Wanting to reduce one's tax liability is normal. Most Connecticut residents take steps to do it. No one wants to see the government get more in taxes than it should. However, the steps one takes to limit his or her tax liability can cause problems if one is not careful. For instance, failing to declare all taxable income could have significant criminal and/or financial consequences if the Internal Revenue Service figures it out.
January is quickly coming to a close, and many Connecticut residents are gathering all the necessary paperwork they need to get their taxes filed. While they are doing their part as tax season gets underway, so are scammers. More tax scams than usual pop up between now and mid-April than any other time of year.
Thanks to a lack of funding, the Internal Revenue Service has been falling short on its duties. The IRS has been expected to operate with the fewest number of employees possible, and its agents have been unable to keep up with taxpayers. How has this been hurting Connecticut residents?
Most Connecticut residents are always on the lookout for ways to lower their tax liabilities. No one wants to pay Uncle Sam more than they have to, so it is understandable. Unfortunately, there are only so many ways that one can do this without raising any questions over legality. For business owners or those who have investment properties, tax-free exchanges are one way to avoid overpaying taxes on capital gains from the selling of property.
Owning investment property can be a good way for Connecticut residents to build wealth. Before diving into the investment property world, though, it is good to understand the tax consequences that come along with doing so. Not all are bad, but some are misunderstood.
Families take care of each other, at least most do. Sometimes, this requires offering financial assistance. Lending money to family is not without its consequences. There are even tax consequences of which some Connecticut residents may not be aware.
After filing personal taxes, the Connecticut Department of Revenue and the Internal Revenue Service have several years in which they can look for issues with one's filing and seek more money. When an unexpected tax bill arrives in the mail, it can be rather stressful. Those who believe a mistake has been made might be tempted to ignore the tax bill, but that will only cause problems. If a tax issue arises, it is best to face it head-on as swiftly as possible.
Convertible virtual currencies have been around for a while now, and there are likely numerous Connecticut residents who have some in their financial portfolios. In 2014, the Internal Revenue Service released a statement saying all CVC-related transactions need to be reported when filing taxes. Up until now, the IRS has been relatively lax on enforcing this rule, but that is changing. It is said that the IRS will be purposefully targeting CVC users to ensure they are meeting their full tax liability.
Certain Connecticut residents have to pay their taxes, not just once but four times a year. Freelancers and business owners typically do not pay taxes with every paycheck. If they make over a certain amount in a year, they must pay estimated income taxes quarterly or face having to pay penalties on top of what they owe.
The 2020 tax season is not too far off. That means that Connecticut residents only have a short time left to address some issues so that there are not problems when they eventually file their income tax returns. What are some of the common problems people are expected to deal with this coming tax season if they choose not to take action to address specific issues now?