What common tax problems do filers sometimes face?

On Behalf of | Nov 3, 2021 | Blog, Tax Issues

Taxpayers often hope their returns process swiftly and without any problems. Unfortunately, not every federal return filed by a Pennsylvania resident avoids problems. Some issues could be minor ones that end up resolved without much trouble. Then, some taxpayers find themselves facing criminal fraud charges. Regardless of the problem, a taxpayer might find it necessary to address things without delay.

Typical problems taxpayers deal with

Taxpayers might find themselves owing money after filing a return. Some know they owe a balance but are unable to make full payment by the due date. Others receive an unexpected letter in the mail that reveals a balance owed and the reason. The IRS provides remedies for taxpayers unable to cover their obligations, including payment plans and extensions.

One reason people owe money is they made a math error. The IRS may catch the mistake and correct the return. A “balance due” notice might soon follow, although some math errors could lead to a larger refund.

Taxpayers may face penalties, and “failure to pay” is one of the most common. The IRS levies this penalty against balances owed, along with interest. Penalties for failure to file a return or punitive civil penalties may further drive up the balance.

Other problems a taxpayer may experience

Underreported income tax issues might arise when someone’s 1099 and W-2 figures reported to the IRS do not match what the taxpayer stipulates on the return. A taxpayer may dispute the underreported amount under certain circumstances, such as when an identity theft worked under the taxpayer’s social security number.

Audits may happen for any number of reasons. Resolving a simple audit could involve little more than providing information through the mail. Complicated audits may lead to in-person meetings.