By: Real America News Updated 26 Mar 2022, 13: 07 pm EDT
In the final stretch of the tax season, it may happen that instead of receiving a refund, what comes to you is a request for payment of debt with the Internal Revenue Service (IRS).
Letting go of these debts is not a good idea nor is it healthy for your pocket, because As small as they may seem, they can result in penalties and interest that will end up costing you much more than you originally owed.
A calculation made by CNN details how bad The idea is to let the debts with the IRS pass, starting with a debt of $1, 000 Dollars.
If you let the debt go, you do not present it in your return or you simply do not want to pay it, at the end of 6 months it will have increased to at least $1,2015 dollars.
As you can see, In a short time IRS debts and penalties can become serious problems if they are not attended to on time.
However better than that is to avoid them. This is how you can avoid IRS penalties on your tax return 2021.
Make your return on time
By this time, millions of Americans have already filed their returns and are just waiting for their refund check.
However, there are still a few others who have not filed it and who must take into account that the deadline for almost all taxpayers is 18 of April.
Keep in mind this day to avoid a mule that can be expensive, and that increases as time goes by, as long as you do not file your return or do not pay your debts with the IRS.
This debt is 5% of the unpaid tax that is owed for each month or part of the month in which you are behind in your return.
For taxpayers with large amounts of debt, the IRS sets a maximum penalty equal to 21% of outstanding balance.
If the balance you owe is small, you could end up paying more than that 25%, because in these cases there is a minimum fine of 352 dollars or 100% of your tax due, for taxpayers with arrears of 60 days.
However, there is always a second chance. If you consider that you will not be able to file a complete and accurate return , before 18 of April request an extension of six months.
To do so you will need the form 4868 and will have up to 17 in October to file your return and avoid the fine.
Pay your balances due
You have already taken steps to avoid being fined for not having filed your return on time and, also, you already have a six-month extension in your favor to do so.
It seems that things are going well; however, if you have debts you could be fined for not covering them on time, and this implies doing it in full.
The fine in this case is 0.5% of the outstanding balance , for each month or part of a month that is late. The percentage can be reduced to 0.26% if the IRS approves a payment plan, which is accompanied by a partial payment of the debt.
Here too there is a limit that is also 25% of the outstanding balance payable.
The IRS also charges interest
The penalties that the IRS can apply also has the result of inaccurate declarations or deliberate errors, resulting in underreporting of income.
These fines and those already mentioned generate interest during the time they are not paid. This also applies to debts to be covered.
Falling into a scenario of this type is risky for your economy, since the interest rate IRS interest is adjusted quarterly according to the federal funds rate, plus 3%.
You may also like:
– Why Tax Refunds May Take Longer Than 21 days to reach taxpayers
– The IRS has issued 45 millions of refunds: the average payment is of $3,352 dollars, almost 20% greater than that of 2020
– Statement of taxes 2021: three tips to take into account if you had income from an additional job