Taxes are a source of income for Canadian government through which they are able to fund programs, spend on infrastructure development of the country. The largest tax obligation faced by individuals is the federal income tax. Majority of the individuals are legally obliged to file tax returns with Canada Revenue Agency, short for CRA, for the purpose of disclosing earned income and pay taxes accordingly. However, individuals can end up facing a myriad of tax problems in the process of filing returns and disclosing the income they have earned.
Discussed below are some of the common tax problems that are encountered by people when they are fulfilling their taxation obligations:
Common Mistakes that lead to tax problems
Mistakes in Tax Filings
Confusion can arise because of common mistakes when filing taxes and this can make this procedure a long and complicated one. A taxpayer might over or under calculate their tax because of simple mathematical errors made in a tax return. Penalties may have to be paid later on if the taxpayer has underpaid their tax. Moreover, if the taxpayer overpays and does not notice it, it can mean losing a lot of money. Some other tax filing problems that can also occur include checking the wrong boxes when filling forms or entering the wrong number.
One of the most worrying and complicated tax problems that can be faced by individuals and businesses is that of a tax audit. When foul play is suspected by the taxation authority, they wish to audit the files of the taxpayers in order to unearth any discrepancies that may exist. The CRA will assign tax auditors to sift through the financial data of the taxpayer for checking if the return was filed accurately and additional taxes are calculated.
If taxes are owed by a business or an individual and they are unable to make their payment, there are different collection methods that can be adopted by the CRA to force payment from the taxpayer. Tax liens are one of the most serious legal collection action. If a tax lien is placed on the taxpayer’s property, this can have an impact on the credit score of the taxpayer. Because of the lien, the tax payer will find it difficult to obtain loans or sell any real estate for that matter. Also, the property can also be possessed by the CRA in exchange for the tax owed.
Wage Garnishment and Levies
The procedure in which a portion of the taxpayer?s income is deducted for owed taxes is described as wage garnishment. When wages are garnished, the individual might not be left with a lot of income. Tax levies is also one of the most serious tax problems that individuals can encounter. In this process, the CRA may legally seize the assets and funds of individuals. These assets are taken to pay back the taxes that are owed to the government.
These tax problems can get quite serious if precautions aren’t taken beforehand by the taxpayer. If you are facing any of the problems above, do not wait. Contact experienced tax professionals to control the tax damage to you. Call Tax SOS at 1-877-982-9767 for immediate free consultation!