• Many people are confused by taxes.tax forms image by Chad McDermott from Fotolia.com
  
  The subject of taxes leads most people to cringe due to the frustrating---and often confusing---process surrounding them. They are frustrating not only because you sometimes must part with a substantial amount of money, but also because taxes can be extremely complicated to determine. Mishandled taxes can lead to late fees and penalties, so understanding some basic income tax questions can make the tax process smoother and faster to complete.
  
  

Plans for Payment

• Many people are not aware of the various benefits that “Installment Agreements” can provide. If you are burdened by tax debt and are curious how to handle it, a solution can often be found in an Installment Agreement, which is an agreement a taxpayer makes with the government where he can settle his debt in specified periods of time. Although this agreement can buy you time, it does end up costing more in the long run due to interest fees.
  
  

Payment Concerns

• Many people worry about whether their payment to the IRS was filed successfully. If you have a check that does not clear and are concerned about whether the check reached the IRS, contact the IRS through its hotline. Assuming the payment is not credited by the IRS, it is recommended to stop payment on the original check. Alternative methods can be used to pay, including online payment, which allows the taxpayer to use both credit and debit cards. Payments generally require a minimum of a Social Security Number, the tax year, the correct tax form, and a telephone number.
  
  

Late Payment Concerns

• Late payments are a common part of taxpaying, as it can be easy to miss deadlines. Normally, unpaid taxes often incur an interest rate that is applied to them. Usually interest rates are applied based on the federal short-term rate, which can be compounded daily.
  
  When filing occurs on time, but payment does not, the result is often a penalty on the late payment, which is normally charged at a rate of 0.5 percent times the unpaid tax amount. The standard penalty interest rate that is applied to unpaid and unfiled taxes is a 5 percent charge on the unpaid taxes, effective each month that the taxes remain unpaid.