File Old Tax Returns

Should I Amend My Tax Return?

Sometimes you will get a Form 1099 or Form K1 after you already filed your income tax return. Sometimes you will “remember” that W2 or 1099-MISC that you should have gotten in the mail but didn’t (like when you move and don’t tell your old employer). No matter what the reason is, sometimes you simply need to make some changes to your return. But what changes require you to file an amendment and just how do you go about the whole thing? Keep reading dear friend, keep reading.

When you should make changes.

Amend to correct errors. You should file an amended tax return to correct errors or make changes that are needed to your original tax return. For example, you should amend to change your filing status, correct the amount of income reported, or fix erroneous/omitted deductions or credits.

Don’t amend for errors where the IRS also receives a form. You normally won’t need to file an amended return to correct math errors where the IRS receives the same form. The IRS will typically correct those for you. For example, if you failed to report $1,000 of interest reported on Form 1099-INT, the IRS will usually fix it and send you a letter telling you they did so. But if you transposed the income number for your cash based vending machine business on Schedule C (i.e. $8,999 vs $9,899) then you’ll want to file an amendment to report the correct figure as the IRS will never know it is wrong.

How long do you have to file your amendment?

You usually have three years from the due date of your original tax return to file an amended return. This is particularly true if you need to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. For example, the last day for most people to file a 2011 claim for a refund was April 15, 2015 as the due date for that return was April 15, 2012. For more information about this and other IRS statute of limitations, check out this post.

How do you file an amendment?

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return. Note that this form must be filed via paper as it can’t be e-filed. As such, check out this post on the IRS website for the address applicable to your state as to where it should be mailed. It should also be noted that you will want to include the Form 1040X, the original schedules that you filed and then the amended or changed schedules. This way the IRS will be able to see what was originally filed and what was changed.

Other helpful things to know.

Wait to file for a “second” refund. If you are due a refund from your original return, wait to get that refund before filing and amended return to claim an “additional” refund. Amended returns take up to 16 weeks to process so:

you don’t want things to get crossed up in the IRS system by having two returns being simultaneously processed.
expect to wait a while before you receive your money. Amended refunds will come via check, even if you provide direct deposit information.

Pay additional tax as soon as you can. If you owe more tax as a result of your amendment, pay the tax as soon as you can. This will stop interest and penalties from accruing unnecessarily. You can use IRS Direct Pay to pay this amount directly from your checking or savings account

Don’t amend to correct Form 1095-A errors. Taxpayers who filed a 2014 tax return and claimed a premium tax credit using incorrect information generally do not have to file an amended return even if additional taxes would be owed. The IRS may contact you to ask for a copy of your corrected Form 1095-A to verify the information.

Track your amended return. You can track the status of your amended tax return three weeks after it’s been filed with the IRS ‘Where’s My Amended Return?’ online tool or by calling 866-464-2050. The tool can track the status of an amended return for the current year and up to three years back. If you have filed amended returns for multiple years, you can check each year one at a time.

Need help filing your amendment?

If you don’t want to go through the hassle of doing all those calculations, filling out the various forms and then trudging down to the post office to wait in line and mail them, why not give us a call? We’d be happy to help you navigate the process and get the correct forms to the IRS ASAP.

States With No Income Tax

When tax time rolls around, you typically have to file a state income tax return at the same time that you file your federal income tax return. However, if you live or work in one of these seven states you will not have to file an income tax return come tax time:

Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

In addition to the above states, the following two only tax income from dividends and interest:

Tennessee
New Hampshire

Living in one of these states will certainly save you from the hassle of having to file an extra return during tax season, but it won’t necessarily save you any money. These states make up for the gap left by not collecting income taxes by charging relatively higher property, sales, and fuel taxes. Based on 2013 data, the following graphics indicate where each of these states derived their revenue:

Normally, you have to file a resident tax return in the state where you are a resident. That state will tax you on all of the income earned, no matter what state it is from. Thus things can get a little complicated if you live near the boarder in any of the “non-tax” states but work in one that does charge its residents an income tax.

So if you are a resident of a state without an income tax, you will still need to file a return in any other state where you earned money. Conversely, if you are a resident of a state with an income tax, but you work in one of the seven without one, you will not have to file a nonresident return there.

