Kemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Written By Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Tax Writer Caren Weiner Personal Finance EditorSince her first tax article appearing more than three decades ago in Money magazine, Caren Weiner has written and edited stories about money management topics ranging from investment fees and health costs to household budgets. Her finance- and invest.
Caren Weiner Personal Finance EditorSince her first tax article appearing more than three decades ago in Money magazine, Caren Weiner has written and edited stories about money management topics ranging from investment fees and health costs to household budgets. Her finance- and invest.
Caren Weiner Personal Finance EditorSince her first tax article appearing more than three decades ago in Money magazine, Caren Weiner has written and edited stories about money management topics ranging from investment fees and health costs to household budgets. Her finance- and invest.
Caren Weiner Personal Finance EditorSince her first tax article appearing more than three decades ago in Money magazine, Caren Weiner has written and edited stories about money management topics ranging from investment fees and health costs to household budgets. Her finance- and invest.
| Personal Finance Editor
Updated: Feb 27, 2024, 4:03pm
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If the IRS has assessed a tax penalty on your account for the first time, don’t panic. You may qualify for a relief measure known as a first-time penalty abatement.
This penalty abatement waives certain penalties for one tax period. To be eligible, however, you must have a history of good tax compliance.
The IRS considers you compliant if you’ve filed returns for the past three years with no penalty.
For example, let’s say you received an IRS failure-to-pay penalty on your 2023 tax return. For tax years 2022, 2021 and 2020, however, you filed and paid properly and did not request the first-time penalty abatement.
In that case, you could qualify for a penalty abatement on your 2023 taxes.
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Generally, the IRS allows a first-time penalty abatement for three types of penalties: failure to file, failure to pay and failure to deposit.
The failure-to-file penalty is applied when you don’t file your tax return by the due date. It may be charged to an individual, S corporation or partnership tax return.
For individuals, the penalty amount is generally a percentage of the taxes you owe. The penalty can’t exceed 25% of your unpaid tax, but interest will accrue on it.
For partnership or S corporation tax returns, the IRS determines the penalty based on the number of shareholders or partners who were on record at any time during the tax year.
For the 2023 tax year, the IRS charges S corporations and partnerships a late filing penalty of $220 for each shareholder or partner. The penalty is assessed for each full or partial month of lateness; it maxes out at 12 months.
You may also qualify if the IRS penalizes you for paying your taxes late.
The agency imposes a failure-to-pay penalty when you haven’t paid the tax amount reported on your return by the due date—or when you fail to report the correct tax and leave some or all of it unpaid. The penalty is assessed as a percentage of the unpaid taxes, but it won’t exceed 25% of the amount owed. Interest will apply to the penalty amount.
However, if the IRS charges you both penalties for the same month, the failure-to-file penalty will be reduced. The reduction is equal to the amount of that month’s failure-to-pay penalty.
The IRS provides first-time penalty relief for the failure-to-deposit penalty as well.
Employers must send employment tax deposits monthly or semi-weekly, depending on their tax deposits. The IRS will penalize an employer who fails to make tax deposits on time for:
The agency also charges this penalty if the employer fails to deposit the correct amount or deposits it in the wrong way. The amount of the penalty varies; it’s based on the percentage of the taxes that were deposited improperly.
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Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make informed tax decisions. Her work has been featured in Yahoo Finance, Bankrate.com, SmartAsset, Black Enterprise, New Orleans Agenda, and more. She frequently appears on NBC's WDSU news broadcast.
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