TaxCure Blog

Once you reach age 73, the law requires you to take distributions from your traditional IRAs, 401(k)’s, defined benefit plans, and most other types of retirement accounts, except for Roth accounts. If you don’t take out the required minimum distribution (RMD), you will incur an excise tax of 25% of the amount you were supposed to withdraw. The penalty drops to 10% if you correct the mistake within two years or before having the tax assessed by the IRS if sooner. 

The IRS will waive penalties in some situations – namely, if you have reasonable cause or a history of compliance over the last three years. However, the agency will only waive certain penalties. Generally, you can get failure to file, failure to pay, and failure to deposit penalties waived, and sometimes even accuracy or civil fraud penalties. But, the IRS is typically not willing to waive other penalties. 

If you bounce a check to the IRS, the agency will assess a penalty, and depending on the nature of your payment, you may face other consequences as well. The penalty is 2% of the face value of the check or $25, whichever is higher – if the payment was for less than $25, the penalty is for the face value of the check. 

Losing a home or any other property through foreclosure can be personally and financially devastating, and to rub salt into the wound, it can also lead to a tax liability. If your property is foreclosed on, you may face: 

Your filing status has a significant impact on the taxes you owe. It determines your standard deduction, your eligibility for certain credits, and if you’re married, your liability for your spouse’s taxes. The options are single, head of household married filing jointly, married filing separately, and qualifying widow(er) – To optimize your tax situation, you need to choose carefully and ensure you’re following the rules.