tax law http://www.wisebread.com/taxonomy/term/15061/all en-US What If I Skip My Taxes This Year? http://www.wisebread.com/what-if-i-skip-my-taxes-this-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-if-i-skip-my-taxes-this-year" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/5520716864_443fb3acf7_z.jpg" alt="tax form crane" title="tax form crane" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For many people, filing and paying their taxes can be a major source of anxiety every spring. On top of all the other things you're already juggling in your daily life, you've got those pesky tax stubs, the federal and state returns, and standing in line at the post office. And while many taxpayers are expecting a nice refund, there are plenty of folks out there who owe money to the IRS this year.</p> <p>So what if you just don't do it? What really happens to the people who ignore the whole thing and say, the heck with all of this, I'm skipping tax season?</p> <p>Well, here's the surprising news: not much. At least, not much happens to you at the beginning, and your chances of getting nabbed by the IRS &mdash; and having to pay up &mdash; differ significantly depending on the kind of income you've earned over the year. (See also: <a title="15 Surprising Facts About Income Tax" href="http://www.wisebread.com/15-surprising-facts-about-income-tax">15 Surprising Facts About Income Tax</a>)</p> <h3>Which Is Worse &mdash; Filing Late or Paying Late?</h3> <p>Let's back up a second. The law requires taxpayers to both file a tax return and pay any taxes due. And there are separate penalties associated with each of your legal obligations every year.</p> <p>But, contrary to what a lot of people think, the &quot;failure to file&quot; penalty is actually <em>worse</em> than the &quot;failure to pay&quot; penalty. And yes, the Code is way harsh and adds interest to the penalties as well as to the principal. Also, keep in mind &mdash; you're slapped with both the failure to file <em>and</em> the failure to pay penalties if you blow off doing both of them.</p> <p>That's why, if you are facing a <a title="Don't Have Enough To Pay Your Taxes?" href="http://www.wisebread.com/dont-have-enough-to-pay-your-taxes">bill that you can't afford</a>, tax professionals always tell their clients to at least <em>file</em> on time so they can avoid all of the late filing penalties and interest. And lawyers will advise you to pay any part of your liability if you possibly can, since the IRS accepts partial payments &mdash; and something is always better than nothing when it comes to your taxes.</p> <h3>Who Is Most Likely to Be Caught?</h3> <p>So who does the IRS catch up with the most? It's simple. People who've had a third-party report earnings to the IRS for that tax year.</p> <p>For example, most of our employers are required to provide information to the IRS before they pay us. Brokers generally have to report gain on stock or bond sales. Even a casino will ask you to fill out paperwork before you take home a large jackpot.</p> <p>And that's just the beginning. If you received unemployment, pension income, or pulled money from your IRA in 2011, you've left a paper trail that will lead the IRS straight to you.</p> <p>The people who have the best chance of flying under the radar for the longest amount of time? Freelancers and those who are self-employed or earn most of their income from consulting or odd jobs, because the IRS has the hardest time tracking unreported money. At the end of the day, someone who works for herself is usually the only one who reports it, and therefore, the odds of getting busted are much lower than a full-time employee at a more traditional company.</p> <p>But while it may take years for the IRS to hunt you down, and you may get lulled into a sense of complacency thinking the IRS has forgotten about this tax year, you're better off paying the piper sooner rather than later.</p> <h3>What Is the Best Way to Deal With IRS Problems?</h3> <p>In all the cases I've seen, the government has been more willing to work out a compromise or a payment plan with an individual when the person came forward on their own.</p> <p>Sure, some Americans will get away with not paying the government a dime this year. But if and when they do come down on you, the IRS can be like a three-ton gorilla. I've watched people's wages garnished, their assets seized, and their lives turned upside down until their tax debt is paid in full.</p> <p>So if you find yourself thinking, &quot;Hey, maybe I'll forget about my taxes this year,&quot; make sure you're ready to gamble on one of the most powerful agencies in the country. And you can sleep at night knowing all those penalties and interest are out there, accruing on your account.</p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p><em>Jacoba Urist is a tax and estate attorney from New York. She is a regular contributor to The Huffington Post and is writing a book &quot;The Happiest Parent&quot; about preparing the best possible future for every child. Follow her on Twitter at <a href="https://twitter.com/#!/TheHappiestPare">@TheHappiestPare</a>.</em></p> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jacoba-urist">Jacoba Urist</a> of <a href="http://www.wisebread.com/what-if-i-skip-my-taxes-this-year">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprise-5-reasons-you-might-not-get-your-tax-refund">Surprise! 5 Reasons You Might Not Get Your Tax Refund</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-easy-steps-to-keeping-track-of-expenses-for-the-self-employed">Five Easy Steps to Keeping Track of Expenses for the Self-Employed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-survive-a-tax-audit">How to Survive a Tax Audit</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/turn-last-years-taxes-into-this-years-financial-spring-cleaning">Turn Last Year&#039;s Taxes Into This Year&#039;s Financial Spring Cleaning</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/irs-delays-start-of-tax-filing-for-some-taxpayers-in-2011">IRS Delays Start of Tax Filing for Some Taxpayers in 2011</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes filing taxes tax law tax penalty Thu, 05 Apr 2012 10:36:07 +0000 Jacoba Urist 915138 at http://www.wisebread.com What’s Congress Up to? 4 New Measures that May Affect Your Business http://www.wisebread.com/small-business/what-s-congress-up-to-4-new-measures-that-may-affect-your-business <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/articles/whats-congress-up-to-4-new-measures-that-affect-your-business" target="_blank">http://www.openforum.com/articles/whats-congress-up-to-4-new-measures-that-affec...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/what-s-congress-up-to-4-new-measures-that-may-affect-your-business" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000010717780Small.