Remember that feeling of your first paycheck in your hands Remember spending your hard earned money on that first album, cassette tape, cd and now mp3? Do you also remember years after that when your assets were frozen by the IRS, state, or local taxation department? If this has ever happened to you, you are not alone.
When children become old enough to learn about working to earn money there are several opportunities to teach them good habits that they will carry with them through life. Putting the dishes away earns you $5, taking the trash out $8, folding laundry $3 dollars and a bonus of $2 if it’s put away. But what about teaching them about taxation? According to Benjamin Franklin “In this world nothing can be certain, except death and taxes.”1 Parents have taught their children about death during the sad flush of the toilet when the goldfish dies but when do they have the opportunity and the right timing to teach them about taxes? According to Jennifer Woods’ article on Forbes.com “most kids know the word but few understand what taxes are.” It is safe to say that most kids don’t understand the penalties are of not paying taxes either. When teens get their first job hopefully someone has explained what deductions come out of their hard earned wages. When they first do their own individual taxes, unclaimed by their parents, confusion is an understatement. A lesson once taught in Home Economics seems to be laced with questions once applied to real life.
Now flash forward to the part when they filed incorrectly and a few months later they receive a notice in the mail that is hard to understand and since they were never taught about the repercussions of paying taxes correctly, soon thereafter their assets are frozen by a tax lien or wage garnishment. The process can take several months and sometimes years for the IRS to catch up to the non-payment or error, but when they do, it can carry hefty penalties and interest charges. For some tax payers it is a small tax penalty found due to an error in filing and easily cleared up by payment to the local IRS office. If your tax debt is greater than $10,000 you should consider speaking with a tax attorney to assess options which may involve an offer in compromise to dramatically reduce the total debt or setting up a tax payment plan to stop accruing additional tax penalties. According to Topic 201, The Balance Due Collection Process, there are many options to settle the balance of tax debt including installment agreements and direct pay. If the balance is too large to pay and you are unable to pay it in full to the IRS, an offer in compromise (OIC), which is a proposal to the IRS to accept a smaller amount as payment in full, is a viable option. At this point, it may be in your interest to consult a tax attorney who regularly handles tax IRS problems with the IRS, State and local taxation authorities. As with most things regarding taxes there are forms after forms and handling all of them yourself can be taxing, no pun intended. Therefore, it is a good idea to consult with a tax attorney who regularly deals with the IRS and can work to set up an acceptable tax relief solution.
Learning about taxes early can help you to avoid small errors that can be very costly in the end. Teaching our children the importance of earning money, filing taxes and the repercussions of not valuing both should be clear from the time they learn what money is. Covering topics about debt are important too in order to establish and maintain good credit throughout their lives. Jennifer Woods suggests in her Forbes.com article that age 10-12 is a good age to start the discussion of Taxes. If you are just learning about tax debt or options for tax debt relief contact Sheppard Law Offices for more information and tax help.
- Benjamin Franklin http://www.brainyquote.com/quotes/quotes/b/benjaminfr129817.html