Remember, you can easily take care of all your state income tax returns at the same time you file your Federal return. Have unfiled state returns that you need to take care of? Feel free to give us a call or shoot us an email.

How To File Old Tax Returns

Even in the dead of winter, we’ll file your old taxes!

If you’ve missed the April 15^th deadline but for whatever reason, you STILL need to file your tax return, you might be a little confused as to what to do. Do you need to mail it? Can you send it in via E-File? Keep reading to find out your options.

Current Tax Year and Date Is BEFORE October 15^th
If you missed the deadline but you are filing before October 15^th, then you can still E-File your return. The IRS shuts down the E-File system in October to get everything ready for the next filing season, so you only have until then to get your return transmitted. Your options for doing this are to:

Use IRS Free File or Fillable Forms. There are stipulations regarding these options which you can read more about here.
Use Commercial Software.
Find an Authorized E-File Provider. File Old Tax Returns is an authorized E-File Provider via Wilson Rogers & Company, Inc. We can gladly help you in preparing, filing and transmitting your current year tax return.

Current OR Prior Tax Year and Date Is AFTER October 15^th
Well, that means that you’ve missed the E-File window and your only option is to mail a paper copy of your return to the IRS.

The following are the steps you need to take to get your return prepared and ready for mailing:

Gather your supporting documents. Look for your old tax documents, such as W-2s, 1099s, or 1098s. You will need these documents to file your return(s), as the IRS will expect you to report on your return what was reported to them via these forms.
Request transcripts if necessary. The most elusive documents for most clients are their wage and income forms. The easiest way to obtain them is to contact your old company. However, it’s never a sure bet that they’ll have the information on record, especially if it’s from several years ago. Alternatively, you can always get copies directly from the IRS by requesting a “Wage and Income” transcript via the IRS Get Transcript Service. If you can’t access the web service you can always use Form 4506-T, Request for Transcript of Tax Return
Prepare your return(s). This is where the rubber meets the road. The three steps that we outline under preparing your return before E-File shuts down apply here. You can use the IRS fillable forms, find prior year software or hire a tax professional. If you want to know how our process works, just download these instructions or give us a call at 844-TAXES88 (844-829-3788).
- For filing back taxes, you should seriously consider hiring a tax professional. Since you are already late on filing, it would be in your best interest to file accurate returns the first time. This way, you don’t have to worry about a bunch of back and forth with the IRS asking you to make corrections via dozens of letters to your house.
- A tax professional can also help to ensure that all of the deductions and credits applicable to that year are applied to your return. Remember, tax law changes each year and remember what was applicable in 2007 in 2015 might be a bit of a stretch. But services such as ours always retain the applicable reference literature so that we can prepare an accurate return, not matter how many years late it is being filed.
Mail In Your Return. In this post we tell you the addresses where you can send your old tax return once you’ve finished preparing it. Note that you must send it to a different IRS Service Center depending on 1) if you are sending them money or not and 2) where you live.
Address any balances owed. This post from our sister site discusses how to deal with any outstanding balances. Our basic recommendation is to 1) respond to any IRS or state correspondence, 2) assess what options are available to you and 3) enter into an appropriate resolution. Once you’ve filed the returns and addressed the balances (if any) you are ready to move forward. Just make sure that you remember to file your returns going forward or you’ll find yourself reading this post all over again!

Tax Year 2015 IRS Calendar

Wondering when certain taxes are due? Need to know the exact deadlines? Take a look at this post as we outline the tax deadlines for individuals/businesses and employers. For further details, chck out IRS Publication 509.

General Calendar For Individuals, Corporations & Partnerships

January 15, 2015

4th Quarter 2014 Estimated Tax Payment Due If you are self-employed or have other fourth-quarter income that requires you to pay quarterly estimated taxes, get them postmarked by January 15, 2015.

March 16, 2015

Deadline for filing a 2014 corporation or S-corporation return or extension.

