It doesn’t matter whether it’s time to pay your personal taxes or your business taxes, it’s easy to run afoul of the IRS. There are some common types of tax penalties that you may incur if you don’t stay focused. The following are the most common tax penalties you need to avoid.
If you write a check to pay your taxes and the funds aren’t available when the IRS tries to withdraw the money, you can be penalized a set amount or the full amount of the check you wrote.
Anyone caught operating for-profit activities while claiming the endeavor as a charitable organization will face considerable penalties. Non-profits that are caught operating for-profit activities can lose their tax exempt status.
Failure to File
There are some taxpayers that aren’t required to file a return, but if you do have to file, you need to do so by a specific date or file for an extension. An extension gives you six more months to file, but won’t absolve you from the need to pay any taxes owed by the usual deadline.
Failure to Pay
When you owe taxes to the IRS, you have 21 days to pay the entire amount. If you don’t, the IRS will charge you ½ of 1 percent per month on the amount you owe.
Fraud occurs when you don’t report all your income or inflate the number of deductions you have to lower your taxes. The IRS can penalize you by 75 percent of what you actually owe and/or have you jailed. The IRS receives a copy of your earnings every year, just as you do.
If you fail to pay a balance owed the IRS by the filing deadline, there will be financial penalties that will be added to what you already owe. Those penalties accrue compound interest each month that they go unpaid.
Social Security Number
You have to provide a Social Security number for yourself, spouse, and anyone you claim as a dependent. You must disclose those numbers or face penalties for each instance of non-compliance.
For individuals that estimate their tax burden, you’ll incur a fine if you fail to pay the entire amount. There is also a fine for underestimating what you owe. The fine will be added to the amount you owe the next time you’re required to file.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!