Services: Collection - Individual
Individuals file Form 1040 tax returns, an Individual Income Tax Return, every year. Form 1040 tax returns are due on April 15th of the following year. An automatic six-month extension of time to file is available if you file Form 4868, Application of Time to File U.S. Income Tax Return, by the due date for filing your tax return, usually April 15. Remember, an extension is only an extension of time to file the tax return, not to pay the tax liability. Many individuals that have several years of unfiled tax returns do not know where to start and simply try to ignore the problem. However, the problem rarely, if ever, goes away and usually becomes larger and more severe. The time to take care of your IRS problems is now.
Case study: In this case study, our taxpayer simply forgot to file a tax return for one year because of his divorce. Although he intended to file the tax return, he never got around to it. All of a sudden, one year turned into two years and two years turned into three years and his case began to “snowball.” Because the taxpayer did not file his tax returns, the IRS filed tax returns for him, called Substitutes for Return. Unfortunately, the tax returns filed by the IRS are often inaccurate tax returns because the IRS does not know if you are married, have children or give money to the church. The IRS assessed the Substitute for Return liability against our taxpayer and started garnishing his wages and seizing bank accounts. Our taxpayer was afraid of losing his job and his home. Patrick T. Sheehan & Associates was able to stop the IRS and undo the Substitute for Return liability. Our taxpayer is now on track, has no IRS problems and files all of his returns every year without fear of the IRS.
If you are a W-2 employee, your employer withholds taxes from your pay. If one is withholding at the correct level, one typically does not have any unpaid tax liability at the end of the year. Income from other sources may alter this result.
If you are self-employed, you may have to make estimated tax payments on a quarterly basis. Estimated tax payments are due on April 15th, June 15th, September 15th and January 15th of the following year.
People that are recently self-employed often fall into a trap regarding estimated tax payments. It is very difficult to discipline oneself to make provision for estimated tax payments. Failure to make estimated tax payments often leads to the cycle of not filing tax returns and hiding in fear of the IRS.
If you are self-employed, we recommend the opening of a second bank account. Title this account “Tax Savings Account” and deposit regular, small deposits in anticipation of your estimated tax payments. We recommend that a small percentage of each self-employment check you receive be placed into the tax account. It is easier to take small bites at the apple rather than one big bite.
Case study: In this case study, our taxpayer decided to go into business for himself. To fund his new business, he started taking money out of an IRA. Because he was not making a lot of money at first, he did not make estimated tax payments. His tax return for that year listed a substantial liability stemming from the withdrawals from the IRA and by not making estimated tax payments. Our taxpayer wisely sought the advice of Patrick T. Sheehan & Associates before the tax return was filed so that we could assist him with the looming IRS problem. Patrick T. Sheehan & Associates analyzed the problem and negotiated a resolution with the IRS to his case.
If you have unfiled Form 1040 tax returns or unpaid liability, we can help.
1-877-4-IRS-LAW