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What You Need to Know to Avoid Tax Fees

Money you owe the IRS is subject to interest. Don't let interest and penalty fees add up. You may owe now, but paying sooner is much better than paying more later.

You haven't started your taxes and you're afraid to start the process...

Avoiding the problem will not make it go away. It's not fun. But it'll feel so good to check it off your list. If the process is so overwhelming that you are burying it then maybe you should seek the help of a professional and hand off all your tax related documents. If you're going to seek a professional's help, remember that tax season is very busy. It's always better to start as soon as possible.

If you know you're going to be late then you should file an extension. You can file an extension for free using IRS free file. Start here.

You've started your taxes and you realized that you owe money...

Pay as much as you can. Since money you owe is subject to interest, it's important to chip away at that bill. Leaving it unpaid will only make it bigger.

You can apply for a payment plan to spread out the cost over time. Learn more here.

You can e-file for free using IRS free file through October 6th, 2023.

Use your finished taxes to reflect on why you owed money to prepare for next year. Maybe you needed to withhold more money on your check or pay more estimated taxes for your small business. Maybe you had business expenses you could've deducted or charitable donations you forgot to mention. No one wants to pay a huge tax bill. Consider asking a professional what you could do differently in the future to reduce your tax bill.

You haven't filed but you are likely to be owed a refund...

If the IRS owes you money then it's in your best interest to file a tax return. Being owed a tax refund can happen for different reasons such as withholding too much money on your checks or not earning a lot of money throughout the year.

But that money won't wait around forever. The IRS isn't required to pay your after 3 years. So get on it.

You're being charged a late fee...

If you have a history of paying on time for the last 3 years then you may be able to get your late fee waived.

Follow the instructions in the IRS notice you received.

Some penalty relief requests may be accepted over the phone. Call the IRS at the toll-free number at the top right corner of your notice or letter. Have this information when you call:

  • The notice or letter the IRS sent you

  • The penalty you want relieved

  • The reasons you think they should remove it

It's possible that you have extra time because of special circumstances...

If any of these circumstances apply to you then you may be allowed extra time (2 months) and benefits:

Click each category for more information on each of them.

Military members may also be able to file for free through Miltax. Find out more: here

I feel you...

Having to pay a large tax bill really sucks. We hear you. But letting it become a central overwhelming burden in your life is worse. Please reach out with questions, we are happy to help as much as we can.

This blog post is not a substitute for legal or financial advice and is not liable for any misinformation that may have been provided. This information has been provided by the IRS.


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