Penalties Feed

Uncle Sam is always on the lookout for people who try to evade taxes by hiding money in foreign accounts. To keep track of taxable money abroad, the federal government relies on two agencies, the Internal Revenue Service and its sister agency within the U.S. Treasury, the Financial Crimes Enforcement Network, usually referred to as FinCEN. FinCEN requires a special filing from some of Form 114, Report of Foreign Bank and Financial Accounts, usually referred to as FBAR. FBAR filings have long been a pain for Americans who hold assets abroad. A couple of years ago, Treasury tried to make... Read more →


Taxpayers and their tax pros have faced many and new hassles this filing season, primarily because of COVID-19 challenges. Do any of these 2020 tax season situations qualify as an acceptable reason to waive associated filing penalties? Maybe. Technology, and especially tax tech, is great. Until it isn't. That was my reaction when I learned that a lot of tax professionals were left in the lurch yesterday when their tax software provider's e-file system crashed just as they were submitting — or trying to — businesses clients' tax returns that were due Sept. 15. The issue, as you can imagine,... Read more →


The growing acceptance of electronic financial transactions has pretty much put an end to paper checks. Pretty much, but not totally. Some people still send old-school paper checks. And some of them sent such pen-to-paper payments to the Internal Revenue Service earlier this year to cover their due taxes. Unfortunately for the payers, their checks arrived at IRS offices that were closed as part of the agency's coronavirus pandemic precautions. And now that the IRS is digging those payments out of its massive mail backlog, there's a possibility that some of the months-old checks could bounce. But the agency is... Read more →


Ways and Means Chairman Richard Neal (D-Massachusetts), right, and his colleague, the late Rep. John Lewis (D-Georgia), conduct a hearing in pre-pandemic days. (W&M Committee photo) In a recent post about the Internal Revenue Service sending out nonpayment notices that it knew were wrong, I asked now what? Ways and Means Committee Chairman Rep. Richard Neal has one answer. The Massachusetts Democrat is calling on the IRS to stop sending tax bills until the agency catches up on its huge mail backlog. Stop the notices: In a letter to IRS Commissioner Chuck Rettig, Neal noted that this summer, following IRS... Read more →


Photo via Office of the U.S. Postal Service Inspector General And the crazy that is COVID-19 tax season 2020 keeps on coming. The recent buzz on tax social media was/is about Internal Revenue Service balance-due notices that arrived in folks' mailboxes. However, the people who got the notices did file on time and did pay when they filed. So what gives? The problem, in most cases, is that the payments were/are stuck in the agency's huge — 10 million pieces — U.S. Postal Service mail backlog. Since those initial concerns were aired on social media (thank you #TaxTwitter!), things seem... Read more →


via GIPHY The long-delayed Tax Day 2020 came and went yesterday and you weren't part of it. Maybe you were distracted by COVID-19 worries or financial concerns brought about by the pandemic. I get it. Family crammed together for weeks, savings are running low and every ache sends you online to check coronavirus symptoms. Taxes just don't seem that important. But Uncle Sam and his tax folks are back at their jobs and they're doing them. To ensure that you don't run too afoul of the Internal Revenue Service, here are four steps you need to take as soon as... Read more →


We're less than two months from Tax Day 2020, which was pushed to July 15 due to the coronavirus pandemic. Or are we? There's been some talk and a few actual reports in the media that the White House is contemplating pushing the tax deadline back again, possibly to Sept. 15 or even mid-December. Just talk, so far: An NBC News report noted that talks of an even later Tax Day are preliminary. In that same article, Trump Administration officials stressed that no tax date change decision has been made. But some in the tax community are still a little... Read more →


The first two estimated tax payments for 2020 aren't due this week because of COVID-19 changes, but it's still time to look at how much you owe via 1040-ES and how best to figure those amounts. I've paid estimated taxes for almost as long as I've filed taxes. These payments, in case this tax is new to you, are the equivalent of withholding. With estimated taxes, however, we taxpayers must cover the income (and usually other) tax on things like freelance earnings or investment payouts since we get the money without anything being taken out beforehand for Uncle Sam. There... Read more →


Image via GotCredit.com The year's first obvious and, for some, painful acknowledgement of taxes is next week. Jan. 15 is the due date for the final estimated tax payment for the 2019 tax year. That upcoming deadline day is this weekend's By the Numbers figure. Generally, if you expect you'll owe more than $1,000 in taxes, then you must pay estimated taxes throughout the year. If you've been paying estimated taxes for a while, you already know that these payments cover earnings that aren't subject to withholding. This includes things like investment earnings that pay out periodically during the year... Read more →


Greek street market vendors offer just about everything. (Photo: Travels with Gerri-Travellerspoint) Every day, more Americans go digital, at least partially, when comes to their finances. We pay via our smartphone features and apps. Our paychecks or gig earnings are directly deposited. Even the Internal Revenue Service is nudging (and sometimes shoving) us to handle our tax tasks electronically. But we are nowhere near where Greece is going. That Mediterranean country, the one that's been on the financial edge or over it for years, now is forcing its residents to use electronic transactions equal to around a third of their... Read more →


