If you are considering not filing your 2012 tax return, because you may possibly owe the IRS, you should reconsider. The IRS imposes a 4 percent penalty, per month, for failing to file your tax return by the due date. The penalty for failing to pay on time is .5 percent. For every $1,000 you may owe that’s a difference of $50 for not filing and paying on time, versus just $5 for not paying on time, per month. If you think it’s best to not file and perhaps the IRS won’t notice, beware that your employers or contractors are required to file you earnings with the IRS. The IRS will calculate your taxes based on this information. However, they will not bother figuring out any deductions or credits you may be entitled to, so it’s best that you file your return yourself. If you cannot pay your taxes by April 15th, you should still file to avoid the failure to file penalties. The IRS allows you to file an installment agreement to pay your taxes over time. When this is done, your late payment penalty is reduced from .5 percent to .25 percent, saving you a little extra money. Did I mention the 3 percent interest the IRS charges per year on amounts owed to them?
Basically, it’s best to not owe the IRS. If you believe you owe this year and are trying to figure out what to do; or you want help avoiding owing them in the future, give us a call at 708-720-2860.