Seven Deadly Tax Debtor Sins

100-Bill DollarsDo you think it’s difficult to get into tax debt? Chances are you’re committing one of the IRS’s seven deadly sins right now.

1. Not Filing Tax Returns on Time (Sloth)

After the New Year’s ball drops, the IRS gives you four and a half months to file your federal tax return. If you miss that deadline, you risk penalties, interest accumulation and even legal action. It doesn’t matter if you forget, have an honest excuse or are just being lazy. If you are missing records and cannot complete your return by April 15, file an extension with Form 4868.

2. Not Paying All Taxes by April 15 (Greed)

The government demands its share of your income whether or not you can afford to give it up. You may be able to skip out on your tax bill for a few years, but eventually a federal agent will track you down. Instead of ignoring your debt, ask for more time to pay. You can even file Form 1127 to show evidence of a financial hardship. If the IRS grants your extension, you can avoid some interest charges and filing penalties.

3. Living a Lavish Lifestyle (Envy)

After hearing stories about corporations paying zero taxes, you likely want to live that way too. You may switch to an all-cash business or ask your employer to withhold the smallest amount of federal taxes possible. Whether you are truly rich or a poor pretender, living off Uncle Sam’s tax money is sure to get you an audit.

4. Taking Undocumented Deductions (Gluttony)

Never claim more deductions or credits than you truly deserve. An auditor can easily challenge the amount of your charitable contributions, say that your home office does not qualify for a tax break or ask you to justify some business expenses. Always be ready with a defense, including receipts, cancelled checks, third-party affidavits and even your own written testimony.

5. Marrying a Deadbeat (Lust)

After five years and two kids, your husband trades you in for a showgirl in Vegas. Besides not telling you about the affair, he also fails to mention that he hasn’t paid taxes in a decade. Even though you’ve kicked the guy out of your personal network, the IRS can try to collect against you. You need a good tax defense as an “innocent spouse.” Be ready to show that you did not know about or benefit from the unpaid taxes, that you have been living apart for a year or more or that enforcement of your spouse’s debt would cause unfair consequences.

6. Viewing the IRS as an Enemy (Wrath)

No one likes the Internal Revenue Service, but keep in mind that tax agents are just people doing their jobs too. They make mistakes. If you receive a letter stating an incorrect tax debt, do not overreact. Challenge the judgment in writing and request an abatement, or cancellation. If you do not take action within 60 days, you must pay the tax, even if it’s wrong.

7. Not Working with a Tax Professional (Pride)

The first step to overcoming a challenge is admitting that you have a problem. If your tax returns become too messy or complicated or you just don’t have the time to deal with the hassle, ask a qualified tax preparer for help. By spending a few bucks, you gain peace of mind that the IRS will not come knocking on your door for unpaid tax bills.

About the author: Mary Sutton is a Senior Writer for Fertile Content and a frequent guest contributor to many blogs and to Google+.