April 15, 2015

Individual Tax Returns Due for Tax Year 2014. If you haven’t applied for an extension, e-file or postmark your individual tax returns by midnight April 15, 2015.
Individual Tax Return Extension Form Due for Tax Year 2014. Need more time to prepare your tax return? File your request for a tax extension by April 15 to push your deadline back to October 15, 2015.
1st Quarter 2015 Estimated Tax Payment Due. If you are self-employed or have other first-quarter income that requires you to pay quarterly estimated taxes, get your Form 1040-ES postmarked by April 15, 2015.
Last Day to make a 2014 IRA Contribution. If you haven’t already funded your retirement account for 2014, do so by April 15, 2015. That’s the deadline for a contribution to a traditional IRA, deductible or not, and a Roth IRA. However, if you have a Keogh or SEP and you get a filing extension to October 15, 2015, you can wait until then to put 2014 money into those accounts.

June 15, 2015

Deadline for filing a 2014 personal return for U.S. citizens or residents living and working abroad, including military duty.
2nd Quarter 2015 Estimated Tax Payment Due. If you are self-employed or have other second-quarter income that requires you to pay quarterly estimated taxes, make sure your payment is postmarked by June 15, 2015.

September 15, 2015

Final deadline to file your 2014 corporation, S-corporation, partnership, or estates/trusts tax return if you filed an extension.
3rd Quarter 2015 Estimated Tax Payment Due. If you are self-employed or have other third-quarter income that requires you to pay quarterly estimated taxes, make sure your third quarter payment is postmarked by Sept. 15, 2015.

October 15, 2015

Extended Individual Tax Returns Due . If you got a filing extension on your 2014 tax return, you need to get it completed and postmarked by October 15, 2015.
Last Chance to Recharacterize 2014 Roth IRA Conversion. If you converted a traditional IRA to a Roth during 2014 and paid tax on the conversion with your 2014 return, October 15, 2015 is the deadline for recharacterizing (undoing) the conversion. Doing so could save you money if the IRA has lost money since the time of the original conversion.

January 15, 2016

4th Quarter 2015 Estimated Tax Payment Due. If you are self-employed or have other fourth-quarter income that requires you to pay quarterly estimated taxes, get them postmarked by January 15, 2016.

Employer’s Tax Calendar

January 31, 2015

File Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. However, if you deposited all of the FUTA tax when due, you have 10 additional calendar days to file.
File Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees if you paid wages to one or more farmworkers and the wages were subject to social security and Medicare taxes or federal income tax withholding.
File Form 944, Employer’s Annual Federal Tax Return, for the previous calendar year instead of Form 941 if the IRS has notified you in writing to File Form 944.
Provide Form W-2, Wage and Tax Statement to employees.

February 28, 2015

File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). For electronically filed returns, see By March 31 below.
File paper Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, with the IRS. See section 6 of Publication 15. For electronically filed returns, see By March 31 below.

March 31, 2015

File electronic Forms 1099 and 8027 with the IRS. File electronic Forms W-2 with the SSA. For information on reporting Form W-2 information to the SSA electronically, visit the Social Security Administration’s Employer W-3 Filing Instructions & Information web page.

By April 30, July 31, October 31, and January 31

File Form 941, Employer’s QUARTERLY Federal Tax Return, for the fourth quarter of the previous calendar year. If you timely deposited all taxes when due, you have 10 additional calendar days from January 31 to file the appropriate return.

Cities With An Income Tax

Maybe you are considering moving and want to know if your income taxes will be higher as a result. Maybe you are a tax professional and just want to know what tax returns that new out of state client you landed needs to file. Either way, knowing what cities levy an income tax is always helpful information to have. So without further adieu, here is the summary of cities that impose some form of income tax:

