(DailyDig.com) – The Internal Revenue Service (IRS) warned US taxpayers that they may face stiff penalties if they missed the April deadline to make their tax payments. If so, they want taxpayers to know that meeting tax obligations can avoid penalties.
According to the IRS, tax returns filed over two months past the deadline will be subject to a fine of 100 percent of the late tax payment, or $485. The actual fine would be the lesser of the two amounts.
The penalties could also add up to eight percent interest on the amount owed, compounded daily. There is also a penalty of five percent per month for filing taxes after the deadline if the taxpayer does not file for an extension. If they fail to make a payment to the government, they will incur a late payment penalty of 0.5 percent, with a maximum penalty of 25 percent. However, individuals filing for an extension should calculate and pay the estimated amount due by the April deadline.
On June 10, the IRS posted a statement on its website advising taxpayers to make payments as soon as possible to avoid penalties. The interest charged for late payments could grow substantially, according to the tax laws.
For certain taxpayers, there may be a solution to find some relief from these penalties. Taxpayers who filed their taxes on time and paid by the deadline in the last three years may receive a reduced penalty. The IRS stated that if any taxpayer does not meet that requirement, they may still qualify for a penalty reduction if the cause for not filing or paying by the deadline was reasonable and not just a willful refusal to pay by the deadline.
Only after the taxpayer pays will the interest be released. Interest will continue to accrue until the taxpayer pays off their government debt.
The IRS has repayment plans, both short-term and long-term, depending on the amount owed. If the taxpayer agrees to make payments in installments, the IRS will reduce interest and penalties by half, as long as they continue with their agreement.
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