When you are undergoing a tax issue, then it is vital to have knowledge of what are you up against and what can you do to make things right? If the issue is related to taxes then a tax professional can help you with his experienced advice and help you resolve the issue in a timely manner. Tax filing is not easy to process and mistakes can lead to penalties. Penalties can be harsh and difficult to deal with. You need a plan and expert suggestions to get out of this situation as soon as possible.
Now let’s take a look at what is the tax penalty? A tax penalty is disciplinary action taken by IRS if you have misfiled your returns, or the details are not accurate. Tax penalties have different kinds and there are a lot of ways to solve each one of them. If you are fully knowledgeable about tax laws and the functioning of the IRS, then you can handle it yourself. But if you are not skillful, then you should get professional help to get the issue resolve. His/her advice will help you make things afloat and help you get back on track.
So, now we know why penalties are imposed. Let us take a look at the type of penalties people have to deal with. There are more than 142 tax penalty kinds. If you have a tax issue then, it’s possible that you have one or more issues with your tax return that is why you are facing a penalty. Below are some of the reasons why penalties are imposed on taxpayers.
- Providing Wrong Information
- Bogus Returns
- Less Payment
- Missing payments
- Return after the due date
If you do not want to deal with penalties this article is for you. You can avoid it by being careful, attentive, and recording small details of your finances, keeping track of all financial activities happening in your workplace. However, there are few things that help you avoid or reduce these penalties some of them are written below.
1. File on Time
Always file your taxes on time. If you cannot file your taxes on time, then IRS will penalize you. The amount is 25% of what you owe. If you are not able to file your taxes then you file an extension with form 4858. In this way, you will get more time to prepare your taxes and you will also be saved from the tax penalty.
2. Payment Plan
Ask for a payment plan if you find that you do not have enough money to pay in full. This is something that most people fail to notice because they think the IRS does not allow installments. Don’t be so stupid! You can also request the payment plan if you find that you cannot pay in time. IRS allows the taxpayer to
Pay in the span of months, instead of one complete payment. This way you will not feel the burden to pay the entire amount all at once.
Penalty abatement is a good way to revoke the penalty. You need to have a genuine reason why you were not able to pay your taxes in time to have the penalty removed. Such reasonable cause includes sudden accidents that took place like a death in the family, health problem, unemployment, etc.
4. Professional Help
Getting professional help is also a good idea. There are something’s that we will always miss when filing a tax return, professional help is necessary to file your documents accurately. There are many firms that have a lot of experience behind their back and can help you in a number of ways.
5. Late Filing Penalty for Tax Returns
April 15 is the deadline to submit your tax returns. The deadline is not the same for everyone. For instance, many corporations and organizations have a deadline of March 15. If you are late, on your return, you will have to pay the penalty of 5% and if your returns are late 60 days, the penalty is huge. So, if you want to save yourself from a late filing penalty you need to send all your tax returns before the due date to get in the safe zone. The only solution to save you from a late filing penalty is getting a tax extension.
There are few things that you should keep in mind to save yourself from a penalty. Even if you are hit by a penalty, you can take many actions to minimize or avoid the penalty. For instance, if you miss on deadline or another important metric you can save yourself by showing the reason behind it, a rational reason. You can also claim abatement as mentioned in the article.
Plan everything before the due date and make preparation starting from now, in this way you will be prepared when the moment arrives. SNG INC CPA provides Dallas tax services. Our experts can make the process of tax preparation and account simple and easy for you. With our deeply knowledgeable and skilled team, we can deliver the best possible solutions for your accounting needs.