Alabama: Birmingham and Mountain Brook have a 1% occupational tax on gross wages.
Colorado: Three cities impose flat taxes on compensation. Aurora charges $2 per month on compensation over $250, Denver charges $5.75 per month on compensation over $500, and Greenwood Village charges $4 per month on compensation over $250.
District of Columbia: Washington D.C. imposes an income tax at a rate of 4% for the first $10,000 of income, 6% for $10,001 to $40,000 of income, 8.5% for $40,001 to $350,000 and and 8.95% for income over $350,001.
Delaware: Wilmington has a 1.25% tax on income.
Iowa: While not necessarily “cities” there are hundreds of school districts that impose an income tax surcharge on their residents. These surcharges range from 1% up to close to 20% of the state income tax owed.
Indiana: Similar to above, this state’s counties tend to have an individual income tax assessment.
Kentucky: Several cities in Kentucky levy income taxes, some of the larger ones being: Bowling Green (1.85%), Covington (2.5%), Florence (2%), Lexington-Fayette (2.25%), Louisville (2.20% for residents and 1.45% for non-residents), Owensboro (1.33%), Paducah (2%), and Richmond (2%).
Michigan: Several cities in Michigan impose income taxes with rates ranging from 0.50% to 2.50%. Detroit’s income tax rate is 2.50% for residents and 1.25% for non-residents.
Missouri: Both Kansas City and St. Louis have a 1% income tax.
New York: New York City and Yonkers both have individual income taxes. NYC rates range from 2.907% to 3.876%. Effective with tax year 2014, the rate is 16.75% of the net New York State tax (i.e., the sum of all state taxes imposed for a tax year, less any credits).
Ohio: Hundreds of cities in Ohio have an income tax, including Columbus, Toledo, Cincinnati, and Cleveland.
Oregon: The Lane County Mass Transit District (Eugene, Springfield, and surrounding communities) assesses an income tax of 0.67% and Tri-Met Transportation District (Portland) imposes a 0.6918% income tax. However, these taxes are charged to the employers.
Pennsylvania: 2,400+ municipalities and 400+ school districts within Pennsylvania impose a local income tax or local services tax. Take a look at the Earned Income Tax page to learn more regarding the cities.

Understanding Estimated Taxes

When you work for yourself you generally have your employer withhold federal and state (if applicable) income taxes from your wages. Then at the end of the year it becomes a calculation of if you had enough withheld (i.e. you get a refund) or have to make a balance due payment.

But what if you work for yourself (i.e. self employed) and no one is “withholding” anything from your check? Then this post will clue you in on how you make your payments and keep Uncle Sam happy.

What is estimated tax?
Estimated tax is how you pay your taxes when you have income that isn’t subject to withholding. Just think of it as what your employer does for you when you don’t have an employer ( so to speak).

Who has to pay it?
If you are filing as a sole proprietor (Schedule C), or receive income as a partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments. Fortunately, you only have to make payments if you expect to owe tax of $1,000 or more when you file your return.

If you own a corporation, be advised that you generally have to make estimated tax payments if you expect it to owe tax of $500 or more when you file its return.

When are payments due?
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

For the period: Due date:

Jan. 11 – March 31           April 15
April 1 – May 31                June 15
June 1 – August 31          September 15
Sept. 1 – Dec. 31               January 15 of the following year

How do you pay it?
To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. The worksheet in Form 1040-ES will help you figure the amount. You can then make your payment(s) using the voucher contained within or electronically via the EFTPS system.

Each state will have a similar form or electronic platform for you to pay the corresponding state taxes. In our home and surrounding states you would use:

Illinois Form 1040 ES
Indiana Form ES-40
Wisconsin Form 1-ES
Missouri Form 1040ES
Iowa Form 1040ES
Kentucky Form 740ES

What happens if you don’t pay it?
If you didn’t pay enough tax throughout the year (either through withholding or estimated tax payments), you may have to pay a penalty for underpayment of estimated tax. You can avoid this penalty if you owe less than $1,000 in tax after subtracting withholdings and credits, or if you pay at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

Need help estimating your tax liability?
Give us a call at 1-844-829-3788 or shoot us an email via the link below and we’ll be happy to assist you with your quarterly projections, filling out your forms or just coaching you through the process.

Understanding IRS Statute Of Limitations

When dealing with an old tax return, sometimes people wonder just how long the IRS has to come after them for the tax. Sometimes people want to know how long they have to claim their refund. Other times people want to know what happens if there was a mistake. The short answer? It all depends.

Filed Tax Returns:

Deadline for Assessment
Generally, the statute of limitations for the IRS to assess taxes on a taxpayer expires three (3) years from the due date of the return or the date on which it was filed, whichever is later.

However, the IRS has six (6) years to assess additional taxes if:

You omitted income that adds up to more than 25% of the income you reported on your return OR
You fail to included foreign financial assets that breached the reporting thresholds

Deadline For Collections
The IRS statute of limitations period for the collection of taxes, known as the Collection Statute Expiration Date (CSED), is generally ten (10) years. Thus, once an assessment occurs, the IRS has 10 years to collect. If they can’t collect within the time frame then the taxes simply just vanish as a result of being discharged.

