How Good People Solve Bad IRS Problems - Nick Nemeth - Manual / Resource - Page 31
End Your IRS Problems
If you are Self-Employed -your opportunities to hurt
yourself with the IRS are limitless. The problem is that
no one takes any tax withholdings out of your checks
... so you can keep it all.
This sounds great... because we all know it’s more fun
to have money than not, but in the end, it’s a killer.
Here’s a very well-kept secret at the IRS. If you are
self-employed, IRS employees are never going to
understand you. They come from the world of job
security and regular paychecks with withholding taxes.
Self-employment is different. Anything is possible.
You can make a lot of money for one month and make
nothing the next month. IRS employees just don’t get
that.
You may love the freedom that being self-employed
brings but, overall, you may not be that disciplined
when it comes to paying your taxes.
The following is a good method to pay your future
taxes. It will help you accomplish two things:
First, if the IRS sees that you are now paying as
you go (Estimated Taxes), they will think you have
changed your ways, which makes you less likely to be
a problem taxpayer in the future. This helps a lot when
you are negotiating anything with the IRS.
Second, this method will provide you the easiest way
possible to pay the IRS during the year without any
forms or even a calculator.
Here it is ... whenever you get a check or cash from a
customer as payment to you for services or products,
you should immediately take 20% of the check or cash
and send it to the IRS for this year’s taxes.
The 20% number may be a little high or low ... but if
you’ve never made any Estimated Tax Payments, it’s a
starting place. You can always change the percentage
later.
You need to take this 20% amount from every check
or cash amount you receive and send that amount in
a check or money order to the IRS with your name,
social security number, and the words “l 040ES Tax
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