Interest increases the amount you owe until you pay the balance in full. You may be eligible for certain penalties to be eliminated or reduced if you acted with reasonable cause and in good faith. In general, taxpayers must make estimated tax payments in four equal amounts to avoid a penalty. However, if you receive income unevenly during the year, you can vary the payment amounts to avoid or reduce the penalty by using the method of paying in annualized installments.
Use Form 2210, Underpayment of Estimated Taxes by Individuals, Estates and Trusts, to see if you owe a penalty for underpaying. We calculate the penalty for non-payment based on how long your back taxes remain unpaid. Unpaid tax is the total tax that must appear on your return minus the amounts paid through withholding, the estimated tax payments, and the refundable credits allowed. Attorneys, certified public accountants, enrolled agents, or anyone who is paid to prepare tax returns may owe a penalty if they do not comply with tax laws, rules and regulations.
If you didn't pay enough taxes during the year, either through withholding or through estimated tax payments, you may have to pay a penalty for paying less than the estimated taxes. You can qualify for penalty relief if you show that you exercised the usual care and prudence and yet you weren't able to file your return or pay your taxes on time. It applies to tax preparers who knowingly or recklessly disclose information provided to them to prepare a tax return or use the information for any purpose other than preparing a return. You may be eligible for penalty relief if you tried to comply with tax laws but were unable to do so due to circumstances beyond your control.
April 15 is generally the deadline for most people to file their individual income tax returns and pay any taxes due. The non-payment penalty applies if you don't pay the taxes you declare on your tax return before the due date or if the extended due date has been approved. The United States income tax system is a pay-per-use tax system, meaning that you must pay income tax as you earn or receive your income during the year.
