Video instructions and help with filling out and completing What Form 2220 Penalties

Instructions and Help about What Form 2220 Penalties

Hello everyone today's video discussion is going to be on the matter of certain penalties that the IRS imposes now there are a number of different penalties that the IRS imposes but I'm only going to speak of those that i think are commonly imposed penalties and those penalties are as follows the failure to file penalty the failure to pay penalty the underpayment of estimated tax penalty and the accuracy related penalty now I'm going to briefly touch on each of these different types of penalties just so that you can have an idea as to why that penalty was imposed against you if you actually got hit with one of those penalties okay so let's first discuss the failure to file penalty and that penalty is imposed for exactly what it sounds like failing to file your tax return by the due dates or if you filed an extension by the extension due date for individuals the filing due date is April fifteenth if you file an extension the due date is October 15 now of course if the 15th falls on a holiday or a weekend you have until that next business day that would be the deadline filing date for corporate filers the due date is March 15 and if you filed an extension the date is September 15 so now that you know the due dates there's no excuse for you not filing by those dates right right ok so again the failure to file penalty will be assessed against you if you fail to file your return and you have a tax liability that's due now if you're due a refund and you do not file that failure to file penalty does not apply again the failure to file penalty applies if you have a tax balanced view and for more information on how they calculate that penalty you can refer to the IRS's website which is a WWII RS gov or you can also google failure to file penalty IRS and there will be a number of links that Sheila so that's the failure to file penalty now let's talk about the failure to pay penalty and again that penalty is what it sounds like it's a penalty for failing to pay the tax liability do by the due date now let me explain something that seems to be confusing to some people they figure that if they file an extension they have an extension of time to pay any tax balance that's due that's incorrect no an extension of time filing an extension which is a form 4868 is only an extension of time to pay to file the paperwork sorry not to pay any balance that is due so if you know that you're going to owe by the due date and you do not pay that amount you will get hit with a failure to file antenna failure to pay penalty if you have not filed or paid by the due date now of course if both of those penalties apply to you the failure to file penalty will be reduced by the failure to pay penalty and for more information regarding how that is calculated again you can refer to the IRS IRS s website now let's talk about the underpayment of estimated taxes penalty this penalty is typically assessed against self-employed individuals schedule Steve filers now if you know that you're going to have a tax liability of a thousand dollars or more the IRS requires you to make estimated tax payments estimated tax payments are due every quarter April 15 jun 15 sep tember 15 and january fifteenth of the following year those are the due dates for estimated taxes now not everyone will get hit with a penalty if they do not file or if they do not pay every quarter the IRS has a certain way that they figure who gets penalized and he doesn't and of course I do not have that information so I cannot elaborate on how they figure that penalty just know that if you as a self-employed individual are going to have a tax liability of at least a thousand dollars or more it might be wise or I should say it would be wise to make estimated tax payments if for nothing else to reduce your tax liability at tax filing time so if you know that your income is going to be 30 40 50 60 plus thousand dollars you know that you're going to have a tax liability possibly i'm not going to say that you know but it depends on your deductions and everything else that you have going on with your tax return but if you think that you're going to have a tax liability of a thousand dollars or more it would be in your best interest to make estimated tax payments throughout the year so for more information on that of course you can refer to the IRS's website under estimated taxes and you can you can find out how they calculate it and more details about it so now let's talk about this accuracy related penalty now I would think that this penalty has been around for a while has been on the books for a while but it seems as though now the IRS is imposing that penalty more now the accuracy related penalty is imposed for several reasons it can be imposed on a taxpayer if the IRS thinks that they underestimated their in common and over inflated their deductions and this is in regards to schedule c filers that penalty can also be imposed for individuals who do not report their foreign assets using the fubar FBAR form foreign foreign bank account reports and there are other reasons why you can be hit with an accuracy related penalty the accuracy related penalty is 20 percent of the additional tax that will be do so in addition to other