Should I be worried?

[Franco]

In 2020 I went exempt on Federal taxes a bit too much, usually I owe around $1,000 when I do my taxes, been doing this for the past 3 years in my life with my CH13. No issues. In 2020 I forgot to undo this, and I just did my taxes, I owe $2,400 in Federal taxes, I can pay it in one shot but it would deplete my emergency fund, so I will do an Installment plan, a short one or 4 months to pay it back. BUT, their website (IRS) can't register me, so they are sending me an activation code in the mail which will be here in 5-10 business days. My coworkers are freaking me out, they said the $2,400 I owe will quickly become $5,000+ with interest and late fee penalties? Let's say I'm a few weeks late, will this really increase THAT much?

Sorry, just kinda freaked out. I went exempt because I needed money for rent/food in 2020, the pandemic really affected my monthly life/income in 2020, my Lawyer couldn't adjust my plan because I'm in a CH13 that is NOT 100% payback etc.

[shipo]

I think you're okay; yeah, you may pay a little in interest, but anybody who says your debt will double is just being a fear monger.

[despritfreya]

Interest runs at approximately 6% per annum. Not sure of penalties but I can't imagine that a penalty for paying late (I assume you filed timely) is even imposed. Penalties are usually assessed due to failure to file a return timely.

Paying $2,400 over a period of say 6 months will cost less than $900 in interest plus penalties (if any). Not going to get anywhere close to $5k.

Des.

[justbroke]

The only large penalty is the failure to file penalty. Paying late just has penalty interest of what Des writes (it's based on something like the federal discount/lending rate). The IRS has a specific formula. It's always good to file on time as you avoid a potential 25% penalty (on the tax owed). Filing on time, but owing, would only subject the balance to the interest rate.

[Franco]

Thank you everyone for putting my mind at ease. Yes I filed my taxes on the 10th, I even payed the TFS site my state refund already which was only $300. Have a great week folks!

[bornfree2]

What happens if you file an older return but owed no tax in that time? There would be no penalty?

And while we are on the topic, whats the cheapest, most private, AND quickest to get to the IRS for processing? I can mail it in or file electronically.... but i dont want to expose my personal data to the likes of 'turbo tax online' ,etc.

[justbroke]

Electronic is the fastest as they send a type of "transcript" transmitted to the IRS for electronic processing. Mail is the slowest of all manners to file with the IRS. Even if you proivded a paper return at your local IRS office, that would still take a long time.

How long you ask? The IRS is still processing paper-based 2019 tax returns and amendments! They are behind by millions of 2019 paper tax returns.

I don't know why you don't trust an IRS data provider to do your taxes (TurboTax, TaxCut). There is more personal data about you in LexisNexis than anyone wants to even mention.

[bornfree2]

I don't know why you don't trust an IRS data provider to do your taxes (TurboTax, TaxCut). There is more personal data about you in LexisNexis than anyone wants to even mention.

Cause i dont and its my constitutional right to expect to live in a country that protects my individual affairs and identity. Gov demands tax...okay thats fair. But I have to use a third party 'partner' that gets to take and sell all my information is abhorrent... for doing my duty to pay taxes. And im still waiting back on Lexis to tell me why my request for disclosure ended up with nothing. But we have had this talk before lol.

Guess ill skip paper filing then. need to get things in before that 341.. sigh