October 16th, 2023
You ran out of time or couldn’t get everything together by April 15th so you put your return on extension. For whatever reason, you still haven’t filed by the extended filing date. At this point, a proactive approach is recommended. Here are some things to consider:
- File as soon as possible. The longer you wait, the more penalties and interest you may incur.
- Even if you can’t pay the full amount of taxes you owe, pay as much as you can. This will help reduce penalties and interest.
- If your situation is complex or you’re unsure about your tax obligations, consider seeking assistance from a tax professional or CPA.
- Be aware that there may be penalties and interest charges associated with late filing and late payment. It’s a good idea to check with the IRS or a tax professional to understand the specific penalties that apply to your situation.
- Keep records: Maintain records of all communications and payments related to your taxes. This will be helpful in case of any disputes or inquiries from the IRS.
The penalties for filing your tax return late can be significant. Here are the main penalties associated with late filing:
- Failure to File Penalty: This penalty is assessed if you don’t file your tax return by the due date, including any extensions. This penalty is generally 5% of the unpaid taxes for each month or part of a month that your return is late. The maximum penalty can reach 25% of your unpaid taxes.
- Failure to Pay Penalty: If you don’t pay your taxes by the due date, you can also incur a separate “failure to pay” penalty. This penalty is typically 0.5% of your unpaid taxes per month, with a maximum of 25% of the unpaid taxes.
- Combined Penalty: If you both fail to file and fail to pay, the maximum penalty is 5% per month, up to 25% of the unpaid taxes.
- Minimum Penalty: There’s a minimum penalty for filing more than 60 days late or failing to pay your tax by the due date. The minimum penalty is either $435 or 100% of the unpaid tax, whichever is less.
It’s important to note that the penalties and interest rates associated with late filing and late payment can change over time, so it’s advisable to check with the IRS or a tax professional for the most current rates and rules, as of your filing date. If you’re unable to pay your taxes in full, you may also consider setting up a payment plan with the IRS to avoid or reduce penalties.