| For example, in recent years the IRS has increased its | | | | income tax on the money withdrawn.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