Here's What Brokers Should Know When Unable To Pay Tax Debt.
Brokers may be unable to pay off their tax debt.
If you’re a real estate broker or salesman, I know right now listings are very difficult to get. Which may be causing you a very difficult time financially. And now that it’s tax season, you may find yourself unable to pay off your tax debt. I recently researched this issue and found out that in the Austin Round Rock area. At the same time last year, compared to now, listings are down about 67%.
Which can lead to penalties and interest from failure to pay.
Now, if you file your tax return and you owe money, you’re going to begin to incur penalties and interest. The penalties for failure to file on time are very substantial, like 25% after five months.
Example: if you owe $10,000 in taxes, and you don’t file your tax return on time, now you owe $12,500.
In addition to that penalty, there’s a “failure to pay” penalty of 0.5% per month. And that continues until you reach 25% maximum penalty.
There are ways to reduce or eliminate penalties when you cannot pay off tax debt.
Now, there are ways to reduce or eliminate penalties. The most common one is first-time penalty abatement for any year the IRS penalizes you. So long as they didn’t penalize you the three years before that year, we can eliminate penalties pretty easily. As an example, let’s say you file your 2020 tax return right now (May 2021). But you file it late and or you can’t make you can’t pay it off. So you have to be making payments.
Reasonable cause abatement
But first-time penalty abatement can eliminate those penalties if the IRS did not penalize you in 2019 2018 and 2017. And that can be done pretty easily. If you can’t do that you may qualify for reasonable cause abatement. Anything that has caused you to fall late or pay late. Circumstances beyond your control, such as:
- an illness.
- You got bad advice from a CPA.
- Lost your records in a fire.
- Or were sick during COVID and couldn’t get out of bed to file.
- Or you lost your job you can’t pay.
Those are the types of things that might be able to help you. So if anything that I told you makes sense to you, and you need some help, just give me a call or fill in the form below and we’ll help you out