This tax season has been one of the most complicated and confusing in recent memory. Of course, this is due to the implementation of the Tax Cuts and Jobs Act, which was signed at the end of 2017 but Americans who file annually only now crunched the numbers and filed a return for the first time under the new law.
The IRS has seemingly bent over backward in efforts to get folks on board with the new guidelines. This includes allowing a couple of expansions of the penalty waiver if taxpayers reach 80 percent of their estimated by the IRS to be the proper amount.
Better late than never
The IRS has now announced accommodations for those who did not meet the April 15 deadline. Those who expect to get a refund will not be penalized for filing late. Others who get automatic extensions for paying what they owe are disaster victims, military personnel and some support staff who are working on bases outside the United States.
The penalties
As mentioned, there is a waiver of fines if taxpayers come within 80% of the determined obligation. Typically fines for missing the deadline are .5% of the total amount owed accrued monthly. However, if the return is filed by June 13 (60 days late), the minimum amount owed will be $210 or the determined amount owed, whichever is less. That $210 will be the base amount for the minimum and go up from there. Those looking for additional help from the IRS can also apply for penalty relief, especially if this is the taxpayer’s first time paying late.
Fixing an error found after filing
It is common for taxpayers to overlook or omit some crucial information that could affect a return. The IRS automatically fixes math errors without penalty when reviewing the filing, but taxpayers can also amend it by filing a 1040X with the correct income, deductions and other information.
What to do if the IRS sends a letter
Taxpayers who get letters informing them of an audit or other important information need to consult with an experienced tax law lawyer. While the government has proven to be patient with mistakes, an attorney can help fight the IRS’s findings to help reduce or eliminate the additional amount that is supposedly owed.