Did you know that the IRS has a first time penalty abatement?

If you qualify, you can receive administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes – no questions asked.  

The most common IRS penalties are for failing to file (on time), and failing to pay (on time). If you owe federal income tax, your tax return as well as the payment, is due by April 15. You can extend your time to file until October 15, but that is never an extension of time to pay. If you fail to pay by April 15 you will incur the failure to pay penalty. If you do not file by your deadline you will incur the failure to file penalty. It is common for delinquent taxpayers to have both penalties assessed against them.

If you have three years of clean tax history immediately prior to your trouble year, you filed all currently required returns or filed an extension, and you have paid, or arranged to pay, any tax due, you may qualify for automatic administrative relief from the penalties.

If you are usually on time with your tax returns and payments and had this one bad year that is when you need to remember this lesson. As tax returns become more complex, and the amounts of money involved get bigger, there will be a number of elements that need checking. If you are not sure if you qualify, contact our firm for help.