The Internal Revenue Service (IRS) has recently released the annual inflation adjustments for the year 2024, bringing forth crucial information about tax rate schedules, tables, and cost-of-living adjustments and shedding light on penalties for late returns and missed forms.
Here’s a comprehensive overview of what taxpayers need to know:
Late Filing Penalties for 2024: Section 6651(a)
For returns required to be filed in 2024, individuals facing failure to file an income tax return within 60 days of the due date (with consideration for any extensions) will encounter a minimum addition to tax under Section 6651(a). This penalty will be at least $510 or 100% of the tax on the return.
Penalties for Partnership and S Corporation Returns in 2025
- For partnership returns due in 2025, the penalty amount under Section 6698(b)(1) for failure to file a partnership tax return is set at $245.
- Similarly, S corporation returns due in 2025 will be penalized under Section 6699(b)(1) $245 for failure to file.
Seriously, Delinquent Tax Debt and Passport Limitations
By law, individuals with seriously delinquent tax debt face potential denial, revocation, or limitation of their passports. In 2024, a tax debt of $62,000 is considered seriously delinquent.
Tax Liens and Property Protection
Tax liens, aimed at protecting the government’s interest in property, can be filed if tax liability is not paid in full. The IRS may file a Notice of Federal Tax Lien, informing creditors of the government’s legal claim to the taxpayer’s property. Certain circumstances may lead to the removal of the lien.
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IRS Limits on Federal Tax Liens in 2024
In 2024, a federal tax lien is not valid against specific purchasers who bought personal property in a casual sale for less than $1,900 or against a mechanic’s lienor who repaired or improved specific residential property if the contract price is not more than $9,520.
Levies: Seizure of Property and Exemptions
The IRS utilizes levies as a legal seizure of property to ensure tax payments. In 2024, the value of property exempt from levy under Section 6334(a)(2) (including household personal effects, livestock, and poultry) cannot exceed $11,390.
Property exempt under Section 6334(a)(3) (such as books and tools necessary for trade) cannot exceed $5,700.
Wages can also be subject to levy, with an exempt amount determined by a formula. For 2024, this exemption equals the standard deduction plus an amount set at $5,000 (multiplied by the number of the taxpayer’s dependents) divided by 52.
Taxpayers should be aware of these adjustments and penalties to ensure compliance with tax regulations and avoid potential financial consequences.
As the tax landscape evolves, staying informed about these changes is essential for financial planning and responsible tax management.
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