Austin & Larson Tax Resolution’s tax compliance services, located near Lansing and Detroit, MI, can assist clients in all matters relating to Federal and State of Michigan taxes, back IRS tax debts, tax audits, negotiation, litigation, and planning. Call us now at 1-866-668-2953 for a free consultation.
Getting into and remaining in compliance with the IRS and State of Michigan is one of the cornerstones of resolving your tax debts and ensuring that you do not owe again in the future. What is tax compliance and what you need to be aware of it when trying to establish resolution on your back tax debts?
Two Important Elements of Tax Compliance
Tax compliance is the combination of two very important elements which are both required by the IRS to establish resolution on your tax liabilities. Being in compliance with that IRS and State of Michigan means that you have filed all required tax returns, and are paying your current year taxes so that you will not continue to owe in future tax years.
The first essential item to tax compliance is filing all back-tax returns and timely filing all of your current and future tax returns. The second essential item to getting in compliance is not having a balance due when you file your current and future tax returns that you are unable to pay. A resolution specialist will contact the IRS to determine which returns have and have not yet been filed. After obtaining this information, we will review it with you to determine whether you had a filing requirement on these periods so we can assist you with filing all of your unfiled delinquent returns. Sometimes the IRS will not be looking for a tax return year because no income was reported to them by third parties. However, this does not mean that you do not have a requirement to file. If you made income in the year, you generally have a filing requirement and need to file a tax return. Not filing a tax return because the income was not reported to the IRS may cause substantial problems for you in the future, including IRS audit, additional tax assessments, and potential legal issues.
The second part of tax compliance is making sure that you are properly paying your current year taxes. This means that you have proper withholding, are running proper payroll, or are paying proper quarterly estimates.
Different Tax Compliance Steps for Different Michigan Taxpayers
For an individual wage-earner, the tax compliance steps are as follows:
- Determine how many exemptions you will have for the current tax year.
- Update Form W-4 with your payroll department to make sure you are withholding the proper amount of taxes from each check so you do not end-up owing taxes at the end of the year.
- If you work for multiple employers, this may bump you into a higher tax bracket. You will need to determine if you need to withhold additional amounts to account for the increased income. Otherwise, each job will calculate the tax based on your income with them and you may not have enough withheld.
For self-employed taxpayer compliance, the steps are as follows:
- Begin keeping proper books and records for your business so you can have an accurate evaluation of how much gross income you have for the year.
- You can then annualize your income to determine how much net income you will have for the year. Please not that if you have a seasonal business, you should make an adjustment for this so you do not under or overestimate your net income by too much.
- The IRS generally expects you to make estimates in the amount of the tax owed in the prior year if you owed greater than $1,000.00.
- Make quarterly estimated tax payments to the IRS by April 15, June 15, September 15, and January 15 of the following year.
- You may also need to send in estimated tax payments on other types of income, such as rental income.
For a business, small or large, the tax compliance steps are as follows:
- If the business is a C-Corporation, it will need to pay estimated tax payments.
- A S-Corporation and a Partnership are both flow-through entities. The tax for them will be paid by the individual.
- If a business has payroll, it will have payroll tax deposits that need to be made. The IRS will notify the business of its deposit frequency. A business must timely make all of its required tax deposits in order to be in compliance with the IRS.
Even though all of these business tax compliance steps may seem straightforward, it can actually be quite challenging to determine what you are going to owe for a tax year and make sure that you have properly paid in taxes for the year to the State of Michigan and the IRS. Bonuses, inheritances, cashing out a of 401(k), and unexpected business fluctuations can all cause serious changes to your tax due at the end of the year. Not understanding the interplay between all of your taxable income may result in a tax bill that you were not expecting and that you are unable to pay to settle this back tax debt. Austin & Larson Tax Resolution can help you stay on the path to getting into and staying in full compliance with the IRS. This is the biggest goal as we want you to not only resolve your back-tax balance, but also to never have to worry about the IRS looking over your shoulder again.
Let our top tax compliance office work with you to prepare and file your back-tax returns for both the IRS and State of Michigan. We will take steps to ensure that you are properly paying your current year taxes and timely filing. Our IRS Enrolled Agents, Tax Attorneys, and Tax Accountants will offer sound and practical tax relief solutions and compliance guidance. Call Austin & Larson Tax Resolution, in Howell, MI, Jackson, MI, and Saginaw, MI at 1-866-668-2953 for immediate compliance help now. Austin & Larson – specialists in tax compliance and successful tax relief solutions.