Thanks for mentioning this! I've definitely filed and paid on time for the last several years. How do I request this abatement? Is it something I ask for when setting up the payment plan, or is it a separate process?

You can request it when you call to set up your payment plan. Just specifically mention that you'd like to request a "First Time Penalty Abatement" based on your history of compliance. The agent should be able to check your eligibility on the spot. If they approve it, they'll remove the failure-to-pay penalties, though interest will still apply to your balance. If you set up your payment plan online, you'll need to call separately to request the abatement. Make sure to do this sooner rather than later - it's easier to get penalties removed before you've paid them than to get a refund afterward.

This is super important! My brother had to pay penalties two years in a row because he didn't adjust his withholding after the first time he owed a lot. The second time, the IRS was way less forgiving about waiving penalties.

Thanks for mentioning the penalties! I wasn't aware of that distinction with extensions. Do you know roughly how much those penalties typically run? I'm worried now because I definitely didn't pay anything back in April when I filed the extension.

The failure-to-pay penalty is usually about 0.5% of your unpaid taxes per month, with a maximum of 25%. There's also interest that compounds daily at the federal short-term rate plus 3%. It's not catastrophic for most people with simple returns, especially if you're due a refund (in which case there's no penalty at all). But if you owe a significant amount, it can add up. Most tax software will calculate this automatically once you input when you're filing.

VITA is amazing, but most sites are only operational during the regular tax season (Jan-Apr). It can be hard to find VITA services for prior year returns in October.

What happened in your situation? Did you get in trouble with the IRS? Im worried about something similar.

I didn't get in trouble since I'd been reporting all my income properly on my Schedule C forms each year. But it created a mess because they tried to issue me 1099s under a business name that wasn't properly registered with the state or IRS. I ended up having to provide additional documentation during tax filing to explain the mismatch between the 1099 information and the business information the IRS had on file. It was a paperwork headache but not a financial or legal problem since I'd been honest about my income all along.

Still $600 for 1099-NEC (non-employee compensation). You might be thinking of the 1099-K threshold for payment platforms like Venmo and PayPal which was supposed to change to $600 but got delayed again for 2024 filings. It's staying at $20,000 for now.

I get a different error every year with TurboTax 🙄 Last year I switched to FreeTaxUSA and haven't looked back. Way cheaper and actually explains errors better.

Omg I didn't even think of this! I usually toss anything that looks like junk mail right away. I'm gonna go through my mail pile tonight to double check. Do you remember what the envelope looked like exactly? Was it white or brown or what?

It's usually a plain white envelope with a very official looking "Department of the Treasury" return address from Kansas City or Philadelphia. Nothing flashy at all - it's actually designed to not look like it contains something valuable for security reasons. The tax refund debit cards are even worse - they come in white envelopes with "Money Network Cardholder Services" as the sender, which looks exactly like credit card spam. Check your mail pile carefully and maybe even look through your recycling if you can!

This happened to me 2 years ago. Filed with my old address by mistake and my check got sent back to the IRS. Took another 2 months to get it sorted out! Always double-check your address on the tax forms.