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Avoid Individual Tax Penalties

By Linda Bossard, EA, USTCP

February 7, 2020

Avoid Individual Tax Penalties

“Are you on track to meet your tax deadlines?” That question is one of the first things we ask our individual tax clients when we meet.

Tax deadlines are crucial. If you miss the filing deadline on April 15, 2020, you will incur penalties and interest — and we don’t want that to happen.

“Taxes are high enough, and there is no need to pay additional fees on top of that,” says Manager Linda Bossard. “By paying on time, you avoid costs and only pay what you were meant to from the beginning.”

You may incur two main penalties if you do not pay your taxes on time. The key word in that sentence is pay. You may request an extension of time to file your taxes, but that extension does not extend to payment. No matter what, you are still required to pay your taxes by the April 15 deadline.

The two penalties are:

  • Failure to file: This penalty is incurred when you do not file by the deadline, or you do not submit your request for an extension by the required due date.
  • Failure to pay: This penalty is incurred when you do not pay your taxes by the April 15 deadline. Any outstanding balance will begin to accrue interest once this date has passed.

If, for some reason, you are not able to submit by the deadline — and we encourage you to do anything possible to meet the deadline — there are a couple of options you may qualify for:

  • First-time penalty abatement: This provides administrative relief for certain penalties if you meet certain criterion. For example, you must have paid all outstanding taxes and have no prior penalties. The catch is that you can use this abatement only once. For detailed information on the qualifications criteria, please click here.
  • Reasonable cause penalty abatement: This is available when someone has made a reasonable effort to get into compliance but circumstances out of their control made it impossible to file. For example, if a spouse suffered from dementia, hid files from their partner and later passed, this could cause a delay in filing due to lack of information. For detailed information, please click here.

One point of clarification when it comes to abatements: These options may provide administrative relief from the IRS on penalties, but you will still be required to pay the interest accrued on your outstanding tax balance, if any.

If you fear that you might not be able to pay your taxes on time, give us a call. You can count on us to assess your situation and come up with a plan that works for you. Contact us at contactus@gccpas.net or 209-527-4220.