Though you know you must pay taxes, you probably try to conserve your money as much as possible. Fiscally responsible though you may be, the Internal Revenue Service (IRS) calculation of additional fees often augments California’s significant tax rate.
Due to the current pandemic, taxes are not due until July 15 this year. However, it is important to understand the potential penalties you could face.
Common IRS penalties
United States tax law includes numerous rules and regulations, the complexity of which most people need help deciphering. Activities such as business ownership or the dissolution of a marriage can further complicate matters.
You may be familiar with some available write-offs, yet there could be more deductions for which you qualify. Meanwhile, in addition to the ways you can reduce your tax liability, there are situations in which the IRS may assess additional fees.
Among other matters, you could face penalties if:
- You do not file your taxes
- Your quarterly estimated payments are insufficient
- You pay your taxes late
If you cannot make a lump sum payment when you file, you may be able to establish an installment agreement. If you do so, you will likely accrue interest until your tax bill is paid in full.
You can request penalty relief
Specific circumstances, such as an IRS error or recent disability classification, could result in penalty dismissal. Furthermore, you may be able to seek relief if economic casualties of the global health crisis compound the complexity of state and federal tax regulations.
If the IRS assesses penalties on you or your business this year, you would be wise to learn more about how your situation may qualify for relief. A qualified tax professional can help you understand what penalty relief options are available and work with you to minimize your liability.