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Get Rid Of Tax Debt In A Way Most People Don’t Know

Get Rid Of Tax Debt In A Way Most People Don’t Know

While the

global economy continues to showcase signs of considerable growth and diversification, personal debt remains a huge issue in developed countries throughout the world. This is a key legacy of the Great Recession, during which time numerous citizens defaulted on their financial agreements and triggered additional, interest-related debt. Tax debt is another key consideration for citizens in the modern age, especially when you consider the rising number of freelancers, independent contractors and part-time financial traders who are active in 2014. This demographic is ultimately responsible for conducting its own tax assessments and calculating repayments, and many have found themselves impacted by a fundamental lack of knowledge and awareness. coins_refund

    It is important that you look to reduce your tax debt quickly, while also keeping a level head and avoiding such issues in the future. Consider the following steps towards achieving these goals.

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    1. Understand the nature of your debt and identify key resources.

    Before you can start to diminish your tax debt, it is first important to understand its nature. Just as there are multiple tax laws and codes, so too there are several different types of debt and methods of potential repayment. Understanding the full extent and structure of your debt is crucial, as from there you can determine the best and most expeditious resolution. If you are looking for a place to start, consider contacting your country’s revenue and customs regulatory body or an independent website for more impartial advice.

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    2. Create a clearly defined plan of action.

    Once you have researched your debt liability and all viable resolutions, you can begin to create a clearly defined plan of action. This can include one or several points, so long as they are relevant to your debt and help you to move towards a resolution. It is crucial that your plan includes maintaining open lines of communication with the governing tax authority, as this enables you to discuss your options and agree on an amicable solution. Whether this involves making estimated quarterly repayments while your case is being investigated further, requesting a payment extension or scheduling installments, you will at least be able to create a foundation from which your tax debt can be diminished.

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    3. Ensure that your plan is practical and manageable over Time

    Once you have established a plan that is agreeable with the governing tax authorities, the next step is to ensure that this is manageable over time. Execution is critical, as even the most detailed and proactive plan of repayment is meaningless unless it can be sustained. So even if you have managed to negotiate an amicable installment plan to settle your tax debt, for example, you must carefully analyze your income and existing repayments to ensure that this is viable. The same principle applies if you commit to making estimated quarterly repayments, while anyone who requests an extension must guarantee that they can meet the full cost of their debt and any affiliated interest within the specified time frame.

    4. Seek help from a tax debt professional before executing your plan.

    When dealing with a governing tax body such as the IRS or HMRC, it is absolutely imperative that you deal in precise fact and meet deadlines without fail. Even though authorities such as the IRS remain flexible and are willing to allow payment extensions of up-to 120 days, for example, the failure to repay within this time frame will be met with a far more serious response. Given the need to comply with tax legislation and ensure that you make repayments according to exact terms of your agreement, it may be worth seeking advice from a tax debt professional before your finalize and execute your plan. While this may require an initial investment, it will potentially help you to reduce the cost of your repayments and make longer-term tax savings.

    5. Learn from previous mistakes and change your behavior for the future.

    On this note, it is also important that you look to learn from your mistakes and ensure that you do not incur future tax liability. Acquiring knowledge is key, so you should also look to review individual income streams and how your earnings are structured in relation to tax. If you are someone who looks to boost your income though financial trading and speculation, for example, you may want to consider considering investing in derivatives that are free from capital gains tax. In the UK and similar European countries, any earnings generated through activities such as currency trading are ineligible for taxation, as these practices are categorized as informed gambling. So long as this is not your sole or primary source of income and you are able to access a real-time price chart while trading, it is therefore possible to maximize your earnings without falling foul of tax legislation.

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    Published on September 17, 2018

    How Being Smart With Your Money Leads to Financial Success

    How Being Smart With Your Money Leads to Financial Success

    Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

    With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

    So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

    1. Avoid being “penny wise but pound foolish”

    It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

    You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

    So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

    2. When you want something big, wait

    Impulsivity can get you in trouble in most aspects of life. Finances are no different.

    It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

    We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

    A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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    So, you get the itch.

    You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

    Here’s where you have to take a step back.

    Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

    Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

    It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

    The impulse faded. And you just saved yourself a ton of money.

    3. Live smaller than you can afford

    You finally get that big raise. And you want to celebrate – and why not?

    You’ve been looking forward to this forever. And after all, it was all due to your hard work.

    That’s fine, splurge a little. However, make it a one-time deal and be done.

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    Don’t get caught in the trap that just because you’re now making more money, you should spend more.

    Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

    The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

    But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

    4. Practice smart grocery shopping

    Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

    But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

    Create a grocery budget

    Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

    Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

    I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

    Make a list… and never deviate

    Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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    You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

    These impulse decisions will lead to overspending, which will derail your grocery budget.

    Eat before going grocery shopping

    It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

    If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

    After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

    Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

    However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

    This makes it much easier to stick to your grocery plan.

    5. Cancel your gym membership

    Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

    The average gym membership costs around $60 per month. That’s $720 a year.

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    Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

    I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

    Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

    Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

    For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

    Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

    There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

    It’s baby steps… And baby steps can start now!

    I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

    Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

    The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

    Featured photo credit: Unsplash via unsplash.com

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