Tax season is here, and filers are being reminded to check for any underpayments to avoid potential penalties. The Internal Revenue Service (IRS) has issued a warning to taxpayers to ensure they have paid the correct amount of taxes or face consequences. Underpayment penalties can be quite costly, so it’s important for individuals to carefully review their tax returns before filing.
The IRS has stated that underpayment penalties can occur if a taxpayer has not paid enough tax throughout the year, either through withholding or estimated tax payments. This can happen if a person has income that is not subject to withholding, such as self-employment income, interest, dividends, alimony, rent, and gains from the sale of assets. Additionally, changes in a taxpayer’s personal or financial situation can also lead to underpayments.
To avoid penalties, the IRS advises filers to use the Withholding Calculator on their website to ensure they are having the right amount of tax withheld from their paychecks. It’s also recommended for individuals to make estimated tax payments if they have income that is not subject to withholding. By staying on top of their tax payments throughout the year, filers can avoid owing a large amount at tax time and potentially incurring penalties.
In addition to checking for underpayments, the IRS also encourages filers to review any potential tax credits or deductions they may be eligible for. This can help individuals maximize their tax refund or minimize the amount of tax they owe.
In light of this reminder from the IRS, some tax professionals also stress the importance of staying organized when it comes to taxes. Keeping accurate records, saving receipts, and staying informed about potential deductions can all help individuals stay on top of their tax obligations.
Overall, the key message from the IRS and tax experts is clear: filers should take the time to review their tax returns, check for any underpayments, and make sure they are in compliance with tax laws to avoid costly penalties. By staying proactive and informed, individuals can have a smoother tax filing experience and avoid running into any issues with the IRS.