Unfiled, False or Fraudulent Returns:

Deadline to Claim Your Refund
The deadline for you to claim a refund on a tax return in which one was owed to you is 3 years from its due date (including extensions). For example, if you were due a refund on your 2011 Income Tax Return (which was due April 15th 2012), you have until April 15th 2015 to claim it. If you don’t file a claim for a refund within three years, the money becomes property of the U.S. Treasury.

Note, there are no interest and penalties for failing to file a return in which a refund was owed. However, if you have a balance due, those items can be pretty stiff as outlined in this post.

No Statute Situations
The IRS has an “unlimited” amount of time to assess taxes against a taxpayer if they can establish that they:

Simply failed to file a return;
Filed a false or fraudulent return; or
Willfully attempted to evade tax

How Does Form W4 Work?

After tax season, many people find themselves in the position where their tax preparer/accountant recommends that they change their withholdings. This typically happens when a person has prepared their return and either has a large refund or balance due. The rule of thumb most will use is that if either of the above is roughly 3% or more of your gross annual salary, you may need to make some changes.

How Form W4 Works
Form W4 is used to tell your payroll department how much you would like taken out of your pay for Federal Income Taxes. You will also have to fill out this form in you live in one of the 41 states that impose an income tax. The simple way to think of this form is that every number listed on the form (called an allowance) is supposed to represent a member of your household. So the greater the number of allowances on the W4, the smaller the amount of taxes withheld becomes. The smaller the number is on the W4, the greater the amount of taxes taken out becomes.

What Are Allowances?
As mentioned above, a withholding allowance is generally meant to represent each member of your family that will be claimed on your tax return. Just you by yourself? Claim 1 allowance. Are you married? Maybe you will claim 2, one for each spouse. Have 3 children? Then it could be 5, one for each spouse and 1 for each child.

Should I File Exempt From Withholding?
Generally speaking, there are very few individuals who should EVER claim that they are exempt from withholding. This is honestly one of the fastest was we see people get into trouble with the IRS and create mountains of tax debt.

The only people who should claim this status are 1) those who do not have a filing requirement and 2) those who were entitled to a full refund of ALL amounts withheld in the previous year. To learn more, take a look at Publication 505 and look at the section on “Exemption From Withholding” and “Figure 1-A.”

What If I Am A Teenager?
If you are a student, you are not automatically exempt from having to pay taxes. If you work only part time or during the summer, you may qualify for exemption from withholding. Thus, if your total income was say $2,500 (which is less than your standard deduction) and you had $375 of income taxes withheld, it would be refunded to you. But if you earned say $8,500, you would have a filing requirement and want to have taxes taken out. At a minimum, you would probably claim 1 withholding allowance just to be safe.

How This All Comes Together At Pay Time and Tax Time
Every week that you are to be paid, your employer’s payroll department will use the number listed on your Form W4 to determine how much to take out. They do this via one of two methods listed in Publication 15, Employer’s Tax Guide. If you go to the “How To Use the Income Tax Withholding Tables” you can see that the employer will take your withholding, look up the appropriate amount to take out based on your filing status, and then cut you a check for the rest. Once again, the greater the number, the smaller the amount of taxes they will withhold.

Fast forward to income tax return time. If you made $15,000 during the year and you were just fling for yourself, you would probably claim 1 exemption and the standard deduction. For tax year 2014, the two amounts combined amounted to $10,150 with the exemption being $3,950. Thus, you would have been taxed on $4,850. But what if it was you and your two children? Then your exemptions would have been $11,850. Add this to your standard deduction (assuming the filing status is now head of household) and you would have been taxed on $0 ($15,000 income – $21,000 standard deduction and 3 exemptions).

As you can see, under the second scenario you would not have had a filing requirement. Thus, if you only had 1 allowance on the W2, you would have had too much income tax taken out and it would have come back to you in the form of a refund. This is why you would have possibly wanted to claim 3 allowances on the W4; so they would have taken less tax out based on the anticipated outcome on your income tax return.

Need Help?
If you need some assistance determining if you are having the correct amount of income taxes withheld, give us a call at the number in the upper right or shoot us an email via the link below.

You can also use the IRS Withholding Calculator to help you determine the correct number of allowances to claim.

Federal & State “Where’s My Refund” Pages

That was easy – for some!

