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Unpaid taxes could ruin your financial health

August 4, 2014 by · Leave a Comment 

Unpaid taxes can get you in financial trouble in many ways. The IRS is relentless when it comes to collecting taxes and it has many powers that it can use causing you a financial ruin. Not just the past due taxes, the IRS will add penalties and interest too. Some say these two together can exceed the interest rate charged on your credit card balance.

Pay your taxes in full and on time to avoid penalties and interest. If you are unable to pay your taxes due in full, still file on time and choose a payment plan to pay the balance. You may still be subject to interest payments but not penalties.

Refusing to file a return may ruin your financial health. Any action taken by the IRS may result in refusal of your loan applications, levy your wages, and even file a tax lien.

In order to avoid tax time surprises, make sure your employer deduct adequate taxes from your salary. Do not claim more exemptions than what you think is adequate to cover your tax bill. If your employer is not deducting taxes from your compensation, make sure to set aside enough funds to cover yearly tax bill. That goes for Federal, state as well as local taxes.

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