Did you know that around 77% of Americans feel stressed about money? Money worries can lead to anxiety, depression, weight gain, and social withdrawal. If you are someone that worries about money, tax season can be hard.
You have to worry about filling out the information correctly, paying taxes, and avoiding tax penalties. Tax penalties are extra fines owed to the IRS if you don’t pay and file your taxes correctly.
Are you wondering how to avoid tax penalties? If so, keep reading to learn how to make filing taxes less stressful.
1. File Your Taxes
One of the easiest ways to avoid tax penalties is to file your taxes annually. Most of the time, annual taxes are due in April, but you can request an extension if you need more time.
If you don’t file your taxes on time, you could face a penalty of 5% for every month you don’t pay. If you are getting a refund, you may not have to pay fees. You can lose your refund if you wait too long.
2. Pay on Time
Once you file your taxes, you still have to pay on time to avoid IRS tax penalties. Taxes are due in the spring, but you can request an extension if you can’t pay on time.
Like failing to file your taxes, failing to pay will result in a 5% per month penalty. If you can’t afford all your taxes by the deadline, pay as much as you can. This will reduce the penalty amount you have to pay.
3. Pay Quarterly Estimated Taxes
Another way to avoid tax penalties is to pay quarterly estimated taxes if you are required to do so. If you own a business or make money from contracting, you may need to pay estimated taxes.
The IRS states that individuals and corporations that expect to pay over $1,000 should pay quarterly taxes. If you don’t pay the taxes on time, there will be a penalty.
4. Avoid Writing Bad Checks
To avoid paying tax penalties, you need to avoid writing bad checks. Before paying your personal taxes, make sure you have enough money in your account.
If you don’t, you could face a penalty of 2%. If the check is for less than $1,250, you will owe the IRS $25.
5. Hire a Tax Expert
One of the easiest ways to avoid IRS tax penalties is to hire a tax expert. Tax experts can help you learn about different types of taxes, maximize your refund, and avoid problems with the IRS.
They also can keep you updated on IRS tax laws and updates. To choose a tax expert, check their credentials, read online reviews, compare fees, and make sure you can trust them.
Avoid These Tax Penalties
Filing taxes can be stressful, but you can make it easier by avoiding common tax penalties. Some of the best ways to avoid penalties include filing on time, paying on time, and paying quarterly estimated taxes.
Did you find this article on paying taxes useful? If so, check out our blog for more financial tips.