Unrelated to Penalties

• When you have an unpaid tax penalty balance, the IRS will use any collection procedure necessary to obtain payment from you. However, these procedures have nothing to do with your potential obligations to file a tax return in other years. The IRS will not penalize you in unrelated tax years for prior tax law violations. Keep in mind, however, that if you ever attempt to reach an agreement with the IRS to waive or reduce your prior tax penalties, you may encounter problems if the IRS is aware that you continue to disregard the tax laws.
  
  

When to File

• Taxpayers who do not qualify as another person's dependent only have an obligation to file a tax return in years their total income exceeds the sum of the standard deduction plus the personal exemptions they are eligible to claim. When evaluating your requirement to file, it's important to note that your personal exemption is different from the exemptions you claim for each of your dependents. These dependent exemptions should never be a consideration when determining whether you need to file. Furthermore, since the standard deduction varies across the different filing statuses, you should insure you use the correct amount. As of the time of publication, single filers receive a standard deduction of $5,800, head of households receive $8,500 and joint filers can claim $11,600.
  
  

Avoiding Future Penalties

• When you already owe other tax penalties, it's likely that you don't want to accrue any more. There are some simple things you can do to avoid future penalties. For one, make sure that you get your tax return filed on time. If you fail to do so, the IRS will charge you a monthly 4.5 percent late-filing penalty until it receives payment. This penalty will increase the amount of tax you still owe with the return. In addition, a separate monthly penalty of one-half percent will apply for paying late, bringing your total monthly penalty to 5 percent.
  
  

Loss of Refund

• Taxpayers who are in a position of owing the IRS need to be especially careful that they don't lose the refunds they are rightfully due. This is because the IRS limits the amount of time you have to claim a refund to three years from the time your originally file, or two years from the time you finish paying the tax for that year when you don't file. Since you can use a future refund to offset any other penalties you owe the IRS, be sure not to lose it by taking too long to file.