The IRS said that it levied a record $7 billion in penalties against taxpayers last year, mostly targeting individuals who underpaid heir estimated taxes.
The IRS hit Americans with $7 billion in tax penalties in 2023, a record-high level that marks a nearly 300% increase from the prior year. The majority of the fines were levied against those who underpaid their estimated quarterly income taxes, which is predominantly freelancers, gig workers and other self-employed individuals. In fiscal year 2023, the average estimated tax penalty jumped to $500 from $150 the previous year, according to IRS data.
It is frequently used by independent contractors, freelancers and gig workers because there is no tax automatically withheld on their income. Some small businesses, as well as landlords and self-employed workers, also take advantage of the practice. HOW MUCH OF YOUR TAX MONEY GOES TOWARD SERVICING THE US NATIONAL DEBT? The IRS previously said it has seen an increasing number of taxpayers subject to the estimated tax penalties, which can amount to several hundred dollars.
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