While some of us get large returns that can be quite enjoyable, many of us are spending this time forking up money to the IRS. Whether you owe money to the IRS or not, sometimes we get caught up in our hectic lives and end up filing our taxes once the deadline has passed. But if you decide to pay your taxes late or you forgot altogether, it’s important to know the consequences involved. In this post, we’ll discuss what happens if you pay your taxes late and what options you have once you file past the deadline.
April 15th is the annual deadline to pay your taxes and, by law, the IRS can pose some penalties if you do indeed file your taxes past the deadline. However, there are some facts about late-filing that you should be aware of — some of which involve not even paying a penalty. See below for these important facts about filing late:
There is a difference between not filing and not paying your taxes. While you may not have the money to pay your taxes by the deadline, you should still file. Use an online tax service to make it quick and easy (we have a list of the best online tax companies to use). According to the IRS, the failure-to-file penalty is generally more than the failure-to-pay penalty. Additionally, you should always pay as much money as you can to reduce any additional interest and penalties that occur over time. The good news is, the IRS will work with you to pay this money back. Getting a loan or making an installment agreement are two options you have.
If you feel that you can’t pay or file your taxes on time, you can request an extension. If you request an extension and pay at least 90 percent of taxes due with your request, you may not have to pay a failure-to-pay penalty. But it’s important to note that you still must pay the remaining amount by the extended deadline.
The normal penalty for filing late is 5 percent of the unpaid taxes for each month or part of the month of the late return. It’s also important to note that the penalty starts accruing the day after the taxes are due and the penalty won’t exceed 25 percent of your unpaid taxes.
While many people are afraid of the IRS, they are very helpful when it comes to filing late — as long as you communicate with them. In fact, you can even avoid a penalty altogether if you can show reasonable cause for not filing or paying taxes on time. However, while there are ways to avoid the penalty or to keep penalty costs low, filing and paying on time is highly advised.
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