IRS Payment Penalties
If you have not payed the taxes that you owe the IRS and aren't filing bankruptcy on tax debt, then the amount that you owe is going to be increased substantially. The longer that you go without making these payments, the more money that you are going to end up owing. As this is the case, you need to make an effort to pay as much as you can as soon as you can. Making these payments will help relieve your tax debt and will get you back on the right track financially.
When it comes to penalties for the IRS, you need to take things very seriously. This is, after all, your money that is in question. Keep in mind that you may be assessed fees for paying your taxes late, but that you may also be assessed fees and penalties for actually filing your taxes late. If you want to make sure that you don't have to deal with any of these fees or penalties, then it is in your best interest to file and pay your taxes in a timely manner. It's really the only way to guarantee that you can hold on to more of your money.
Categories of Penalties
One common type of penalty that you may have to pay is a failure to file penalty. These penalties will be based on the time from when your tax return was due to the time that you actually end up filing your taxes. The IRS is going to charge you a 5% fee for each and every month that your tax return is late. If you don't file for an additional two months after the return is due, then you will need to pay 10% of the balance that you owe in penalties.
Another type of penalty that you have to pay is a failure to pay penalty. This is going to be calculated based on the amount of tax that you actually owe to the IRS. You're going to be charged 0.5% of the balance that you owe for each month that your tax is not paid in full. This penalty is going to be assessed from the original payment deadline until you have paid off your taxes in full. Keep in mind that there is no limit to how large the penalties can grow on your taxes. If you don't pay for a long time, then the costs will continue to rise.
The other type of penalty that you will need to pay is interest. These rates are subject to change, and they are going to be assessed quarterly, but you will have to pay interest for each day that your balance is not paid in full. These rates may change every three months, or four times a year, so you need to be aware of these changes. A lot times, people will end up paying a large amount in interest if they do not settle their tax debts as soon as possible.
Get Your Taxes Filed
One thing that you can do to reduce IRS payment penalties is to get your taxes filed as soon as possible. A lot of people put off doing this because they don't think that they can afford to pay what they owe. By not filing, you are only going to increase the amount of money that you owe overall. Give yourself a break and file as soon as you can. You may be able to come up with a payment option that will work for your financial situation. Speaking to the IRS is better than just letting things go.
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