It's very important that you do your very best to have your tax returns filed timely, preferably by April fifteenth. If needed, you can file for an extension. - The reason for filing on time is the harsh penalty for filing late. The penalty is 5% per month or any part thereof. This means that even if you're only one day late, you will still be penalized with 5% of the total tax you owe. If you're four months and one day late, the penalty will be at 25%, which is the maximum cap for the penalty. This penalty can be very harsh. - My advice is to first get your tax return filed, even if you anticipate having to amend it later, or even if you don't have the money to pay your taxes. By filing on time, you can avoid incurring the very harsh penalties. - Additionally, there is another penalty called the failure to pay penalty. This penalty is generally at a rate of 1/2 of 1% per month, also capped at 25%. This means it is equivalent to an annual rate of 6%. - In addition to these penalties, you will also need to pay interest. Currently, the interest rate has been relatively small at around 3% per annum. It's important to note that the interest is calculated on the tax amount owed, as well as on the penalties and accumulated interest. Furthermore, the interest is compounded daily. - It's worth mentioning that the IRS has many other penalties, which go beyond the scope of this discussion. Over the past few years, the IRS has become increasingly aggressive in asserting and collecting all of these penalties. - However, there are ways to potentially reduce or eliminate these penalties. It's crucial to consult a lawyer or qualified CPA to explore options for...
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Video instructions and help with filling out and completing Form 2220 Taxable