Many of our current year clients begin to get a little worried when their tax refund doesn’t come as quickly as they expect. They often call us and ask us “Where’s my refund?” To that question we usually reply that it can take anywhere between 7-21 days for one to receive their money. If they have any concerns, they can continue to check the status of their refund’s processing via the IRS’ or states website.

Out in cyberspace, the various state tools are housed on each individual site. This post aggregates them into one place for all to search. So no matter if you filed in one, two or nine states, you now have a place where you can check them all via the links provided!

Locate your state below and click on its name to be taken to the applicable “Where’s My Refund” site. If you need further assistance, the name of the appropriate taxing authority and their general phone number is listed. We recommend that you have a copy of your return(s) handy when you visit the appropriate site as it will often want to verify things such as SSN, filing status, refund amount or Adjusted Gross Income (AGI).

Note that you will not find any links for the states of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Why? These nine states don’t have an income tax!

IRS “Where’s My Refund?” Use this link to check on the status of your Federal income tax refund. If you need to speak to someone, feel free to call 1-800-829-1040.

Alabama Alabama Department of Revenue: 1-800-322-4106

Arizona Arizona Department of Revenue: 1-602-255-2060

Arkansas Arkansas Department of Finance and Administration: 1-501-682-1100

California State of California Franchise Tax Board: 1-800-852-5711

Colorado Colorado Department of Revenue: 1-303-238-7378

Connecticut State of Connecticut Department of Revenue Services: 1-860-297-5962.

Delaware Delaware Department of Finance – Division of Revenue: 1-302-577-8200.

District of Columbia District of Columbia Office of Tax and Revenue: 1-202-727-4829

Georgia Georgia Department of Revenue: 1-877-423-6711 option #2.

Hawaii Hawaii Department of Taxation: 1-800-222-3229.

Idaho Idaho Tax Commission: 1-888-228-5770

Illinois Illinois Department of Revenue: 1-800-732-8866

Indiana Indiana Department of Revenue: 1-317-232-2240

Iowa Iowa Department of Revenue: 1-515-281-4966.

Kansas Kansas Department of Revenue: 1-785-368-8222

Kentucky Kentucky Department of Revenue: 1-502-564-1600

Louisiana Louisiana Department of Revenue: 1-855-307-3893

Maine Main Revenue Services: 1-207-626-8475

Maryland Comptroller of Maryland Revenue: 1-410-260-7701 or 1-800-218-8160.

Massachusetts Massachusetts Department of Revenue: 1-617-887-6367

Michigan Michigan Department of Treasury: 1-517-373-3200

Minnesota Minnesota Department of Revenue: 1-651-296-4444

Mississippi Mississippi Department of Revenue: 1-601-923-7801

Missouri Missouri Department of Revenue: 1-573-526-8299

Montana Montana Department of Revenue: 1-866-859-2254

Nebraska Nebraska Department of Revenue: 1-402-471-5729

New Jersey New Jersey Division of Taxation: 1-609-826-4400

New Mexico New Mexico Taxation and Revenue Department: 1-505-827-0827.

New York New York State Department of Taxation and Finance: 1-518-457-5149

North Carolina North Carolina Department of Revenue: 1-877-252-3052

North Dakota North Dakota Office of State Tax Commissioner: 1-701-328-1242.

Ohio Ohio Department of Taxation: 1-800-282-1784

Oklahoma Oklahoma Tax Commission: 1-405-521-3160

Oregon Oregon Department of Revenue: 1-503-378-4988

Pennsylvania Pennsylvania Department of Revenue: 1-717-787-8201

Rhode Island State of Rhode Island Division of Taxation: 1-401-574-8829, option #3.

South Carolina South Carolina Department of Revenue: 1-803-898-5300

Vermont Vermont Department of Taxes: 1-866-828-2865.

Virginia Virginia Department of Taxation: 1-804-367-2486

West Virginia Arizona Department of Revenue: 1-800-982-8297

Wisconsin Wisconsin Department of Revenue: 1-866-947-7363.

Understanding IRS Penalties

Some of our “current Year” clients come in to see us on April 15th. When they do we often ask “why did you wait so long?” Their response usually has something to do with the fact that they knew they owed and didn’t want to pay the IRS before they had to. To this we usually respond with “you can file your return at any time before the April 15th deadline, EVEN if you have a balance due. The payment isn’t due until April 15th and interest and penalties don’t start running until AFTER that date.”

