Texas Tax Penalties and Interest Rates and How to Avoid Them
When you owe back taxes to the state, or to the IRS, you not only have to pay off the actual tax debt, but you also must pay a hefty amount in penalties and interest that have accrued as a result of your debt. Depending on what you owe, this can add significantly to your total amount due. Penalties and interest continue to accrue each day that your tax debt goes unpaid, so the longer you wait to settle your debt, the more you will ultimately owe.
Calculating Interest And Penalties for Texas Tax Debt
In Texas, you can expect to pay a 5% penalty on top of your taxes due, if you are paying between 1-30 days late. That penalty jumps to 10% if it’s been more than 30 days. If you are paying the tax after the date that is referenced on the Notice of Tax/Fee Due, you should be prepared to pay an additional 10% on top of the 10% referenced above, for a total of 20% in penalties. Interest starts to accrue 61 days after the due date and this rate is variable, determined in January of each year. In addition to these penalties and interest, you are also assessed a penalty of $50.00 for each late report.
Avoid Paying Unnecessary Interest And Penalties
As you can see, you can very easily pay as much in interest and penalties as you do in actual back taxes. Avoiding tax penalties and interest is your best bet for protecting your financial future. Here are 3 ways you can take care of your tax debt now so that you do not have to pay interest and penalties:
- Installment Agreement: An installment agreement allows you to pay your tax debt over time, rather than in one lump sum. While you are still responsible for the interest and penalties, you come up with a plan to pay, rather than letting the debt get out of control.
- Offer in Compromise: If you cannot afford the taxes that you owe, you might qualify for an offer in compromise, which is a program offered by the state (and the IRS) to allow you to pay off the debt for less than you actually owe. You will need to be able to demonstrate need to the state and provide detailed financial information.
- Personal Loan: One simple way to avoid penalties and interest is to investigate other options for paying your debt off as soon as possible. You may qualify for a personal loan through your bank and/or a low/no interest credit card and find that you will pay much less interest over time.
Resolve Your Tax Debt As Soon as Possible
Success Tax Relief has worked with a large number of taxpayers in the Texas area who are struggling with how to pay off their tax debt. Our team of professionals can review your previous returns and financial information and help you develop a plan to pay your taxes as soon as possible, to avoid any unnecessary penalties and interest. If you decide to move forward with an application for an installment agreement or Offer in Compromise, our team can help with that as well. Give us a call today at 877-825-1179 and let us help you navigate your tax problems so you can finally move forward. You can also contact us online for a free consultation.