Just so you know you're not alone, we thought we'd outline the most common reasons for falling behind on taxes in order of prevalence:
Number one reason: Self employment - whether you are a doctor, a truck driver or a massage therapist - the burden of paying social security taxes (15.3% of your net income) as well as Federal taxes is the most common reason for hiring us for representation.
Number two reason: IRA/401k early liquidation -You ran into trouble ... you lost a job, had to pay for something in an emergency (school) or tapping the funds in your 401k early was just too tempting. Withdrawals from 401ks or IRAs are a pretty normal reason for owing back taxes plus the 10% penalty for early dispersement.
Number three reason: W2 under withholding - You just got into the habit of enjoying bigger paychecks so failed to adjust your W4 back to normal (at HR). The taxes piled up.
Number four reason: Financial windfall (property sale, lottery, business sale, sports-match purse or stock sale) Big payouts can put the wool over your eyes and have you forget about the tax obligation. Just ask boxers like Joe Louis. Imprudent management of the windfall can lead to owing a bunch of taxes.