Welcome to Part 9 of the ol' blog's 2020 series on tax inflation adjustments. We started on Nov. 6 with a look at next year's income tax brackets and rates. Today we look at how much tax penalties could cost you or your tax preparer next year. Note: The 2020 figures in this post apply to 2020 returns to be filed in 2021. For comparison purposes, you'll also find 2019 amounts to be used in filing 2019 returns due April 15, 2020. IRS agents don't throw flags like football referees, but the tax agency isn't afraid to blow the whistle... Read more →


Halloween is almost here. Are you still looking for a costume? Here's a suggestion. Go as the Internal Revenue Service. On this annual night of frights, Uncle Sam's tax collector offers plenty of scares. Here are four terrifying tax situations to get you in a Halloween mood. Be afraid, but also be prepared, on this Oct. 31 as well as year-round. 1. Audit: There's no need to build up to this scare, which can occur any time of the year. Fear of an IRS audit is one of the biggest tax terrors for most people, even (or maybe especially) those... Read more →


April 15 came and went without you. You didn't file your annual Form 1040. You didn't send in an extension request to get six more months to file your return either. And you definitely didn't get around to sending the Internal Revenue Service the balance of the tax you owed on last year's income. Hey, I'm not judging. Things happen. But if you don't want to have to fork over even more cash to Uncle Sam, then you better get to work on your 2018 tax return and get it to the IRS soon. June 14 soon. After that date... Read more →


Most U.S. taxpayers filed their annual tax returns or got extension on Monday, April 15. But what about folks who missed the Tax Day deadline? Don't panic, but don't procrastinate any longer. The IRS is serious about hearing from you each April. It imposes three main filing-related penalties, the harshest of which is for not filing. Here are four things late-filing steps you need to take ASAP. 1. File a return. Yes, the filing deadline is over. But still get the IRS a return. Now. You need to get something into the IRS system that will show the tax man... Read more →


The time left until Tax Day is tick, tick, ticking away. If you're feeling like silent movie legend Harold Lloyd (pictured above), hanging on by your fingernails as you try to get your tax filing act together, I have some good news and some bad news. The bad news is that there's no way to stop the tax deadline clock. The good news is you can get an extension to file your 1040. By filing for an extension, the Internal Revenue Service will give you six more months, up to Oct. 15, to submit your return. You still have to... Read more →


That's me in mid-February doing my personal Groundhog Day shadow prediction that warm weather was back to stay. (The full image is on my Instagram page.) I was sooooo wrong. A couple of weeks ago, ecstatic over the return of warm weather and sunshine to Central Texas, I celebrated the arrival of spring. Was I ever wrong. Today is cold, wet — I swear it was sleeting when I ran to my car this morning after yoga class! — and downright dreary. And it's only supposed to get worse, with local meteorologists predicting the latest hard freeze ever for the... Read more →


Most taxpayers every year end up getting refunds. But some folks are at the opposite end of the tax spectrum. They owe Uncle Sam at filing time. And some of those owing taxpayers end up in an even worse situation. Their tax bills are large enough that they also face added penalty charges. This filing season, though, those penalty-paying taxpayers could get a break. Tax underpayment penalty calculations: A tax penalty assessment usually occurs when wage earners don't have enough income tax withheld from paychecks or, if they have other income not subject to withholding, don't pay enough (or any)... Read more →


The current, and longest-ever, federal government shutdown has made it painfully clear that many of Uncle Sam's employees don't have an emergency savings cushion. They are not alone. A study released last summer found that only about a quarter of all Americans across nearly all ages and generations have no savings whatsoever in an emergency fund. Just more than a quarter of U.S. residents, 29 percent, had saved enough to cover six months' worth of living expenses. When people do save, they tend to do so for retirement. It's not necessarily that they're looking ahead to their golden years. Rather,... Read more →


Welcome to Part 9 of the ol' blog's 2019 series on tax inflation adjustments. Today we look at tax penalties. You can find links to all 2019 inflation posts in the series' first item: income tax brackets and rates. Note: The 2019 figures apply to 2019 returns that are due in April 2020. For comparison purposes, you'll also find 2018 amounts to be used in filing this year's 2018 tax return due April 15, 2019. IRS agents don't throw flags like football referees, but the tax agency keeps a close eye out for violation of tax rules and laws and... Read more →


Each year, the Internal Revenue Service assesses estimated tax penalties against millions of taxpayers. This added money typically is due the IRS when a taxpayer pays too little total tax during the year. The last time the IRS released complete estimated tax penalty data was three years ago. The federal tax agency said back then that the average estimated tax penalty, which is based on the interest rate charged by the IRS on unpaid tax, was about $130. Back in September 2015, the IRS said it was seeing more taxpayers run into the estimated tax penalty. The number jumped about... Read more →