5 things to consider if the new tax law has you thinking about becoming an independent contractor
Calculating your new tax law bill

File by June 14 to avoid higher late-filing tax penalties

Tax-penalty-IRS-equivalent-of-red-card

Millions of folks filed for an extension last April, getting six more months to finish their 2017 Form 1040. They also paid their expected tax bill, or as much as they could, then so as to avoid late- or nonpayment penalties.

Some taxpayers, however, always blow off this annual tax duty entirely. They don't finish he Internal Revenue Service forms. They don't send them and the money to Uncle Sam at all.

They might have good reasons for the tax oversight. Or they might just be ignoring their civic tax duties.

Regardless, the oversight is gonna hurt. But it doesn't have to be quite so painful.

60 day semi-reprieve: The IRS says that if you haven't yet filed or paid last year's taxes, you can avoid a larger penalty assessment by doing soon. Like within a week.

Under current tax law, folks who owe tax and file their federal income tax return more than 60 days after the deadline usually face a higher late-filing penalty.

If, however, they get those overdue tax forms and payments in before that two-month period expires, they'll avoid the penalty increase. The deadline to do that this year is next Thursday, June 14.

I don't know about y'all, but paying the IRS any penny more than you have to, either in tax owed or penalties assessed, seems like a really bad — OK, I'll say it: stupid — move.

So if for whatever reason you haven't filed anything yet in connection with your 2017 taxes, you've just under a week to get that done and face the somewhat lower penalty charges.

Penalty amounts: Ordinarily, the late-filing penalty, also known as the failure-to-file penalty, is assessed when a taxpayer fails to file a tax return or request an extension by the due date.

This penalty, which only applies if there is unpaid tax, is usually 5 percent for each month or part of a month that a tax return is late.

If a tax return is filed more than 60 days after the April due date — or more than 60 days after the October deadline if an extension was obtained — the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less.

This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

Late-payment penalties still possible: The late-filing penalty does not apply to the more than 135 million taxpayers who did get their 2017 tax returns to the IRS by the glitch-extended April 18 deadline.

It also won't apply to the estimated 14 million taxpayers who asked the IRS for a six-month extension of time to file, as long as the complete their form filing by Oct. 15.

And if you are expecting a refund and didn't file, you're also OK since the penalty applies only when tax is due.

However, if you did file or requested an extension, but did not pay enough back in April to cover your full 2017 tax liability, then any balance you still owe is subject to a late-payment penalty, as well as interest charges.

In fact, the IRS already has said it's preparing bills (with the added costs, of course) for those folks.

The late-payment penalty, also known as the failure-to-pay penalty, is usually one-half of 1 percent of the unpaid tax for each month or part of a month the payment is late. Interest, currently at the rate of 5 percent per year, compounded daily, also applies to any payment made after the original April due date.

You can end the accrual of these added amounts by completing your return and paying any still due tax ASAP.

Even then, you'll still hear from the IRS. Once your return is filed, the agency will figure any applicable penalty and interest due from the late filing and late payment and send you a bill. You'll have 21 days to pay any amount due.

Possible penalty relief: Taxpayers who have a history of filing and paying on time often qualify to have the late filing and payment penalties abated.

A taxpayer usually qualifies for this relief if they haven't been assessed penalties for the past three years and they meet other requirements. You can find more on penalty relief at IRS.gov's First-Time Penalty Abatement web page.

Even if a taxpayer does not qualify for this special relief, they may still be able to have penalties reduced or eliminated if their failure to file or pay on time was due to reasonable cause and not willful neglect.

The bottom line is that the IRS is serious about getting what you owe. And if you're late in paying, it's serious about getting even more money from you.

So finish your 1040 and pay what you owe as soon as you can. That's the only way to stop the running of the IRS money meter.

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