As tax season draws near, people who are self-employed in Michigan may be dreading the back taxes that will be owed to the IRS. It is a common practice to save up money with the intent of being able to pay off the taxes owed in one lump sum; however, if the amount owed end up being greater than what someone has saved up, it can create a lot of stress and may require negotiating a payment plan or offer in compromise with the IRS. One way that people may be able to avoid being surprised is to simply find out how much they owe before it is even time to file taxes.
One way that people may try to figure out how much they will owe is to look at the federal and state income tax rates that will apply to them and calculate based on their expected or present income. Smart Asset reminds that the total income tax can range from anywhere from 37% to 10%, depending on the individual.
The problem with this method is that it can be complicated to figure out what numbers to use and if there are any exemptions to keep track of. If someone uses the wrong values or makes a mistake in calculating, he or she can end up anticipating the wrong amount of taxes.
Just ask the IRS
Tax Debt Help points out that the simplest and most straightforward way to find out what taxes are owed is to just call the IRS during their operating hours. While the disadvantage to this is that an inquiry will only yield the current balance owed, the person asking can at least know that the information about the present balance is definitely accurate.