Everyone pays taxes. If you have income, you pay taxes. You also pay taxes whenever you buy something. The biggest taxes however are taxes paid on income. Taxes are important because it funds the services provided by the state to its citizens. The federal government uses your taxes to fund Social Security, national defense, health care and other social services including housing and stamps. In short, taxes are what make a country operate.

The IRS makes sure every citizen pays taxes. Furthermore, the IRS also makes sure that everyone pays the right taxes. If you try to mess around with the IRS you will be in deep trouble because they can definitely track you down. There are two ways to get into trouble with the IRS. Either you underpay your taxes or you delay or not pay your taxes at all.

Underpaying your taxes is a dishonest way of paying taxes. Most taxpayers however claim that they did not have a deliberate intent to underpay or be dishonest in paying their taxes. If you underpay your taxes, you will be subject to underpayment penalties and in some instances a tax audit. Underpayment may come in the form of not declaring your exact gross income and claiming more deductions than you are actually entitled.

To avoid underpayment tax penalties

To avoid tax penalties due to underpayment, remember that the United States has a pay-as-you-go-tax system. This means that as you receive or earn income, you need to pay taxes. You can pay taxes through the withholding tax scheme wherein taxes are automatically withheld from your income or through estimated tax payments. If you do not pay the right tax or are not honest in paying your taxes and the IRS catches up with you, you will need to pay tax penalties for underpayment.

There are exemptions to the tax penalties for underpayment. If your underpayment is less than $1,000 after deducting your withholding taxes and credits. You are also exempted if you have paid at least 90% of your tax due for the current year or 100% of the taxes you paid for the previous year, whichever is the lesser amount.

To Avoid Tax Audits

The main reasons taxpayers who have paid taxes receive notices from the IRS is because of math errors. The moment you receive a letter from the IRS and you are sure you paid the right taxes, double check on the additions and subtractions for errors. There are instances when IRS employees overlook the numbers or the wrong numbers are encoded on the IRS system. If the IRS has made an error, notify them at once.

Claim only the dependents and deductions you are qualified to claim. Some taxpayers over-claim dependents and claim more deductions than they are qualified to claim to pay lesser taxes. The IRS will be able to notice this. A perfect example could be in claiming qualified dependents. Only one taxpayer can claim a particular dependent. No two taxpayers can claim the same dependent. Take the case of a minor child. Only the father or the mother can claim the minor child as his or her dependent. When both parents claim the same child as dependent, a tax audit will be performed to determine who among the parents have the right to claim the minor child as dependent. A tax audit is the one of the worst mess you can get into with the IRS. The other being not paying your taxes at all.

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Author Bio: Seomul Evans is SEO services consultant and content writer for leading Dallas Tax Attorney. Visit the site to know more about Dallas IRS Help.

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