household on your W-4. You will have more money hitting your pocket every paycheck. You could put some of that money into an interest-bearing savings account. At the end of year, you will not get a big refund.

If self-employed; the IRS prefers you pay your tax in the year you earn it, rather than wait until tax returns are due. You can pay online at IRS.gov and use a direct pay feature. IRS prefers payments every quarter on the 15th of April, June, September and January. To calculate yours take last year’s income, divide it by four, and pay in equal amounts each quarter. This saves on interest and penalties.

If you can’t pay quarterly, when you file your return the following April, you'll owe tax plus interest and penalties for not prepaying. Think of it like this: Just as a W-2 wage earner’s boss withholds taxes every paycheck and submits it to the IRS, the IRS wants you as a self-employed person to send in your taxes in real time, while you make the money during that year.

I owe and can’t pay, do I still file?

Many people I have worked with who owed taxes, felt if they did not file their tax return, somehow the IRS wouldn’t come after them to pay.

The truth is — eventually it catches up and you will have to pay. The IRS can collect on your unpaid tax return for up to 10 years after you file. If you don’t file, the 10 years gets extended until you do.

This makes it important to file on time.

You can always work out a payment plan at IRS.gov. Another option is to hire an accountant to do that for you to negotiate a payment plan.

If you always owe the IRS, you can solve this by adjusting your W-2 withholdings, paying in quarterly if self-employed, or filing your taxes timely.

www.tax-intervention.com or call 602-687-9768.

Renee Sieradski | EA, CTR
Renee Sieradski, EA has received extensive training in the field of IRS Representation, with over 18 years of experience as a practicing Tax Professional, and specializing in Multi-State Taxation and the Real Estate Industry. Her expertise is in resolving tax debt, with a focus on 1040 tax liens. She is also a Federally Authorized Enrolled Agent.