What To Know About Penalties And Paying Taxes Late

Written By Mary Beth Eastman
Last updated May 8, 2019

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Personal Finance
May 8, 2019

Simple. Thrifty. Living.

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:

Not Paying Taxes is Better than Not Filing at All

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.

You Can Request an Extension

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 is 5 Percent

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.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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