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4_Reasons_People_Get_Into_Trouble_With_the_IRS

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					Title:
4 Reasons People Get Into Trouble With the IRS


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328


Summary:
You don't want to mess with the Internal Revenue Service. One small mix-up when handling your finances
can cost you big.



Keywords:
4 Reasons People Get Into Trouble With the IRS



Article Body:
You don't want to mess with the Internal Revenue Service. One small mix-up when handling your finances
can cost you big.


For example, in recent years the IRS has increased its filing of levies, liens and wage garnishments. In fact,
in 2004 alone, approximately 2.5 million levies were filed.


The experts at JK Harris & Co., one of the nation's largest tax resolution firms, offer this list of common
ways people get into trouble with the IRS.


1. Filing too many exemptions. An exemption gives you a major tax deduction, and some taxpayers can't
resist the temptation to report more exemptions than they're entitled.


You can only claim exemptions for yourself, a spouse and for all "dependents." Dependents have to meet
specific criteria, however, so make sure you follow the IRS guidelines so that you don't mistakenly file an
extra exemption.


2. Being unaware of taxes levied for early withdrawal from certain retirement plans. If you withdraw from a
retirement fund such as a 401(k) or IRA before you're 59 1/2, you may face a 10 percent federal penalty on
your investments, as well as a state penalty and an income tax on the money withdrawn.


3. Not paying enough taxes when self-employed. Many people who own their own businesses don't know
how much they have to pay in taxes. The tax structure for a self-employed person - what to pay, how to pay
and what can be deducted - is decidedly complex, so it's easy to become confused.


4. Not paying taxes on winnings. It is necessary to report all gambling winnings, including winnings from
lotteries, casinos and horse races, as income.


For people who are in trouble with the IRS, there are various programs available that can provide debt relief
if a taxpayer qualifies. JK Harris helps its clients determine if they meet the requirements for one of these
IRS programs. Its staff includes former IRS agents, certified public accountants, attorneys, enrolled agents
and other experts that offer tax services, financial planning, small business services and other assistance.




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