You’ve filed your taxes and you’re hoping for the best. Maybe squeezed out an extra deduction here and there, hoping the powers that be wouldn’t notice.
But, oftentimes they do see it… the certain deductions you claim on your tax return. Did you know that the IRS charges penalties for these?
So it is important to understand what an improper deduction is and, of course, what kind of penalties you could face.
Tax attorney Mary King of the Law Office of Mary E King PL says:
“While honest mistakes can be made, there are strict penalties for taxpayers who deliberately evade taxes and/or disregard tax laws when reporting deductions. When taxpayers take deductions that they aren’t entitled to, which results in substantial income tax underpayments, the IRS can, and will, impose a penalty.”
King goes on to say that the penalty essentially takes the underpayment and increases it by 20%. It’s then added on top of what the taxpayer already owes.
If you’re an individual, it’s either 10% more than what your tax return should have been or $5,000, though there are exceptions where you might have a legitimate reason for underpaying a substantial sum of money on your tax return.
Any underpayment on your taxes that’s due to reporting a false deduction, incorrect tax item, or negligence may result in a 20% penalty. What’s more, the penalty can be applied regardless of how much you underpaid. It may also apply if you fail to follow the tax code and fail to exercise reasonable care in preparing your tax returns.
So it’s best to have an expert on your side. The Law Offices of Mary King have been dealing with the IRS for decades and there isn’t any tax problem they haven’t seen.
WIth this type of experience and confidence in your corner, you stand to achieve a more favorable outcome in your negotiations with the IRS, including the possibility of a lower tax bill. So if you have questions about which deductions won’t flag the IRS, give Mary King a call and see if she can help you.