No one wants to find out that they owe money to the IRS when Tax Day arrives. However, owing money to the IRS is even worse when the amount includes additional penalties that you could have avoided through more prudent tax planning.
Taxpayers are required to pre-pay their taxes through payroll withholding, estimated tax payments or a combination of the two. Employees generally accomplish this through withholding, while owners of pass-through entities, self-employed individuals and those with investment income by paying quarterly estimated payments.
If you have been procrastinating about filing your 2017 tax return or have unfiled tax returns for prior years, you need to consider the consequences, such as penalties, interest, and aggressive IRS collection actions.
Many tax penalties are substantial and can significantly increase the amount you owe the IRS. Penalties can be assessed for various reasons, with some resulting from a taxpayer’s carelessness, overstatement of deductions, failing to report income, or procrastination.