With that said, here are some key things every taxpayer should know about interest and penalties.

No Penalty Situations.

There is no penalty if you’re getting a tax refund, provided that you file within 3 years of the April 15 deadline (or October 15 deadline if you filed an extension).
After 3 years, your unclaimed tax refund is forfeited and becomes the property of the U.S. Treasury.
There is no penalty if you filed an extension AND paid the taxes owed by April 15, as long as you file your return by the October 15 deadline.

Possible Penalties. If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is the failure-to-file penalty for filing late. The second is the failure-to-pay penalty for paying late.

Failure To File Penalty (Late Filing). This penalty applies if you owe taxes and didn’t file your return or extension by April 15. It will also apply if you owe taxes, filed an extension, but didn’t file your return by the extended October 15th deadline.

The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due (as reduced for any credits and estimated payments).
The combined penalty is 5% (4.5% late filing and 0.5% late payment) for each month or fraction of a month that your return was late, up to a maximum amount of 25%.
If your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $135 or 100% of the tax shown on the return.
If after five months you still have not paid, the failure-to-file penalty will max out.

Failure To Pay Penalty (Late Payment). This penalty applies if you didn’t pay the taxes owed by April 15, whether you filed an extension or not.

The late-payment penalty is 0.5% (1/2 of 1%) of the tax owed for each month or fraction of a month that the tax remains unpaid after the due date, up to a maximum of 25%.
The 0.5% rate increases to 1% per month if the tax remains unpaid after several notices and 10 days after the IRS issues a final notice of intent to levy or seize property.
For any month(s) in which both the late-payment and late-filing penalties apply, the 0.5% late-payment penalty is waived.
You will not have to pay the penalty if you can show reasonable cause for the failure to pay on time.
If your return was filed timely and you are paying your tax via an installment agreement, the penalty is 0.25% for each month or part of a month that the installment agreement is in effect.

Accuracy Related Penalties. These penalties are not really related to filing your return on time, but we include them here because one can find them subject to them by not filing all of the income documents associated with their return (e.g. forget to include a sizable 1099-MISC). The two most common accuracy related penalties are the “substantial understatement” penalty and the “negligence or disregard of the rules or regulations” penalty. These penalties are calculated as a flat 20 percent of the net understatement of tax.

Penalty for substantial understatement. You understate your tax if the tax shown on your return is less than the correct tax. The understatement is substantial if it is more than the larger of 10 percent of the correct tax or $5,000 for individuals.
Penalty for negligence and disregard of the rules and regulations. This penalty may be assessed if you carelessly, recklessly or intentionally disregard IRS rules and regulations, take a position on your return with little or no effort to determine whether the position is correct or knowingly taking a position that is incorrect.

Interest. In addition to the penalties, you will have to pay interest on any balance that remains unpaid post April 15th. This interest compounds daily from the due date of the return (regardless of whether an extension was filed or not) until the date of payment.

The interest rate is the federal short-term rate plus 3%.
The federal short-term rate is determined every three months. To find the current rate search “quarterly interest rates” on IRS.gov; the relevant interest rate is the rate for underpayments.

Helpful Tips.

The late filing penalty can be 10 times higher than the late payment penalty. If you can’t pay your tax bill and didn’t file an extension, at least file your return as soon as possible! You can always amend it later.
Always file for an extension if you can. Secondarily, always file your return before your extension runs out or your be subject to the late filing penalty.
Think you owe? File early! This way you will know what the balance due is and can either 1) pay it by April 15th, 2) save your money to do number 1 or 3) prepare to make an alternative arrangement (e.g. borrow, charge it, apply for an installment agreement).

jaredrogers2020-04-04T12:13:04-05:00May 10th, 2015|Categories: IRS Procedures|Tags: IRS accuracy penalty, IRS failure to file penalty, IRS failure to pay penalty, irs installment agreement, IRS interest rates, IRS late filing penalty, IRS late payment penalty, irs penalty, IRS Penalty for negligence and disregard of the rules and regulations., IRS Penalty for substantial understatement, irs penalty rate, understanding IRS penalties, What's the IRS penalty for filing late, What's the IRS penalty for paying late|