Best laid plans, right?
After nearly two decades working with taxpayers from all walks of life to resolve their tax issues with the IRS, we’ve learned with no uncertainty that even the most punctual, organized person can miss a tax deadline or forget to file their tax return.
The truth is, a lot of people hate doing their taxes—and that can lead to missing deadlines.
People take on new jobs or try self-employment for a change, and that can lead to missed or late tax payments. And occasionally, people underestimate how much in taxes they owe, and may end up with a tax bill they can’t afford by the deadline.
Fortunately, we’re experts at working through a lot of these problems. Our team of tax specialists can file back tax returns, negotiate offers-in-compromise, and work out payment plans to get the IRS off your back and get you back on track to your financial future.
But we don’t think it’s fair to hog all the knowledge. You have questions, and before you call us, it’s a good idea to get a basic understanding of your tax situation so you can start the process of dealing with it.
Today, we wanted to share with you a little-known waiver that can help you get rid of a few common penalties associated with one of your tax years.
Okay, well not really introducing. The First Time Penalty Abatement has been around for a while, but most taxpayers don’t know about it! We think that’s a shame, because it can be one of the most effective tools for erasing penalties in certain cases.
So, which cases are those, exactly?
Failing to file your tax return—or missing the deadline—are two of the most common situations taxpayers find themselves in.
Tax season is a stressful one to say the least, but filing your tax return late or neglecting to file it altogether will accrue penalties from the IRS. The penalty is based off the total of your tax bill, so if you owe $0 or you’re respecting a return, then your failure to file your tax return is only holding up your tax refund. However, if you owe the IRS, your balance will start accumulating penalties to the tune of 5% per month, every month.
Fortunately, the IRS may be willing to forgive some of those penalties with the first-time abatement penalty waiver.
Whether you’re a 1099 contract worker or you just made an error in your withholding, it’s extremely common to owe the IRS come tax time.
When you don’t pay that balance on time, you’ll begin to accrue penalties and your balance will swell. Even if the total is small, these penalties will stack up over time until things get completely out of control. This is one reason why we recommend our clients get started with us as soon as they know they have tax debt—$5000 can turn into $15,000 before you know it.
If you’ve failed to pay your taxes by the tax deadline, you’re in luck. You may be able to clear some of the penalties with a first-time abatement.
If you own a small business, you’re responsible for withholding taxes from your employees’ paychecks. If you don’t, the IRS will hit you with a failure to deposit penalty.
This penalty is distinctly less common than failure to pay or failure to file penalties, but it still happens. That’s one of the benefits of outsourcing your payroll or bookkeeping tasks to a third party—because they’re specialists, they don’t miss details like this. Nonetheless, those penalties stack up fast because just one missed deposit can total hundreds or thousands of dollars. This can permanently impact the growth of your business.
You may be able to get rid of some of these penalties for your business through first-time penalty abatement.
A first-time abatement can be a windfall, and it’s absolutely worth taking advantage of. According to the IRS, you may qualify for the waiver if:
Interest charged on your penalties will be removed when the penalties are removed. Now that’s a great deal!
Don’t let unfiled tax returns or tax debt spin out of control.
You’ve already taken the first step by learning about first time abatement penalty waivers. Now you need to take the next one. Learn more on the IRS’s website or by giving us a toll-free call. We can help you decide if abatement is right for you, and help you get back on track.
Trust us. It’s what we do.
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