4 Most Common Reasons the IRS Penalizes Taxpayers and Ways to Avoid a Penalty


The IRS is a difficult master that takes every instance of tax default very seriously. It levies heavy penalties on the tax offenders to set a precedence that discourages taxpayers from defaulting on their outstanding taxes. The sad part about paying a penalty is that often these penalties could have been easily avoided if we a little more aware and strictly adhered to the deadlines. Let’s see what are some of the most common IRS penalties that can easily be avoided.

1. Penalty for Mathematical Errors

Math tests have given me several sleepless nights during my school days. When I graduated, I was thankful thinking Math would not bother me anymore. But little did I know that even the smallest of mathematical errors when calculating my tax dues would lead to heavy penalties from the IRS. If you too aren’t good with calculations, the only way out is to hire a tax expert to do the calculations to file your returns. You may also use an online tax calculator to calculate the exact tax you owe to the IRS.

2. Penalty for Late Tax Filing

Your partner may forgive you for forgetting their birthday or your anniversary; the IRS, however, is not very forgiving when it comes to late tax payments. If you are not too good with dates, then you may want to circle the last date for filing the taxes in red. In case you have a genuine reason for not being able to file a tax on time, then request the IRS for an extension. By being a little sincere, you can save a tax penalty that’s as high as 25 percent of your tax bill.

3. Requesting Deductions for Charitable Donations that Don’t Qualify

Not all charitable donations qualify for tax exemption. To avoid getting denied a deduction request, make sure that the trust or organization you are donating to is qualified for tax exemptions. Your job, however, does not end there; you also need to make a list of the items you donated and their value. For example, if you donate clothes or some other used goods to a charitable, then you must get an itemized slip from that organization, with the list of items you donated and their condition.

4. Home Office Deduction Penalties

People who work out of their home or use their home for office or business purpose qualify for a home office deduction. The only exception is that one must use a portion of their home exclusively and regularly for their business. Some of the exceptions to the exclusive-use policy are the daycare or babysitting services that you provide from your home. By adhering to the guidelines of ‘exclusive and regular’ use, and claiming deduction for the exact area of your home that you use for business, you can easily avoid any home office deduction penalty.

Avoid a Potential IRS Penalty

Taxation is one of the most complicated ‘things-to-deal-with’ for a common man. If you are not good at calculations or do not have the time to deal with the complications involved in filing a tax return, hire a professional tax attorney who will not just help you file your tax returns, but will also help you avoid a potential IRS penalty. If you are looking for an IRS tax attorney in Dallas or nearby areas, get in touch with us at The Law Offices of Nick Nemeth. To get in touch simply call (972) 627-4580 or fill out our contact form.

4 Most Common Reasons the IRS Penalizes Taxpayers and Ways to Avoid a Penalty
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