UNITED STATES—Are you getting your paperwork in order? You might say why do you ask? Well tax season is upon us and that W2, 1099, those financial statements and so many other tax documents that are needed for preparing your taxes you should have received or you are starting to receive them. The question of the hour is have your crossed all your ‘T’s’ and dotted all of your ‘I’s?’
I would say most Americans are pretty solid about making sure they are doing the right thing, but you have those who are doing things a bit dirty or illegal. Filing false tax returns, utilizing a SSN that does not belong to you and so much more. That is beyond frustrating. I have been a victim of identity theft and it could be a massive problem for the person who is trying to file their taxes. Why? You have to wait until the IRS completes their investigation on that false return that was filed in your name before you can be compensated if you are expecting a return in the mail or to be deposited into your bank.
As a result, you’re waiting months to get a refund from your taxes if you’re expecting one. Then you have other issues like paying penalties or fees that perhaps you should not have been levied with. It is an absolute nightmare, one that will haunt you for years to come. The bad thing: you’re delayed with your taxes. The good thing, you’re provided with a security pin for future filings that prevents people from filing taxes in your name without that PIN.
It is an extra layer of security that I think is great and the IRS should offer that to all taxpayers to cut back on fraud. My biggest frustration is I want to ensure the person who filed taxes under my name who shouldn’t have pays for the crime they committed, if they do you’re never made aware of because the IRS doesn’t release those details to you.
Now let’s talk about the important stuff, do you owe or are you getting a refund? For most Americans they want to get a refund because it’s a lump sum of money that you only receive once a year in most cases. I have been told by many accountants and CPAs that if you’re getting a refund than you’re doing something wrong. Your goal should be to always break even, as that means you’re getting more of your money throughout the year. A lot of people utilize those funds to put a down payment on a house, to purchase a car, pay for a medical procedure, pay off significant debt, plan a vacation or splurge a little bit on an item that you have been eyeing for weeks or months, hell, even years.
The key is you need to save something. Lots of Americans do not save anything if they get a refund. A lot get that refund and just spend it all without thinking about the future. You never know what might transpire; think about what transpired in 2020 with the COVID-19 pandemic? The government did indeed step in but it did not happen right away, and it results in lots of people finding themselves in situations where they didn’t know when they would receive their next paycheck, how they would place food on the table, how they would pay bills and have basic essentials.
I’m a firm believer it is ok to treat yourself, but at the same time you have to consider planning for the future at the same time. Now on the flipside, you can find yourself in a situation where you have to pay Uncle Sam. That is never fun and if you don’t have the money stashed away or ready to cut that check, it can be stressful and worrisome. So if you’re not having taxes taken out of your checking or if you’re self-employed or an independent contractor, you might want to be planning ahead of tax season, by putting a little bit of money away each time you get paid so when you do file your taxes and you have to pay Uncle Sam you have those funds ready and prepared to go.
Owing the government is never fun, but at the same time it is NOT something that you can avoid. If you fail to pay your taxes it could get you in massive trouble. Garnishment, levies, the list goes on and on and I always tell people PAY YOUR TAXES NO MATTER WHAT! Do not try to cut corners and not do what every other American does. If you’re paying your taxes, you have your paperwork in order; you shouldn’t run into any problems. The moment you try to avoid paying your taxes or avoid filing because you think no one will find out you will learn sooner than later, Uncle Sam is the last person you want to play with. Prepare in advance, do the right thing and you should have nothing to worry about.
Written By Zoe Mitchell