May 26, 2020

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

There are many reasons why you might owe a tax balance when it comes time to file your taxes. You may wonder how this could have happened, and you may not even be sure of what you can do to avoid the same problem next year. There are solutions to ensure you don’t accrue a liability when you file in the future; here are the five most common reasons why you might owe a tax balance and how you can prevent owing the IRS again come next tax season.

  1. You didn’t withhold enough from your pay. Double check your federal and state withholdings on your paycheck to see how much is taken out every time you get paid. The IRS offers tools for taxpayers to use when they want to adjust their withholdings but don’t know how much to take out.  
  2. Income that is not subject to withholding. If you invest in stocks, sell stocks, or even if you receive unemployment benefits, this will make your income appear to be much bigger than it actually is. This could potentially lead to you owing a tax balance when you file your taxes.
  3. Failure to make estimated tax payments. If you are self-employed/1099 earner, you typically don’t have taxes withheld from your earnings. It is up to the taxpayer to determine how much taxes they should be withholding and making these estimated tax payments to the IRS either monthly or quarterly.
  4. Filing Changes. If you’ve had big life changes within the last year such as getting married, divorced or having a dependent, it can affect your filing status and what credits/write-offs you’re eligible for.
  5. You filled out your W-4 wrong. If you just got a job or are in the middle of a job change, it’s important to carefully fill out your W-4 information. A common mistake that a taxpayer makes when filling out this form is failing to put in their correct withholding, which could lead to owing a tax balance at tax time.

If you need tax help, contact us for a free consultation.