subject: Avoid Tax Penalty Fees when You Use Help to File Federal Income Taxes [print this page] Avoid Tax Penalty Fees when You Use Help to File Federal Income Taxes
So you feel you are free from the burden of filing your income taxes? There is NO excuse to not file income taxes! Perhaps it slipped your mind, or it could be that you were financially hindered from doing so. Or maybe you merely didn't want to file because you thought you could beat the system. Nonetheless, the IRS does not actually care about your excuses for failing to file. They only care that your taxes are now overdue. Therefore, they can commence collection efforts on you. Well, you should know just what will go down if you fail to file.
To steer clear of IRS tax filing penalties, it's important that you file your income taxes. If you feel that you'll need it, get professional tax filing help. You don't want to take a chance on owing the IRS anything. tax filing penalty fees are beyond belief. It's already a pain to pay your taxes every year. However, the tremendous debt you could owe the Internal Revenue Service should you fail to take advantage of IRS tax filing assistance will make your tax debt even more ludicrous.
First, It's the Penalties: Once the Internal Revenue Service finds out you've failed to file, they start slapping your debt with penalties. The penalty for Failure to File is 5% of the debt for every month, up to twenty-five percent. In all likelihood, they will also hit you with a Failure to Pay penalty, which is 1% of your debt every month. There is no maximum on the Failure to Pay penalty, so the more time that passes, the higher your tax debt grows.
Interest Charges on the Amount of Your Tax Debt Itself: As if you weren't stressed enough with penalties accruing, you have also got to take the interest into consideration. The interest rate right now is sitting at six percent of the debt for each year. Keep in mind, though, that interest is compounded everyday, on top of penalty fees, so the yearly interest rate is actually much more than that. Therefore, if your tax debt is $10,000 and a year passes, your total tax debt is going to have matured to $15K. If three years go by, you are going to owe approximately $35K. And that is from penalty fees and interest charges alone.
Jailhouse Rock: Not to mention, you can serve jail time for not filing. The largest collection agency in the world is the Internal Revenue Service. If they want their cash, they'll get it. No question about it. The fact that you did not file, whatever your reason, shows the IRS that you do not care. That doesn't accomplish anything but to anger them and give them the go-ahead to undertake collection efforts to the maximum allowed by law. And so you're going to find yourself doing time.
What Can You Do? The most effective way to avoid these predicaments is to file on time, each year. If you do not have the ability to pay off your tax debt, call the Internal Revenue Service and set up some kind of payment agreement. It is a lot better than allowing the interest charges and penalty fees to build up merely because you didn't file.
Too Late? You might be able to obtain a penalty fee abatement if your debt is already sky high due to interest and penalties, and you know the reason you were not able to file was an extenuating circumstance (death of a family member, illness of a family member, etc.). Find out how to get your situation handled by referring to a trustworthy tax debt professional. Even if you do not meet the requirements for an abatement of penalties, you may qualify for something else that can place you in a far greater financial position than the one you are already in.
It's fairly easy to select the right tax filing help. Check that the federal tax filing help organization you have chosen holds at least an A-Rating with the BBB.
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