For most taxpayers, April 15th is the due date for filing your tax return. You won’t incur a penalty if you file your return later than the due date if you’re only owed a refund. However, if you owe money, and you don’t file (or pay) on time, you will incur late charges and interest on the amount due. These penalties can add up, so it’s important to file and pay all taxes before the deadline. Here’s what you need to know about the late penalties. There are two penalties that may apply to you if you file late and owe money: Failure to file penalty and a failure to pay penalty.
The penalty for not filing on time can be almost 10 times more than the penalty for not paying, so even if you can’t pay on time, it’s in your best interest to file. You can pay as much as possible to the IRS, and file your return on time to avoid the failure to file penalty. Typically, the IRS will work with you to make payment arrangements for your tax liability. The IRS has an Online Payment Agreement tool available on their website at IRS.gov, which can help arrange a payment plan.
Failure to File Penalty
If you don’t file your taxes by sixty days after the deadline, the minimum penalty is either 100% of your owed tax or $135, whichever is less. Otherwise, the penalty for not filing is approximately 5% of the tax you owe every month, or the part of the month that your return is late. It can’t be more than 25% of your total unpaid balance.
Failure to Pay Penalty
If you don’t pay your taxes when they are owed, you may be subject to a .5% penalty each month. For as long as your taxes remain unpaid, the penalty will apply, and it take effect the day after taxes are due. Like the failure to file penalty, the fee for not paying can also carry a maximum amount of 25%. If both penalties apply during the month, the maximum amount charged is 5%.
If you have sought an extension for filing your tax return, and you owe less than 10% of your total taxes, you may not face any fees. You will have to pay the rest of the money owed by your new due date, and any money paid after the April 15th deadline will be subject to interest charges.
