Tuesday, 26 April 2011

Late Filing Your Tax Returns? Tax Tips for Those Who Know They Will Owe

It’s really easy to fall behind filing your income tax returns, especially if you failed to file because you were unaware that you owe money. Some individuals find the idea of dealing with the Canada Revenue Agency and a tax debt so stressful that they succumb to wilful blindness. They fail to file so that they will not have to face their tax debt.

If you are behind filing your tax returns, the simple truth is, the faster you face it, the better off you’ll be. If you have an idea of what you will owe and it is much more than you can afford to pay, be warned, the Canada Revenue Agency will still demand payment in full and they will pursue the money. This could be done by imposing a wage garnishment, freezing your bank account or by placing a lien on your home.

If you own a home, you have even more to lose. If the sum of your mortgage(s) and your tax debt exceeds the value of your home, you must act fast. If the Canada Revenue Agency places a lien on your home it is very hard to get it lifted. Even if you hire an expensive tax lawyer or file for bankruptcy, once the Canada Revenue Agency has secured its interest through your home, you will have little or no negotiating power. If you are able to raise a lump sum payment you may be able to get the Canada Revenue Agency to postpone their position on title, but make no mistake – as long as you owe the Canada Revenue Agency money, they will not leave your home alone.

If you act and make the difficult but correct decision before enforcement action occurs, you will be one step ahead of the game.

There are a number of programs that have been introduced by the Federal Government that can enable you to deal with your tax debt without facing Canada Revenue Agency enforcement action. In turn, these programs can also keep your home and others assets safe.

If the Canada Revenue Agency has already come after you, these programs will stop most Canada Revenue Agency collection action, including frozen bank accounts and wage garnishments. In the case of a property lien, you must act prior to a lien being placed on your home. Now, if you have a tax lien on your home and the combined total of your mortgage(s) and tax debt is less that the value of your home, you can also be successful at making tax settlements that involve some debt consolidation.

Your financial circumstances will dictate how you are able to deal with your tax debt. If the facts are that you cannot pay and are insolvent, hiring expensive lawyers and accountants will prove to be an exercise in futility. If you have assets to protect, do not go directly to a trustee. They have a responsibility to protect both you and the Canada Revenue Agency.

The best tax advice we can offer is to establish a relationship with a financial consultant who has the experience, expertise and access to government programs that will result in meaningful solutions to your tax problem. A consultant who can also represent you through whichever program you choose.

The April 30th tax deadline is approaching; don’t let another tax year pass you by, call DebtCare Canada at 888-890-0888.

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