6 Tips to Avoid IRS Penalties, Interest and Filing Fees This Tax Season

With Federal and various State tax revenues in decline, the IRS and State tax collectors are not letting any taxpayer fall through the cracks. In fact, if anything the IRS's computerized Automated Collection System (ACS) is probably better than ever with all the funding the IRS has received from the Federal stimulus.

Here are a few tips to avoid IRS penalties, interest and general filing fees.

File On Time

The IRS can penalize you up to 5% per month up to a total 25% of taxes owed

If You Can't File On Time

Request a 60 day extension to avoid the 5% to 25% penalty on taxes owed

File for Free Or File for Less

Take advantage for free government filing programs or various tax software programs to reduce professional filing fees

Can't Pay In Full

Request an IRS Installment Agreement (IA) or Apply for a Bank Loan

Abate Penalties With Reasonable Cause

In some cases, if you have good reason you can file to have underpayment and filing penalties abated or removed.
Some reasons that the IRS may accept are:

Contact the Taxpayer Advocate Service

This is an “independent” organization, part of the IRS, which can help you with reducing your tax penalties. Call them at 1-877-777-4778 or 1-800-829-4059.

Penalties are used by the IRS in order to scare taxpayers to remain in compliance with US tax laws. With the increase in technology used by the IRS they have been assessing individuals penalties at an increased rate. The above tips can help you avoid interest, filing fees, and the most common penalties given by the IRS. Just remember that if you know you are going to have a problem filing or paying your taxes there are solutions offered by the IRS to avoid or decrease the penalties associated with common IRS problems.
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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