Business owners and employees must pay taxes. It won’t be an exciting activity but it’s something you have to do. However, it isn’t all bad: there are some benefits to paying your taxes on time. Find out how paying taxes on time can help you in the long run.
Understanding Your Tax Return
A tax return is an annual report of your income, expenses, and other financial information. You can use your tax return as a way to compute for liabilities and refunds. This form is also useful for scheduling your tax payments.
Why You Should Pay Taxes on Time
Think about paying your taxes before other expenses. You’ll pay more when you forget to pay on time. The interest may not be that big to you at first, but that will add up if you consistently pay late.
In 2018, late payers had to pay $210 for payments of 60 days late or more. Taxpayers will pay 100% if their unpaid tax is less than that. The largest amount is 25% for other late payments. To add, taxpayers won’t get any penalties if they have a refund. Paying taxes is an obligation and one you might miss when you are busy. Some people also find it hard to compute for it, but this doesn’t mean it’s alright to miss a payment. Get some help with your income tax return verification from a reputable company. Choose a company that is trustworthy and can assist with your tax queries.
There’s a late filing penalty which amounts to 5% of what you’re supposed to pay. This can go up to 25% depending on the circumstances. The penalty for late payment is 0.5% of your unpaid taxes. This can go up to 25% if you continue to skip payments. On the other hand, there’s a 5% fee for late filing and late payment. You need to pay these when you’re guilty of both.
There’s still hope where taxes are involved. One is that you won’t get penalized if your payment is delayed due to reasonable causes. If you choose this, you must show evidence for the cause of your delay. Contact the agency who can answer your queries about this option. You may also qualify for abatement if you’ve been a good taxpayer before.
You can file for an extension and pay enough during your original deadline.
The IRS may lift your penalties if you can pay 90% of your late payments. To add, you should pay 10% of the remaining tax due to enjoy this option.
It’s easy to file for taxes through the IRS Free File and e-file platforms. You should consider using your credit card to avoid late payments. Your credit is less expensive than when you have unpaid taxes. There are more options you can choose from, like getting personal loans, but you should explore other options from the IRS website. Do some research about it so you can choose the best payment plan for you.
Updating Your Payments to Avoid Penalties
Congratulate yourself when you are able to update your tax payments. It’s important to do everything you can to never miss payments again. To prepare, consider saving up for future payments. You should also allocate tax money before spending on “wants.” Practice other helpful strategies to pay for taxes first before anything else.