Nobody loves paying taxes, but doing the paperwork to submit your taxes can also be quite a nuisance. Luckily, there are tax preparation professionals who can do this paperwork for you. They'll make sure you are getting all of the credits and deductions you are eligible for so you don't pay more than the government requires.
But even if you hire someone else to do your taxes, it is important to know the basics. You need to know what deductions are, when taxes are due, and so forth. Learn about these and other tax topics as you dig into our blog posts.
If you're struggling with debts, you may feel that they are all equally distressing. But in fact, some debts are more dangerous than others. Tax debts are some of these more hazardous types of debt, and any taxpayer should prioritize getting relief for them. Here are four key reasons why.
1. Tax Agencies Have Broad Collection Powers
Any creditor has certain powers to collect on a debt, but tax authorities have some of the broadest and most significant. Civil creditors must go to court for permission to garnish wages and bank accounts. When given this authority, they are limited as to what percentage they can garnish. The IRS, though, follows a separate path to garnishment and has more automatic authority to do so. They also do not fall under the limits that civil creditors and even child support authorities can take.
Simply hoping to avoid these onerous collection efforts and unique powers is unlikely to be a successful strategy. The only way to really avoid them is to find alternate relief for the tax issue in the first place.
2. Tax Debts Don't Readily Go Away
Civil debts have a much shorter shelf life than tax debts. In certain circumstances, tax debts can be legitimately collected for 10 years or more, whereas the statute of limitations is much shorter for most other debts. Additionally, the burden of proving that a tax debt is no longer collectible or is not legitimate is on the taxpayer rather than the creditor.
3. Taxes Can Affect Job Prospects
Most debts can affect your credit history, which many employers may use when screening potential employees. But a poor credit score is not usually a game-changer when it comes to employment or promotions. However, owing back taxes can be a deal breaker if you want to work in certain fields, such as accounting or government agencies. If your career could include a sensitive position, you'll need to clean up the tax issue as soon as possible.
4. Future Money Can Be Seized
Any collections methods used by civil creditors are limited in future length and scope. But a tax debt puts much more of your future earnings at risk. Future tax credits you need, such as the Earned Income Tax Credit or Child Tax Credits, could be seized if they create a refund. Even your Social Security Income is subject to seizure. Failure to get relief now could leave you in a financial bind for many years.
Clearly, not all debts are equal, and tax debt may be one of the most serious you can encounter. The sooner you find the right kind of relief, the less of your life will be permanently affected. If you are suffering under tax debt, consult tax relief services in your area for assistance.