As a resident of Oklahoma and a citizen of the United States, you may be required to pay state and federal income tax. Unfortunately, many taxpayers find themselves facing tax problems when they do not fulfill their tax obligations properly. Understanding the common tax problems that arise can help you to stay in the good graces of the Internal Revenue Service and the Oklahoma Tax Commission.
Seven Common Income Tax Problems Faced by Oklahoma Taxpayers:
What exactly are some of these common tax problems? The following is an overview:
Failing to File Tax Returns for One or More Reporting Periods
While this may seem like an obvious responsibility of a taxpayer, many people fail to file their required returns each year. Filing your returns is just as important as paying the taxes owed. When returns are not filed, you may be subject to penalties and fees.
Failing to File Income Tax Returns in Oklahoma Even Though You Live Out of State
Even if you do not live in Oklahoma, you may still have to file an income tax return in this state. This is true if you worked in Oklahoma and earned more than $1,000 for the year. Similarly, if you are an Oklahoma resident but work in another state, you may have to pay income tax in your home state in addition to the state in which you earned income. Further, if you live in Oklahoma for part of the year, you must file income tax returns and pay income taxes for the portion of the year when you lived in the state.
Failing to Make Estimated Tax Payments
Many people who own their own businesses are required to make quarterly estimated tax payments. This is also true if you work for someone else (e.g. as an independent or 1099 contractor) but do not have income tax withheld from your earnings. Failing to make your estimated tax payments could result in penalties and fees.
Paying Too Little When it Comes to Your Estimated Tax Payments
If you are required to make estimated tax payments, it is important to pay the correct amount. Paying too little could result in additional interest charges.
Missing the Filing Deadline
Even though the due date for your tax returns is generally the same every year, it is surprising how many people miss the deadline. Even if you ultimately file the return late, doing so could subject you to costly penalties and fees.
Filing a Tax Return but Not Paying the Tax Debt Owed
A taxpayer’s obligations each year essentially comes in two parts. First, you must complete and file all necessary tax forms. Second, you must pay the tax owed, in the correct amounts. If you file the return but do not make a payment or otherwise make a payment plan arrangement with the Internal Revenue Service (IRS), you have not fulfilled your tax burdens and may face problems.
Failing to Report the Income of Your Business
Just as an individual is required to pay taxes, many businesses are also required to file income tax returns. Ignoring the tax obligations of your business is likely going to be a costly mistake. Enlist the assistance of an experienced tax advisor if you need guidance handling your business’s taxes.
If you have already found yourself in “trouble” with regard to your income taxes, all hope is not lost. We are here to help. An excellent place to start is to check out our free guide: The Ultimate Survival Guide for IRS Problems.