This year I was heavily strapped for cash due to a family emergency. I couldn't file my taxes on time and I had to file for an extension. Usually I receive a very large refund but this time I had to pay a huge amount of money to the government. Since I filed on Oct 15th, I was hit by a penalty of $2000. Anyway, I can reduce the penalty because I had a genuine financial emergency?
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The IRS may provide administrative relief from a penalty that would otherwise be applicable under its First Time Penalty Abatement policy.
You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:
The failure-to-pay penalty will continue to accrue, until the tax is paid in full. It may be to your advantage to wait until you fully pay the tax due prior to requesting penalty relief under the Service's first time penalty abatement policy.
Other administrative relief: If you received incorrect oral advice from the IRS, you may qualify for administrative relief.
Is the information on your notice correct? If there is an issue you can resolve with your notice, a penalty might not be applicable. Call the toll-free number on your notice either to resolve the issue with your notice or to determine if you are eligible for First Time Penalty Abatement or other administrative waiver.
Interest charged on a penalty will be reduced or removed when that penalty is reduced or removed. If an unpaid balance remains on your account, interest will continue to accrue until the account is full paid. See our Interest Overview page for additional interest information.
So I called up the IRS and they agreed to wave the penalties but not the interest on the taxes which is close to half the dues. Also I have a California tax. Anyway to get the interest and California taxes reduced?
That is another call this time to CA. Good luck.
I paid my taxes monthly from my IRA distributions Why am I charged $68 late fee?/
If you owe more than $1000 on the return then the IRS applies a failure to pay penalty for the underpayment of taxes ... so increase your withholding to compensate for that short fall or make estimated tax payments.
You may be able to reduce your penalty if you complete a worksheet in TurboTax. Go to "Other Tax Situations" and then "Additional Tax Payments" and then "Underpayment penalties":
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