INDIVIDUAL

Underpayment of Taxes

There are numerous ways to attract the unwarranted attention from the IRS – almost too many to count. Underpayment of taxes is one of the surest ways to garner their scrutiny, however, and is best to be avoided, whenever possible.

In the case that you don’t pay your federal taxes, in entirety, the IRS will begin tacking on penalties, late fees, and interests. Penalties range in severity, depending on their reasons, and can even sometimes result in criminal charges. If you continue to not pay, the IRS can even place a lien on your assets and property, including your bank account and home.

Some common types of penalties that can incur from underpayment of taxes:

• Failure To Pay: If you don’t pay the entirety of the balance due on your tax return, the IRS will begin to tack on .5% interest for the overdue amount, per month or for part of month overdue. This can continue up to 25% of the total overdue amount

  
  Failure To File: In the case that you don’t file a tax return at all – thus underpaying 100% – the IRS will attach a penalty of 5% of the total overdue amount, per month not filed, up to 25% of the total overdue amount. In the case that your return is over 60 days late, the IRS will automatically issue a $135 fine, or 100% of the overdue amount, but not at the same time as the failure to pay penalty, which will be subtracted from the failure to file penalty.

Are you looking for someone to manage your book keeping? Are you finding it hard to keep your taxation in order? Are you looking for some financial advisory? If you answered yes to any of the questions, get in touch with us today!