IRS Tax Return

Every time you earn income the IRS expect you to declare it as part of your earnings. At the end of the financial year you add up your total amount of income and declare this figure on your IRS tax return.

Withheld Tax Payments

If you work for an employer then tax is usually withheld from your gross salary before you receive the net figure and then paid to the IRS by your employer. You might also find that income tax is also withheld from several other types of income you receive, like pensions or unemployment payments.

When you fill out your IRS tax return, the amount of gross income you receive determines the amount of tax you need to pay. It is possible for some people to actively reduce the amount of gross income that is shown on your IRS tax return by claiming deductions for work-related expenses through each financial year.

Estimated Tax Payments

Self-employed people don't usually have tax withheld from their income payments. They receive their money directly from clients or customers and then are required to pay estimated tax payments.

This can be a tricky area for many self-employed people as the amount they can earn may vary greatly from month to month, depending on sales or business volume.

Insufficient Withheld Tax Payments

When you fill out your IRS tax return, you'll be asked to add up the total amount of income received throughout that financial year. You'll also be asked to add up the total amount of withheld tax payments that were paid to the IRS on your behalf by an employer, or that you paid through estimated tax payments throughout the year.

If the amount of tax paid is not enough to account for the amount of income you declared, then you may receive a tax bill to make up the shortfall, called a tax penalty.

However, if you paid more tax throughout the year than you needed to then you could be eligible for a tax refund.

Avoiding a Tax Penalty

You don't have to wait until you fill in your IRS tax return to pay a tax penalty. In fact there are some things you can do throughout the financial year to reduce your chance of receiving a tax penalty. You can ask your employer to take a little extra tax from your salary through the year or you can make voluntary payments to the IRS through the year.

Lodging Your IRS Tax Return

While it's possible to lodge your IRS tax return yourself using the secure online system, you might prefer to pay a qualified tax agent to prepare your return for you. The benefits of paying a professional to help you can mean finding more tax deductions to help reduce your taxable income further than you could on your own.

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Irs Tax Return

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IRS Tax Return

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