if you fail to file on time or if you fail to pay your taxes on time you may be subjected to a penalty. The IRS can assess a penalty if you fail to file, fail to pay or both. According to the IRS, there are eight important points to be concerned about if you don't file your taxes on time.
If you do not file your taxes by the deadline, you may face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty.
The failure-to-file penalty is usually more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and pay as much as you can, then explore other payment options that may be available to you.
The penalty for filing late is generally 5 percent of the unpaid taxes for each month or portion of the month that the return is late. This penalty may not exceed 25 percent of your unpaid taxes.
If you file your return more then 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
If you do not pay your taxes by the due date, you may have to pay a failure-to-pay penalty of half of 1 percent of your unpaid taxes for each month or portion of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
If you request an extension to file before the tax deadline and you paid at least 90 percent of your actual tax liability by the due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.
If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
You may not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to pay or file on time because of reasonable cause and not willful neglect.
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