We are here to address the T word! Wondering what we are talking about? It’s not Trump but taxes! The word can be a dreading nightmare if it’s not cleared on time. While income tax rules differ from country to country, in the United States, the taxes are imposed by the federal government and most states, with rates applied to taxable income.
Individuals and corporations are taxed according to their annual earnings, with the tax rates increasing as incomes also get higher. Estates and trusts may also be subjected to taxation. Meanwhile, the federal government has been following the tax system since 1913, and the system has been modified according to new tax laws being issued over time.
As per a report, most taxpayers in America file their taxes by April 15 of the new year, with taxes withheld or paid in advance. The top 50% of earners pay the majority of federal income taxes, with the top 1% paying a notable share.
Those residents who fail to pay their taxes on time receive notice from the IRS about the “failure to file” penalty. This penalty is 5% of any unpaid taxes for each month, or partial month, the return is late, up to a maximum of 25%, according to the IRS (Internal Revenue Service).
The IRS is a necessary government body in the U.S. that is responsible for monitoring and allocating tax rules and looking after all the nitty-gritty of the procedure. These procedures are done so that the government can collect the necessary revenue to fund projects and services that can enhance people’s lives in the country.
Furthermore, failure to pay taxes on time would result in a fine, but payers can also contest these penalties if they believe they acted in good faith and can demonstrate a reasonable cause for missing the deadline. Moreover, citizens can also contact the IRS team and plead to remove the penalty depending on the amount and situation.
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However, the interest amount cannot be reduced; it can only be waived. Consequently, for those unable to pay taxes in full amounts, the IRS offers the option to apply for an online payment plan to pay over time. Also, certain taxpayers, like military members serving in combat zones and their spouses, receive a 180-day extension after leaving the combat zone for both filing and payment.
Similarly, people who have businesses and work situated in FEMA-designated disaster areas may also have their deadlines extended. In addition, U.S. citizens and residents living overseas, including Puerto Ricans, are given an extra two-month extension, which makes their final date June 15, 2025.
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Lastly, Individuals who wish to apply for a tax extension request can use the Free File program to request an extension by the April 15 deadline by submitting Form 4868, Application for Automatic Extension of Time to File U.S.
Another painless way is to request an extension by completing an electronic payment through the Electronic Federal Tax Payment System (EFTPS), using a credit or debit card, or via IRS Direct Pay. More details are available on the IRS website.
