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When you retire, you don’t want to pinch pennies. These are the 10 least tax-friendly states for retirees, according to GOBankingRates.
If you owe money to the IRS that you can’t pay, you’re probably pretty nervous with the tax deadline approaching. While you may be tempted to skip filing your taxes and hope the IRS doesn’t notice you owe money, that’s a really bad idea. Not only will the IRS likely fine you, but you’ll face much harsher penalties for not filing your tax returns than you’d face for not paying the amount you owe.
When do you owe a penalty to the IRS?
If you don’t file your taxes when the IRS owes you money, you won’t be penalized financially. However, you need to file to obtain any refund. You have until 2021 to file your return and still claim a refund on your 2017 taxes.
If you owe money to the IRS, you need to file your tax returns and pay what you owe by April 17, 2018 for the 2017 tax year. If you can’t file by the deadline, you can request an extension until October 15, 2018.
An extension on your time to file is not an extension on the time you have to pay what you owe. If you get a filing extension but don’t pay your tax bill by April 18, you’ll still face late-payment penalties in most cases. Penalties for failing to file your taxes and paying your taxes late are both charged in addition to any interest you owe on your unpaid tax balance.
The failure-to-file penalty is much higher
If you don’t file your taxes when you owe money, you could be hit with not one, but two penalties imposed by the IRS: failure to file and failure to pay.
A quick glance at these penalties shows why it’s so important that you file your taxes on time, even if you can’t pay on time. In most cases, the failure-to-file penalty is 10 times greater than the failure-to-pay penalty.
Keeping penalties to a minimum
Filing your taxes on time, even if you can’t pay what you owe, is just one of several steps you can take to try to keep your IRS penalties to a minimum. You may wish to consider whether you could potentially take a personal loan to pay what you owe, depending upon whether the loan rate is lower than the penalties and interest the IRS will charge you. You could also explore IRS payment plans that can reduce the penalties you’re subjected to.
Finally, to make sure you don’t face the same problem next year, make a plan to save for taxes throughout the year or adjust your withholdings so enough money is taken out of your paycheck to pay the IRS what you owe.
The number one thing people are doing with their tax refund. Elizabeth Keatinge has more.
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