April 15 has come and gone. If Massachusetts residents failed to file their income tax returns or file for extensions by this date, they could face consequences if they owe money to the IRS. Unfiled tax returns could lead to substantial penalties and interest, among other things.
As a Massachusetts business owner, executive or bookkeeper with employees, you know that you are responsible for keeping a portion of each worker's check for withholding and Social Security taxes. After putting these amounts in a trust, you are to transmit them to the IRS. When the agency believes you failed to fulfill this duty for some reason, it could find you personally responsible for a trust fund recovery penalty.
For some Massachusetts residents, earning enough money to live on can present a challenge. For this reason, the state, like the federal government, provides eligible taxpayers with the opportunity to take advantage of certain tax breaks, including the earned income tax credit. However, if filers are not careful, they could risk tax audits through misuse or mistaken use of this option.
With the technology available today, keeping records may not seem as difficult as it did in the past when most things were on paper. However, that does not always resolve the issue of how long Massachusetts taxpayers should retain their tax records. When it comes to taxes and statute of limitations, how long the paperwork should be kept largely depends on the information, but a good rule of thumb would be to keep relevant tax paperwork, including prior returns, as long as possible.
Have you moved to Boston or to another location here in the city recently? Did that move prevent you from knowing that the IRS send you communications regarding an audit, so you failed to appear for it? Perhaps you did attend, but now have new information to provide the agency that could potentially change the outcome. You may be able to file for an audit reconsideration request.
Did you know everything about your family's finances? Did you rely on your spouse to handle it all, including filing income tax returns? If the IRS later comes after your former spouse and you, you may qualify as an "innocent spouse," which means that you may not be held liable for any wrongdoing by your ex-spouse during the marriage.
It just is not always possible for many Massachusetts residents to meet their financial obligations. Medical emergencies, job losses and other catastrophic events can quickly drain any monetary resources a family may have. Another event that can result in an adverse financial event is owing taxes. Fortunately, more than one way exists to deal with tax collection cases.
Many Massachusetts residents find themselves in dire financial circumstances due to IRS obligations. Whether they can pull themselves out of the situation depends on a variety of factors, and some will find that their best debt relief option involves much more than tightening up the budget or trying to work out a deal with creditors. In many cases, the best way to resolve the situation is to file bankruptcy. However, many people believe that taxes and bankruptcy just do not mix.
Almost for as long as there have been computers, there have been scammers and hackers misusing them for nefarious purposes. That remains true to this day, with new scam tactics arising every day.
We’ve discussed previously the importance of proper estimated tax payments if you have a profitable hobby or so-called “side-gig.” It’s understood and fairly well-known that if your side project brings in more than $1000 per year (via cash, check, bank account transfers, electronic currency or other source), you need to report that income, even if you don’t receive a 1099-MISC, W-2 or other similar tax form. You can also deduct qualified business expenses for a side gig just like you’d be able to with a full-time job.