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Tax Tip Tuesday: How to avoid penalties and interest

Stacy Engle, an IRS spokesperson based in Indianapolis, says if you don’t file because you can’t pay, you an be hit with penalties for failure to file and failure to pay.
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Posted at 8:00 AM, Apr 04, 2023
and last updated 2023-04-04 18:27:37-04

INDIANAPOLIS—Many taxpayers file their taxes late because they can’t afford to pay the state or federal government, but the Internal Revenue Service says that’s a huge mistake.

In this week’s Tax Tip Tuesday, WRTV Investigates Kara Kenney explains how you can avoid late penalties.
 
The IRS points out you have all kinds of options to pay:

Stacy Engle, an IRS spokesperson based in Indianapolis, says if you don’t file because you can’t pay, you an be hit with penalties for failure to file and failure to pay.

"Paying on time will open your doors to options for the payments, so if you can't pay, maybe you can qualify for a payment plan, maybe you can qualify for what some people think of as a settlement or other options for people that literally can't pay anything,” said Engle. “At least file the tax return. That gives the IRS the correct information and to be able to help you. If you don't file we don't know what's going on or why you haven't filed or if you even owe.”

  • The Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes.
  • The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes.

You can create an account on www.irs.gov, which will allow you to view how much you owe and how to schedule a payment.