Penalties regarding Payment of Taxes and late filing, Sugar Land Texas

 Tax day is usually April 15 in the United States, which is when individual tax returns have to be submitted unless it happens to fall on a holiday or weekend, in which case, it becomes the next business day. For Taxpayers who may need more time to prepare their tax return, tax day also represents when they must file for a tax extension, which by doing so grants the individuals an additional six months. Unfortunately, if the tax payers are late filing your taxes or doing your tax payments, the Internal Revenue Service (IRS) charges fines and interest. This fines must be paid by the tax individual before filing the taxes

The Consequence or Penalty for Late Payment and Filing

The penalty for late payment, or consequence for failure to pay, applies to any portion of your federal tax debt that remains unpaid on the due date, which is usually the date of filing the tax. The IRS imposes a 0.5% non-payment penalty for each month or part of a month that the tax will pay, but it cannot exceed 25% of the total tax you are going to pay the IRS.

The penalty for the final presentation is steeper. Just like the penalty for failure to pay, it also applies to any part of your tax that has not been paid since the date of filing. The penalty is 5% for each month or part of a month that your tax return is late, also with a maximum penalty of 25%. The clock begins on your imposed deadline, and adds up penalty until you file your return. The longer you wait, the worse it gets. If you do not succeed in filing within 60 days of the due date, you will get to pay at least $435 or a penalty which is equal to 100% of the tax you owe, whichever is less. 

Interest is compounded daily and is typically added to any unpaid tax from the period the payment was due until the date the tax is paid. Rates are set by the IRS every three months at the federal short-term rate, plus 3%.

Exclusion exists to the late-filing penalty if you’re filing a return because you’re due a refund. You do not owe any tax. There’s no penalty in this particular case.

Penalties are Usually Charged for the following reasons:

1. Penalties are charged when you fail to file your tax return by the due date of the return, usually April 15, or the extended due date if an extension to file is asked for and accepted.

2. Penalties are charged when you fail to pay the taxes stated on your return in full by the due date, April 15. An extension to file does not make the time to pay longer.

3. Penalties are charged when your bank does not regard your check or other forms of payment. In other words, a dishonored check attracts penalties from the Internal Revenue Service.

4. Penalties are also charged when you do not pay an adequate amount of your taxes owed for the year with your quarterly expected tax payments, or through withholding, when necessary.

 

What Happens If you don’t file or Pay

If you leave April roll by and you do not request an extension from the IRS to file your return in October, and if you owe taxes on that return, the cap on the total associated with penalties works at 47.5% of the tax due, 22, 5% for late filing and 25% for late payment. The penalty for failure to pay will continue to grow up to 25%, even after the penalty for failure to file reaches its maximum.

Request an extension

You must immediately file an application for a time extension if you are certain it will be too late to finish your tax return. You may also want to file an extension even if you have completed your return, and it appears that you owe taxes. This at least pushes your filing deadline back to October and aids you avoid the most serious penalty at the end of the deposit. 

You now have time to take your return to a tax professional to make sure you are not missing a deduction, credit or some other detail that could help you. The deduction will reduce your taxable income and can move you into a tax bracket that lowers your tax bill, and a tax credit will reduce what you owe to the IRS and could put you in a situation where you are getting money back instead of paying.

Waving Penalties

The IRS can make provision for administrative relief and waive penalties if you qualify under your first abatement policy. To qualify, you must not have filed or had any penalties in the previous three fiscal years, filed our current fiscal year return on time, and paid, or arranged for payment, for any tax you may owe. The IRS can also waive the late payment penalty if you can show that there is a reasonable and justifiable reason for the late payment. Likewise, they can also waive the penalty of filing late if you can establish that you did not file your return on time for a reasonable cause, such as illness or unforeseen contingencies.

If you have a payment failure penalty, it will continue to accrue, along with interest until the tax due is paid in full. Once the penalty is reduced or eliminated, the interest will be reduced or removed. Administrative can also be provided if you received misleading advice from the IRS but this is more difficult to prove and claim

 

To relax

On paper, it makes a lot of sense to get your tax preparation out of the way at the beginning of the year, but always remember the emotional burden of delaying filing your taxes. Adding up your Payment of Taxes in advance of April 15th means that you do not necessarily have to deal with the last-minute stress of the tax season.