Enter a search word. Turn off suggestions. Enter a user name or rank. Turn on suggestions. Showing results for. Search instead for. Did you mean:. New Member. Can I deduct taxes and penalties paid this year? Long story: we did not receive a W2 from one of my wife's jobs 2 tax seasons ago. The place went under, all her paystubs were digital, and she lost the ability to retrieve those when the place went under. If your employer withholdings or estimated tax payments fail to cover the taxes owed, you must pay the difference or set up alternative payment arrangements with the IRS when you file your return.
Because the payments you make cover a federal tax liability, you cannot deduct them at any time, even if it takes you several years to pay the full amount due.
The IRS allows taxpayers who meet certain criteria to set up a payment plan to pay taxes due over an extended period of time, such as five years. These payment plans charge penalties and interest on the tax due until the amount is paid in full.
Tax penalties and interest are not deductible since they are attached to a federal income tax burden. If itemizing nets you a larger deduction than the standard deduction, you can lower your tax burden by claiming certain taxes.
If any of your penalties are reduced, we will automatically reduce the related interest. See our Interest on Underpayments and Overpayments page for additional interest information. More In File. Penalties Eligible for Relief Penalties eligible for penalty relief include: Failing to file a tax return Failing to pay on time Failing to deposit certain taxes as required Other penalties as applicable. The U. IRS penalties are typically assessed for violations of tax laws, such as misreporting income or claiming false deductions or tax credits.
The IRS typically assesses penalties along with interest on the balance owed by a taxpayer, and this interest is not tax-deductible. The federal income tax filing due date for individuals has been extended from April 15, , to May 17, Payment of taxes owed can be delayed to the same date without penalty. Your state tax deadline may not be delayed. Fines and penalties a person owes to the government for violating local, state, and federal laws are never deductible.
According to the IRS, the goal of its penalties is to discourage illegal activity related to federal taxes. Penalties also discourage people from neglecting their obligations to file or pay. The IRS typically sends a notice to a person after a tax audit and assesses both penalties and interest on any unpaid amounts.
Although taxpayers are not allowed to deduct penalties, they may qualify for relief for extenuating circumstances. If approved by the IRS, all or a portion of the penalty may be relieved. However, interest still accrues until the amounts owed are fully paid. Failure-to-pay penalties are assessed on the tax owed after the due date, for each month or partial month, until the taxpayer's account is resolved. The IRS allows installment agreements to pay off the outstanding balance and to stop the assessment of failure-to-pay penalties.
Most often, penalties are assessed for dishonored checks, or for failing to file your tax return by the required due date, failing to pay the full amount of taxes owed by the due date, or failing to pay the proper amount of estimated taxes. Penalties vary according to the type of violation. The IRS assesses a 0. Taxpayers have the option to extend their tax filing deadline by filing an extension using Form
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