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="179" /></a> </div> </div> </div> <p>While some people are complaining that Congress has done nothing, there has been some recent activity on measures that can impact your business. Some changes are good, while others may have an adverse effect. Here is what you need to know.</p> <p><strong>1. Repeal of Withholding on Government Contractors</strong></p> <p>The 3 percent withholding on payments for goods or services of more than $10,000 to government contractors, that was scheduled to take effect on January 1, 2013, has been repealed by the <a href="http://www.opencongress.org/bill/112-s1726/show" target="_blank">Withholding Tax Relief Act of 2011</a>. However, withholding continues to apply to contractors who fail to pay their taxes.</p> <p>At the same time as Congress repealed this harsh rule, it created two new tax credits to incentivize businesses to hire vets:</p> <ul> <li>A $5,600 tax credit for each veteran who has been unemployed for at least six months;</li> <li>A $9,600 tax credit for hiring an out-of-work veteran with service-related disabilities.</li> </ul> <p>Both credits, which are part of the Work Opportunity Credit, apply through 2012. If your business hires an employee that would entitle you to the credit, be sure have the new employee complete <a href="http://www.irs.gov/pub/irs-pdf/f8850.pdf" target="_blank">Form 8850, <i>Pre-Screening Notice and Certification Request for the Work Opportunity Credit</i></a> and submit it to your state workforce agency within 28 days.</p> <p><strong>2. Tax on Telecommuters</strong></p> <p>Today, more and more businesses allow employees to telecommute. This can be a win-win for you and your employees. You save on space and increase employee productivity, the employee is freed from the time and cost of commuting, and the community benefits from reduced traffic and fuel emissions.</p> <p>At present, telecommuting from another state can result in additional state income taxes for teleworkers.</p> <p>The <a href="http://www.govtrack.us/congress/bill.xpd?bill=s112-1811" target="_blank">Telecommuter Tax Fairness Act of 2011</a> would prevent states from imposing individual income taxes on telecommuting nonresident individuals who are actually physically present in another state. Thus, if your company is in New York and your workers telecommute from Connecticut, New Jersey, or any other state, your workers will escape New York taxes.</p> <p>The measure has bi-partisan support and is also supported by various groups, including the Telework Coalition, the National Taxpayers Union, the Small Business &amp; Entrepreneurship Council, and the Association for Commuter Transportation. However, a similar bill failed to be enacted in the past, so we&rsquo;ll have to wait and see about enactment.</p> <p><strong>3. Sales Taxes on Wireless Devices</strong></p> <p>Currently, state and local taxes and fees on wireless devices average about 16.3 percent, compared with 7.4 percent on other goods and services. The disparity could get worse as cities and states continue to look for new sources of revenue and businesses rely more and more on wireless devices.</p> <p>The <a href="http://www.govtrack.us/congress/bill.xpd?bill=h112-1002" target="_blank">Wireless Fairness Act of 2011 (H.R. 1002)</a>, passed by the House on November 1<sup>st</sup>, would prevent states from imposing &ldquo;discriminatory&rdquo; taxes on wireless devices (taxes on wireless devices are double what they are on other goods and services). This would be accomplished by means of a five-year moratorium on any new taxes and fees on wireless devices.</p> <p>The measure is favored by businesses as well as service providers such as AT&amp;T and Verizon. It is opposed by cities and states that continue to need the revenue. Let&rsquo;s see if the Senate can pass this quickly.</p> <p><strong>4. Sales Tax on Online Sales</strong></p> <p>Sales tax for online purchases is a <a href="http://www.openforum.com/idea-hub/topics/money/article/internet-sales-taxes-could-change-your-business-1" target="_blank">complicated matter</a>, with many small businesses unclear about their collection responsibilities. Generally, states cannot collect sales taxes from online retailers that do not have a physical presence within the state. The definition of &ldquo;physical presence&rdquo; (or &ldquo;nexus&rdquo;) has been expanding as states seek to increase the scope of collections. It can, for example, include not only having a sales force in another state, but also warehouses, shipping facilities, and other connections.</p> <p>The <a href="http://www.opencongress.org/bill/112-s1832/comments" target="_blank">Marketplace Fairness Act</a> would create the first national authorization for states to collect online sales tax. The bill likely will exempt &ldquo;small businesses&rdquo; (defined in the bill as those with online revenue under $500,000). The exemption amount may be changed in a final bill, which likely won&rsquo;t happen until next year (after this year&rsquo;s holiday sales season).</p> <p>Amazon, which had $34 billion in online sales last year, has come on board to support the measure. Some small business groups, as well as eBay, oppose it because of the added administrative cost it likely will entail. However, in the end, it would mean that whether a business operates locally or across state lines, it would collect sales tax on its goods and services.</p> <p><b>Final Word</b></p> <p>Stay abreast of developments on the federal and state level that can have an important impact on your business. You can keep tabs on developments that may affect your business through the <a href="http://www.nfib.com/" target="_blank">National Federation of Independent Business</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/barbara-weltman">Barbara Weltman</a> of <a href="http://www.wisebread.com/small-business/what-s-congress-up-to-4-new-measures-that-may-affect-your-business">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">The 5 Best Credit Cards for Small Businesses</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/no-signal-5-quick-ways-to-boost-your-cell-phone-reception-updated">No Signal? 6 Ways to Boost Your Cell Phone Reception</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-if-i-skip-my-taxes-this-year">What If I Skip My Taxes This Year?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-getting-charged-by-a-text-message-scam">Are You Getting Charged by a Text Message Scam?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Small Business Resource Center cell phones contractors internet sales tax online sales tax Sales Tax small business tax law telecommuters Mon, 21 Nov 2011 19:26:13 +0000 Barbara Weltman 788827 at http://www.wisebread.com