How do I avoid penalties when filing my NC taxes? Here’s what to know

Filing your taxes can feel stressful enough without the fear of extra fees looming over it.

Each year, many North Carolinians are hit with penalties that can quietly add up, the North Carolina Department of Revenue warns — but many of those charges are avoidable if you know where the pitfalls are.

With this year’s tax deadline set for Wednesday, April 15, here’s what to know before you file.

How to avoid penalties

Here are some ways you can avoid penalties when filing your taxes, according to the IRS:

• File your return on time: Filing by the deadline (or filing an extension, more on that below) helps you avoid the expensive failure-to-file penalty.
• Pay what you owe by the due date: Even if you can’t pay in full, paying on time (or setting up a payment plan) helps reduce failure-to-pay penalties and interest.
• Make estimated tax payments if needed: If you have income without withholding, you can pay quarterly estimated taxes to avoid underpayment penalties.
• Check and adjust your withholding: Using tools like the IRS Tax Withholding Estimator or updating your W-4 with your employer can help make sure enough tax is withheld during the year.
• Keep accurate records: Good documentation for income, deductions and credits can help prevent errors that trigger penalties.
• Request an extension if you need more time to prepare: Filing Form 4868 by the due date gives more time to file, but you still must pay what you owe by Tax Day.
• Consider penalty relief if there’s a valid reason: The IRS offers options like first-time abatement or reasonable cause relief if circumstances beyond your control prevented you from making timely payments.

How do I know if I owe a penalty?

If the IRS charges you a penalty, you’ll receive a notice explaining what it is, why it was issued and what steps to take next.

Review the letter carefully to make sure the information is correct. In some cases, fixing the issue outlined in the notice can prevent the penalty from being applied at all.

What types of penalties are there?

Here are some common penalties you may face when filing your taxes, according to the IRS:

• Information return: Not filing required forms or payee statements correctly or on time.
• Failure to file: Missing the tax return deadline.
• Failure to pay: Not paying what you owe by the due date.
• Accuracy issue: Underreporting income or claiming credits or deductions you don’t qualify for.
• Erroneous refund claim: Requesting an excessive refund or credit without valid cause.
• Failure to deposit: Not paying employment taxes correctly or on time.
• Tax preparer misconduct: Penalties for professionals who file improperly.
• Dishonored payment: A check or payment that bounces.
• Corporate or individual underpayment: Corporations or individuals missing estimated tax payments.
• International reporting: Failing to properly report foreign financial activity.

Can you get a penalty removed?

Yes. The IRS may be able to waive or reduce certain penalties if you can show you acted in good faith and had a reasonable cause for missing a tax deadline or payment.

By law, interest generally can’t be removed unless the related penalty is also reduced or eliminated, according to Tax Defense Network.

How to dispute a penalty

To dispute a penalty, you can call the toll-free number listed on your notice or send a letter explaining why the penalty should be reconsidered, along with any supporting documents, to the address provided.

Have this information ready when you call or write, the IRS says:

• The notice or letter the IRS sent you
• The specific penalty you want reviewed (for example, a late filing penalty for 2021)
• A brief explanation of why you believe it should be removed

Be sure to follow any instructions or deadlines listed in your notice, since missing them could prevent your dispute from being considered.

More tax help

• Here’s your 2026 North Carolina tax guide. Learn if you qualify for more deductions, plus changes to paying taxes on tips and overtime.
• Here are five ways the “Big Beautiful Bill” could impact filing your North Carolina taxes this year.
• How soon can you get your tax refund? Here’s what to know before you file.

Portions of this story were previously published in The Charlotte Observer.

This story was originally published January 14, 2026 at 9:41 AM.

Evan Moore

The Charlotte Observer

Evan Moore is a service journalism reporter for the Charlotte Observer. He grew up in Denver, North Carolina, where he previously worked as a reporter for the Denver Citizen, and is a UNC Charlotte graduate.