When it Comes to Owing the IRS, Practice Never Makes Perfect

At a young age, you were perhaps motivated by the phrase, "Practice makes perfect." Cab drivers aside, there is truth to that adage. If you keep doing something, you are bound to get better at it.

Here is one area however that you absolutely want to avoid the application of that saying -- Owing on your federal income taxes.

Surprisingly, a large number of taxpayers who owe the IRS do not owe just on one tax return. They owe year after year after year.

Why is this, and what can be done to eliminate escalating or pyramiding tax debt?

Many individuals find themselves with an unpleasant surprise come tax time. They owe on their tax return and do not have the funds on hand to make a full-payment. The solution? Unfortunately, whether out of inadvertent hesitancy or by design, they do nothing.

Notices start piling up, and before long, the balance has close to doubled because of penalty and high interest charges. A continued delinquent balance ultimately is turned over to the IRS collection department, with enforcement actions perhaps being the regrettable step that finally kicks a taxpayer into gear.

Here are two simple things you can do, right now, to ensure you never owe the IRS again.

Change your tax withholding

Most taxpayers owe the IRS simply because they do not have enough federal taxes taken out of their pay. It is your employer's obligation to do this, but it is your responsibility to ensure that you have the appropriate amount deducted each pay period.

This election is made via Form W-4. The W-4 is set up with numerical elections that establish the amount of income you are exempted from having tax withheld on. The higher the number you choose, the more exemptions to tax you take.

Just because you are perhaps entitled to a higher tax exemption amount does not mean that you should elect the maximum. Having less withheld means more in your pocket each pay period, but less withholding available when you file your taxes. You may end up costing yourself in the long run, as you now have an unmanageable tax bill.

Based on your current earnings and filing status, you can check to see if your withholdings are in line with your income. Use an interactive IRS tool, the Withholding Calculator, to check your existing tax withholdings.

Start making estimated tax payments

If you are self-employed, the challenge is to make estimated tax payments to the IRS.

We say it's a challenge because as a self-employed person, you need to have the discipline to set aside a portion of your gross earnings each quarter to cover your federal tax obligations. No one is going to do it for you.

Estimated tax payments should be made approximately every three months via the 1099-ES voucher. You can obtain blank forms or order pre-printed vouchers at irs.gov.

If you expect to owe at least one-thousand in tax from your gross self-employment earnings, then the IRS will require you to make estimated payments throughout the current tax year. Failure to do so may result in a penalty, on top of any other penalty or interest charges for filing a tax return with an unpaid tax balance.

More from this Contributor:

Should I make Estimated Tax Payments to the IRS?

10 reasons why taxpayers owe the IRS

How to determine your correct amount of federal income tax withholding