If you cannot pay your tax bill when it is due, the outstanding amount owed will begin to accrue interest and penalties. If time goes on without any payment to the IRS, they may put liens on your property or garnish your wages. In extreme cases of tax evasion, violators may be subjected to jail time.
Any significant changes to your annual income can push you to the next tax bracket. This means that the additional money received may be taxed at a higher rate. The good news is that the original income that you were anticipating throughout the year will not be taxed at a higher rate. The federal tax system in the United States is progressive, which means as your income increases only these additional portions that exceed the limits of a current tax bracket are taxed at a higher rate.
For each month that your estimated tax payment is due, but not paid, the IRS charges a 0.5% penalty. As the months go by, this penalty percentage will increase to a maximum of 25% of the taxes owed. Quarterly estimated tax payments are due April 15th, June 15th, September 15th, and January 15th of the following year. When the date falls on a weekend, the payment is due the following weekday. A missed payment is seen by the IRS as an underpayment and is treated as such.
To file a tax amendment, you will need to submit new forms for the sections of your taxes that are being amended. The IRS’ web site allows you to download these forms from previous tax years. You will need to submit the 1040X form, also available on the IRS web site. Using this form, you can write in the reason for filing the amendment.
A Brookline resident needed to make an amendment to a previous year’s tax return. Wanting to make sure this was done properly, he contacted Merrimack Tax Associates.
Unmarried individuals have the option of either single or head of household as their tax status. When filing as head of household, you have a much higher standard deduction than single filers, as well as a better overall tax rate. To qualify as head of household you must be unmarried, pay greater than half the costs of supporting a household and have at least one dependent that lives with you.
A rite of passage for any working teen is the filing of their first income tax. A status as a dependent does not exempt your child from filing income taxes. If the child’s earned income reaches $12,200 or unearned income, from investment interest, above $1,100. For those that are self-employed generating income, if the net earnings exceed $400 an income tax return must be filed.