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Financial Management · IRS · Tax Penalties · Tax Planning
The TurboTax article, "Guide to IRS Tax Penalties: How to Avoid or Reduce Them," details strategies for taxpayers to prevent common IRS penalties, including a 5% failure-to-file penalty and a 0.5% failure-to-pay penalty, by adhering to deadlines and proper payment methods.
The guide outlines four primary penalties: failure to file, failure to pay, underpayment of estimated tax, and dishonored checks. To avoid the failure-to-file penalty, which is 5% of unpaid tax per month up to 25%, taxpayers must request an extension by the deadline, extending it to October 15.
The failure-to-pay penalty, 0.5% of the unpaid tax per month up to 25%, is avoided by paying in full on time or establishing an IRS installment agreement. Preventing underpayment penalties requires adjusting paycheck withholding or making timely estimated quarterly payments.
Additionally, ensuring sufficient funds for tax payments prevents a dishonored check penalty, which is either $25 or 2% of the check amount if over $1,250. TurboTax also promotes its services, including expert tax filing for $150 for new Full Service users, with an offer ending March 31.
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