You must have received calls inquiring about your tax payment and whether you have paid it in full? Also, you must have heard about the penalty called IRS.
With the help of the IRS Penalty Calculator you will capable of computing failure to pay, file and accuracy of the related penalty one has to go through, along with the interest one has to pay as per the Internal Revenue Service on a specific date.
When it comes to owing tax, it turns out being a bad thing for any individual. However when you start to accumulate interest and penalties too, the financial plan turns out being quite much more devastating and worse.
There are a few reasons why you could be blows with a sudden tax penalty:
- When you do not have a health insurance
- A flotilla of retirement account inactions as well as actions
- If you fill in some tax returns which is not accurate or is considered frivolous by the IRS
However there are certain offenses done by a taxpayer who will be in most cases be hit by a penalty. They are:
Those individuals who do not pay the tax which they ought to pay
For excluding and not paying any tax return whatsoever
Trying to skip and not pay enough tax as required, all across the year.
Basically, there are several kinds of IRS Penalty when it comes to dealing with non-compliant taxpayers. We will mention about the most common ones here.
If until the due date, you have note filed your return (along with extensions) you might require paying penalty charges which would be about 5%. You would have to pay it for part or every month that a return is late, and the rate should not exceed 25%. Since the penalty is based on not paying of tax until the due date, without any regards to extension. Hence, even if you cannot afford the tax bill, you should ensure that you file for a tax return.
Penalty for late-payment
For about part of the month or every month, you will need to pay 0.50% of your unpaid taxes, soon after the due date for paying the tax is over. The extension which if you file for, is only meant for filing and not for paying. You will not get reprimanded if you covered about 90% of the actual tax liability during the automatic six-month extension, on or before the return due date. The balance should be again paid when you are filing for your return.
In case you get in touch with IRS for installment agreement, you still will need to go through the late-payment penalties. However for the unpaid balance, the rate will be 0.25%. If only you have filed your tax return on due date, should you be able to enjoy the reduced rate. Through the interest calculator you will be able to know about the IRS interest liable on you.
Filing and paying late
If on any month you undergo late payment and filing, failure-to-file penalty gets reduced with failure-to-pay penalty. If more than 60 days have crossed for filing and payment, the minimum penalty you will need to go through would be less than $135 or it could also be 100% of the remaining tax that was owned at the filing time.