Penalties For Incorrect Tax Returns

1. Penalties For Incorrect Tax Returns

2. There are, of course, strict penalties in place for those who incorrectly file their tax return, whether it’s a business or personal one, but the IRS will not assess a penalty if it owes you or your business, a refund. You can even claim your refund late by filing an amended tax return within three years, but if you owe money to the IRS and fail to pay because of an inaccurate tax return, then they may go ahead and assess penalties and interest. What are the penalties for late payment of taxes? If an underpayment of your taxes was caused by incorrect information on your return, then the IRS will assess a late payment penalty of 0.5% of the total overdue amount for every month that your payment is late.

3. For penalty purposes, any part of a month counts as a full month, with the highest penalty being calculated at 25% of the amount overdue. Penalties for negligence: If you make a straightforward and careless mistake on your tax return, if you purposely ignore tax rules, or if you substantially understate your tax liability, then you may be in line for a negligence penalty. If you’ve understated your tax liability but there is no evidence of further negligence, then you will only incur a negligence penalty if it exceeds $5,000 or 10% of the total amount that you owe – whichever is greater. This penalty amounts to 20% of the overdue amount and can be added on to any other penalties that you might have incurred.

4. Civil fraud penalties: If you purposely try to trick or deceive the IRS and are discovered, then you may incur a civil fraud penalty, which means that if proven, the IRS can fine you 75% of the amount of whatever underpayment that was due to fraud, along with any other penalties that you might have incurred. The IRS is usually on the look-out for false statements or attempts to conceal what they class to be critical information, such as if you fail to report any income that you might have earned from overseas because you thought the IRS would never find out about it.

5. Interest on overdue taxes: Interest rate charges for overdue taxes are reassessed by the IRS every quarter, and interest is compounded daily; there is no maximum cumulative interest charge. Penalties for evading taxes: Tax evasion is when the individual has purposely tried to deceive the IRS and can also be prosecuted in much the same way as civil fraud. Overstating your deductions deliberately is one example of tax evasion, and the maximum penalty is 5 years in prison and a $250,000 fine.

6. Tax underpayments and joint liability: Even if you are not the one who has made a mistake on your return, but you file jointly, you are also liable for any resulting tax underpayment. Joint liability means that the IRS can either come after you alone or both of you unless they grant you relief under the tax code’s ‘innocent spouse’ provisions. The best way to avoid incurring any penalties when filing your tax return is to employ a tax professional who will ensure that your returns are accurate, honest and timely.

7. At Heyer & Associates, we proactively assist our individual and small business clients in meeting their goals. Our key area of focus is ensuring that our clients remain compliant with federal and state tax laws by providing them with high quality accounting and tax service Coral Gables. If you are looking for individual tax preparation in Miami , Heyer & Associates would be a right option.