Life can get chaotic and to-do lists are never-ending, so finding time to file your taxes may not be easy. If filing taxes has reached the bottom of your to-do list, we’re here to remind you that April 18 is Tax Day, the last day to timely file your 2015 tax return. Any taxes filed or payments made after this date could land you with a pile of penalties if you don’t take the necessary precautions.
So if you plan on filing by Tax Day, great! On the other hand, if you think you won’t be able to file or pay on time, here are 10 things to know about late filing and late payment penalties.
Late Filing Penalty
- 1.If you don’t file your taxes or request a tax extension using Form 4868 by April 18, you’ll get hit with the late filing penalty by the IRS.
- 2.This penalty is typically 5% of unpaid taxes for every month that your return is late.
- 3.This penalty starts accruing the day after taxes are due and will not exceed 25% of your unpaid taxes. For example, if you owe $1,000, your late filing penalty won’t be more than $250.
- 4.If you file more than 60 days after the due date, the minimum penalty is 100% of your unpaid taxes or $135, whichever amount is smaller.
- 5.It’s important to file on time or file an extension, even if you can’t pay on time. The late filing penalty is much higher than the late payment penalty.
Note: Good news! If you file after Tax Day and are owed a refund, you won’t face the late filing penalty. The IRS gives you up to three years to claim your refund money, no questions asked.
Late Payment Penalty
- 1.If you owe money to the IRS and don’t pay or set up a payment plan with the IRS by April 18, you’ll face the late payment penalty.
- 2.This penalty is typically 0.5% of unpaid taxes for every month that your taxes go unpaid.
- 3.This penalty starts accruing the day after taxes are due and will not exceed 25% of your unpaid taxes.
- 4.If you requested an extension by April 18 and paid at least 90% of your taxes, the late payment penalty may not apply to you. Just be sure to pay your remaining balance by your extension due date.
- 5.If you are financially unable to pay your tax debt right away, you can make monthly payments to reduce or eliminate penalties. Keep in mind, you’ll owe interest on any unpaid balance after April 18.
Note: Do you have a legitimate reason for late filing or late payment? The IRS will consider reasonable causes that prevented you from meeting your tax obligations. Learn more here.
[CM1]Link to Taxes 101 Extensions Blog