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IRS Penalties for Late Filing of Income Tax Return

January 31st, 2012
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Basics of IRS Penalties

IRS Penalties and interest may be for a number of different occurrences. Some examples are: understating your tax liability, understating a reportable transaction, file an erroneous claim for a refund or credit, or file a frivolous tax submission. But the easiest way to receive a penalty is by filing late.  

When it comes to penalties and interest, the Internal Revenue Code may impose many different types of penalties. These can be as simple as a civil fine, or as harsh as imprisonment, depending on the particular scenario.

How IRS Penalties Are Calculated

Penalty for Filing Late:  If a return is not filed by the due date, you may have to pay a failure-to-file penalty.  This amount is typically 5% per month, but not greater than 25%. The penalty is based on the unpaid amount as of the due date.

Penalty for Paying Late:  The Failure-to-Pay Penalty of .5% of unpaid taxes per Month is incurred each month after taxes due are not paid.

NOTE: If there is no tax balance due (or you qualify for a refund) there will be no penalty for late filing.

Avoiding Penalties

Out of Country:  Individuals who live and work out of the country automatically receive a two month extension without filing a Form 4868. However, a return must be filed by October 15 at the latest.

Reasonable Cause:  The IRS does also waive penalties for those individuals and businesses that had Reasonable Cause to not file or pay on time.  This is a more subjective reason to be reserved for the most extreme circumstances, and to be determined by the IRS.

Extend Your Deadline:  An individual or business may elect to file for an extension of up to 6 months. This is not an extension of time to pay; this is an extension of time to file.  

Obviously the best way to avoid penalties and interest is to simply file on time! However, sometimes this is easier said than done.  There are many different services available for use by individuals and businesses to extend filing deadlines. www.expressextension.com is a simple online tool that can help you avoid late penalties by filing for an extension.  Ironically, one of the easiest ways to incur a penalty is also very easy to avoid.

Author: Categories: Business Tax Extension, E-file IRS Tax Extension forms, ExpressExtension.com, Form 4868, Form 7004, Form 8868, Internal Revenue Code, IRS Penalties, Tax deadline Extended, Tax Extension, Tax Extension with the IRS Tags: , , , , , , , , , ,

Is Your Tax Return Getting too Complicated? Get a Tax Extension!

April 13th, 2011
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Each person’s Tax Return is unique to them, and each year there seems to be more and more information to organize. Although your taxes may have been simple in years past, it likely gets more and more detailed each year.  For every major life event, taxes get more complicated.  For example, if you have a child, adopt a child, buy a house, pay for college, or start a business (to name a few) your taxes become more complicated.  

Due to the increased complications involved in filing a tax return, each year more and more people are filing Tax Extensions for their Personal, Business, and Non-Profit Tax Returns.  The IRS accepts Personal Tax Extensions by filing a Form 4868. This Allows individuals 6 additional months to file their tax return.  Business Tax Extensions are filed with the IRS by using Form 7004.  This allows businesses an additional 5-6 months to file their tax returns.  Non-Profit organizations can also extend their tax deadline by filing an IRS Form 8868.  This provides Non-Profit Organizations an automatic 3 Month Extension.  They may then file for a Non-Automatic additional 3 month extension after that.

These fantastic options allow individuals and businesses to properly organize all of their necessary tax documents so that they can be sure that they are receiving the appropriate Tax Credits, and paying the right amount.  Tax Professionals appreciate it when people file for an extension, rather than bombard an already busy person with much more work on the busiest week of their year.  This is another incentive for individuals and organizations to file for a tax extension; accountants and tax professionals are less busy in the summer months than in April.  Most tax preparers are neck deep in paperwork by the time the tax deadline rolls around.  

Fortunately, these IRS Tax Extension Forms can also be E-Filed online.  ExpressExtension.com allows Individuals, Businesses, and Non-Profit Organizations to file Tax Extensions with the IRS.  The beauty of E-Filing is that there is no need to leave your home or office, buy postage, or risk it getting lost in the mail.  According to the IRS, E-Filing is the easiest, fastest, and most secure way to file any IRS Form.

Author: Categories: E-file tax extension, Form 4868, Form 7004, Form 8868, IRS Form 4868, IRS Form 7004, Tax Extension, Tax Extension e-filing, Tax Extension with the IRS, Tax Return Tags: , , , , , , ,
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