Tax Matters - The Top Tax Defenders Blog

Nothing sets the nerves on edge quite like the need to file back tax returns. Deserved or not, the IRS has a reputation for making life difficult. (We will admit they are trying to be nicer.)

There are times when you can do your taxes yourself, and there are times when it’s prudent to hire someone to help you.  It comes down to how complicated your taxes are and your comfort level in dealing with them.

If you haven’t filed your income taxes for a while, you are probably wondering what to do now. Should you continue your habitual non-tax filing behavior? Or should you throw yourself on the mercy of the IRS?

COVID-19 has been at the center of our lives for more than a year. To help with the financial impact of the pandemic, the federal government has passed several laws aimed at providing financial aid to those struggling. But how do these laws affect your taxes? How can you take advantage of new financial relief options?

No one is excited about being audited by the IRS. Even though the IRS has been slammed like everyone else, there is still a chance your return will get flagged for an audit.

The American Rescue Plan Act or ARPA was signed on March 11, 2021, and provides around $1.9 trillion in federal spending.

Is there anything that didn’t happen in 2020?

Toilet paper hoarding? Check.

Wild and crazy Presidential Elections? Check.

Murder Hornets? Check.

When did anyone have time to think about taxes, even if they had a job or a business that survived the lockdowns? At least Uncle Sam said you don’t have to file until May 17th.

Tax law changes all the time. Each year has something new to learn about how much you owe, how much you can save, and what impact the new law will have on your financial life.

Tax credits are like “found money” that turns up when you fill out your tax form. Unlike deductions, credits are awarded dollar for dollar. In other words, if you are eligible for a $300 tax credit, you get $300 off your tax bill—kind of like a sale at the grocery store.

If you could not pay your taxes in full, you owe back taxes to the IRS (and possibly to the state you live in if there is a state income tax). The thing about back taxes is that they accrue interest on the unpaid balance from the time of nonpayment until it is completely paid off. So you wind up paying more than the original amount.