Friday, February 27, 2009

File Your Tax Return On Time

Tax time is here and you need to file your tax return on time! Failure to do so can be very expensive. Most taxpayers know the IRS will penalize you if you do not file your tax return on time. Most taxpayers do not know what the penalties are or how they accrue.

The IRS applies at least two types of penalties to taxpayers. If a return is filed late the IRS will assess a Failure To File penalty. This penalty is 5% of the amount of the tax due the date the return should be filed and accrues monthly (5% per month) for 4 ½ months. If the tax is not paid when the return is due then the IRS will apply a Failure To Pay Tax penalty, which is ½ of 1% per month and continues for a considerable period of time.

When both of these penalties are combined along with interest, the tax liability can begin to grow at a rate that would stagger the mind. This accounts for some of the horror stories you hear about people getting in trouble with the IRS. So the advice here is be sure to FILE YOUR TAX RETURN ON TIME. If you need help call a tax professional.

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