| For example, in recent years the IRS has | | | | investments, as well as a state penalty and |
| increased its filing of levies, liens and | | | | an income tax on the money withdrawn. |
| wage garnishments. In fact, in 2004 alone, | | | | |
| approximately 2.5 million levies were filed. | | | | 3. Not paying enough taxes when |
| | | | self-employed. Many people who own their own |
| The experts at JK Harris & Co., one of the | | | | businesses don't know how much they have to |
| nation's largest tax resolution firms, offer | | | | pay in taxes. The tax structure for a |
| this list of common ways people get into | | | | self-employed person - what to pay, how to |
| trouble with the IRS. | | | | pay and what can be deducted - is decidedly |
| | | | complex, so it's easy to become confused. |
| 1. Filing too many exemptions. An exemption | | | | |
| gives you a major tax deduction, and some | | | | 4. Not paying taxes on winnings. It is |
| taxpayers can't resist the temptation to | | | | necessary to report all gambling winnings, |
| report more exemptions than they're entitled. | | | | including winnings from lotteries, casinos |
| | | | and horse races, as income. |
| You can only claim exemptions for yourself, a | | | | |
| spouse and for all "dependents." Dependents | | | | For people who are in trouble with the IRS, |
| have to meet specific criteria, however, so | | | | there are various programs available that can |
| make sure you follow the IRS guidelines so | | | | provide debt relief if a taxpayer qualifies. |
| that you don't mistakenly file an extra | | | | JK Harris helps its clients determine if they |
| exemption. | | | | meet the requirements for one of these IRS |
| | | | programs. Its staff includes former IRS |
| 2. Being unaware of taxes levied for early | | | | agents, certified public accountants, |
| withdrawal from certain retirement plans. If | | | | attorneys, enrolled agents and other experts |
| you withdraw from a retirement fund such as a | | | | that offer tax services, financial planning, |
| 401(k) or IRA before you're 59 1/2, you may | | | | small business services and other assistance. |
| face a 10 percent federal penalty on your | | | | |