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Tax tips to reduce penalties and interest after filing deadline

The income tax deadline passed a couple of weeks ago, and while many in California filed their returns on time, a few taxpayers likely did not do so. A late filing can cause taxpayers to incur additional costs in penalties and interest, but there are things a person can do to mitigate those expenses. The Internal Revenue Service has released a tax tip touching on that very subject.

The IRS imposes financial penalties on taxpayers who fail to file returns and fail to pay required taxes by the stated deadline. These charges continue to mount over time--along with interest--and have the potential to create a substantial tax debt. Ignoring the problem will only make it worse, so the IRS recommends that taxpayers file as quickly as they can and pay as much of their tax bill as they are able. This will help to reduce the penalties and interest.

To help speed along the process, the IRS keeps the quick e-file option open for many people until October 15. In addition, some taxpayers can take advantage of the IRS's Free File software, which is a program that can make filing easier. To qualify, taxpayers must have income equal to or less than $57,000.

But not everyone can afford to pay the whole of a tax debt in one fell swoop. Taxpayers whose debt is too great for them to pay off at once do have options, however. The IRS offers installment agreements, which allow a person to pay off a debt over a set period of time. An experienced tax attorney can help negotiate an installment agreement that fits a taxpayer's individual financial circumstances.

Source: Internal Revenue Service, "Missed the Income Tax Deadline - IRS Offers Help for Taxpayers," Special Edition Tax Tip 2012-06, April 19, 2012.

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