Tax Penalties And Interest

Tax penalties and interest are two expenses no one wants added on to the already large amount they owe the IRS

. Don't be late paying your taxes because, the IRS will attach penalties and interest,but in all fairness to the IRS, they will also pay you interest if they are late getting your refund to you.

Failure to fine penalties are figured up on the amount due, so if you owe no taxes, but are late filing your return, you will pay no penalty. The money you owe, if you owe, is 5% for each month the tax return is late. However, it does not go up past 25%.

However, the tax penalties and interest don't stop now. There is also the failure to pay penalty. This penalty is calculated on the amount you owe and it 0.5% for each month the tax is not paid in full. Also on this penalty, there is no maximum limit to the penalty. The IRS will start penalizing you from April 15 until you are have paid all your taxes.

Now that you know some of the penalties, you may be surprised to know they place interest on top of the penalties. This is around 4% per year, and is figured for each day your balance is not paid in full.

How can any of this be avoided? First, just realize that if you owe money, it is much better to file as soon as you can, rather than be contacted by the IRS. Also, if you think you are just going to just need a little extra time, file for an extension. Extensions may be able to reduce or even eliminate some of the penalties.

There are many kinds of penalties for every occasion, so as soon as you realize you may be having tax trouble, contact the IRS, and contact a tax professional. Working with the IRS does not have to be a scary thing. If you have never been in tax trouble before and the IRS can see you want to pay your debt, they will most likely come up with a solution that benefits you both.

There are some circumstances where you can come up with an excuse that the IRS agrees with. Such things as death, serious illness, and other serious causes. But, if you just have fallen on bad times, or made a mistake on your taxes, then most likely you will have to pay up.

Visit the IRS.gov website for more information on tax penalties and interest today, and be sure you file a return on time, even if you don't send all the money.

Tax Penalties And Interest

By: Rhonda Grice

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