If, after filing your business tax return, you learn that you are subject to some tax liabilities and still need to pay the IRS more in taxes, don’t fret. Listed below are three different methods that allow you to easily pay what you owe on time and minimize your tax liabilities.
Key Takeaways for Tax Liabilities To Pay the IRS
- Tax liability is the whole amount of tax dues owned by an authority by an organization, person, or other.
- Sales tax, Income tax, and capital tax are all tax liabilities which you have to pay the IRS.
- Taxes are intrigued by different authorities, such as state, local, and federal authorities.
- Taxes result in the funds to pay for services for the country’s betterment.
- Your tax liabilities can be decreased by claiming exemptions, tax credits, and deductions.
Understanding Tax Liability
Organizations like the state, federal, or local government impose taxes on an individual and use the funds to pay for the country’s services, military, social programs, and repair roads.
Organizations withhold salaries, Medicare taxes, and Social Security from employer’s earnings and send them to the government authority. An individual’s tax liability doesn’t just add to the current year but, in fact, to any years for which taxes are possessed. If a person’s previous year’s taxes are due, then those will also be added to the tax liability.
How to Calculate Tax Liability to Pay the IRS
The most common tax liability for US citizens is on their earned income. For standard and federal deductions, you can use Tax brackets issued by the Internal Revenue Service (IRS).
The standard deductions for 2022 were:
- Single filers $12,950
- Married couples filed jointly $25,900
- Married couples filed separately $12,950
- Household heads filed $19,400
The standard deductions for 2023 were:
- Single filers $13,850
- Married couples filed jointly $27,700
- Married couples filed separately $13,850
- Household heads filed $20,800
The Standard deductions for 2024 are:
- Single filers $14,600
- Married couples filed jointly $29,200
- Married couples filed separately $14,600
- Household heads filed $21,900
Electronic Federal Tax Payment System
Electronic Federal Tax Payment System (EFTPS) is a system of paying federal taxes electronically using the Internet. To be able to use EFTPS, taxpayers must enroll in the system. Upon enrollment, taxpayers enter their business information. This includes contact information and details of the financial institution where the funds are withdrawn from. Taxpayers will receive an EFTPS PIN to use along with the EIN and password during log in. EFTPS accepts all types of federal tax payments, including income, employment, and estimated and excise taxes, acting as an optimal gateway for taxpayers to stay tax-compliant and limit their tax liabilities.
Electronic Funds Withdrawal
Electronic funds withdrawal (EFW) is an integrated e-file or e-pay option. This is an option that is only available when filing your business’s federal taxes using a preparation software or through a tax professional. Under this option, taxpayers allow the IRS to transfer funds from their account to the Treasury’s account. This method requires taxpayers’ banking information, such as the bank name, account number, routing number, and account type. When e-filing the tax return, the tax preparer submits the information needed for EFW. The taxpayer can expect their funds to be withdrawn on the date on which the EFW form specifies.
International Wire Transfer
An international wire transfer is a great option for international taxpayers who don’t have a US bank account. This allows the user to transfer funds directly from their foreign bank to the Treasury’s account. With the international wire transfer option, international taxpayers can ensure that their taxes are paid on time and they’re not subject to any tax liabilities.
Taxpayers using this option should complete the Same-Day Taxpayer Payment Worksheet with the proper tax type code and tax period. They then must bring it to their bank for processing. The tax period and tax type code are important so that the IRS will be able to apply the payment to the correct IRS tax liability.
Please note that to be effective, the foreign bank must have a banking relationship with a U.S. Bank. While this is available for anyone with a foreign bank account, it is not recommended since it is costly compared to other options.
Other options available are IRS Direct Pay, IRS2Go, and pay by debit or credit card, but these options are not available for payments of tax due on Form 1120 US Corporation Income Tax Return.
How to Reduce Tax Liability To Pay the IRS
Taxes can be emitted for the take-home amount, but it’s something everyone has to deal with to fund the programs we rely on. However, there are a few tips to reduce the taxes you pay.
Credit and Deductions
Deduction lessens your taxable amount, and credit reduces the sum of tax you owe. Here are some credits you might able to take:
- Salary and savings
- Family and dependent
- Home landlord
- Education
- Healthcare
Some deductions are:
- Business expenses
- Using your vehicle for business
- Itemized debits
- Education debits
- Health debits
- Investment debits
Contribute to a Retirement Fund To Pay the IRS
Granting a retirement fund helps you save for your retirement, and if planned carefully, you can reduce your liability. You can contribute a fixed amount per year to your IRA. By contributing to your tax liability, you will only need to understand how much amount you want to be taxed in retirement by beetling your wages and withdrawals. A traditional IRA can decrease your tax payments as taxes are deferred, and you will have less tax liability in the future.
Can Cleer Help Me Pay Taxes on Time and Minimize Tax Liabilities?
Yes! At Cleer Tax, our dedicated team is committed to addressing the unique tax and accounting needs of your business. We provide comprehensive tax advisory services tailored to your specific needs, covering every aspect of compliance and optimization. Our mission here at Cleer Tax is to ensure that your business seizes every available opportunity, leaving no stone unturned when maximizing your tax benefits and minimizing any potential tax liabilities.
Cleer provides Corporate Income Tax Packages encompassing federal and state income tax filings for a hassle-free experience. We also offer all-inclusive bookkeeping packages, which include your monthly statements plus your federal and state tax returns. All of Cleer’s packages are designed to set up your business for success and keep any tax liabilities at a minimum.
If you have any questions about your business’s specific tax obligations or other filing requirements, schedule a consultation to discuss them further, or feel free to contact us.
