Thursday , March 06, 2014 - 11:33 AM
The time to file your taxes is approaching.
If you have not yet filed, you need to do so or file an extension by April 15 to avoid thefailure-to-file penalty.
If you owe taxes, the extension to file does not mean it extends the time to pay your tax bill. Failing to pay your tax bill by April 15 will cause afailure-to-pay penalty to be assessed to your tax bill.
This penalty is 0.5 percent of the amount of your tax bill each month, up to 25 percent of your taxes.
If you know that you owe taxes, it is wise to contact the Internal Revenue Service to get on a payment plan to avoid the 0.5 percent penalty. There will still be afailure-to-pay penalty, but it is reduced to 0.25 percent per month during the term of the installment agreement. This penalty may also be requested to be abated once the amount of the taxes owed is paid.
Also, April 18 is named Tax Freedom Day for 2013.
This is the day when Americans will have earned enough to pay their total tax bill for the year. This is five days later than last year.
Americans will spend more in taxes in 2013 than they will on food, clothing and housing combined, according to the nonprofit organization Tax Foundation. This organization calculates all federal, state and local taxes by the nation’s income to compute when Tax Freedom Day occurs.
The tax burden varies with different states. Connecticut’s Tax Freedom Day comes on May 13, and residents of Mississippi and Louisiana celebrated their Tax Freedom Day on March 29.
This is sobering news for Americans. If you are in the 25 percent bracket, 25 percent of the days in a year you are actually working just to pay your tax bill. Most Americans will work more than three1/2 months of the year before they have earned enough money to pay this year’s tax bills.
Don’t add to that tax bill by filing your return late.
For more information on Tax Freedom Day, go to www.taxfoundation.org/tax-topics/tax-freedom-day. For information on filing requirements, go to www.irs.gov and type “deadline to file” in the search engine.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at email@example.com.
Sign up for e-mail news updates.