The IRS failure to file penalty is not one that you want to mess with. This is one of the harshest penalties used, and can really put you in a bad financial position if you are not careful. There is a penalty for filing taxes late if you owe money with your final return. Although you may do what you can do avoid this, you never know if you will find yourself facing this situation in the future.
Did you know that the failure to file penalty is much stricter than the failure to pay penalty? Simply put, the IRS wants you to file your return on time no matter what it takes. Even if you owe money, this is something you should do. To ensure that taxpayers realize how important this is, the IRS uses a failure to file penalty.
There is a five percent penalty per month that starts to accumulate on April 16th. As you can see, the IRS does not waste any time charging you for the days that you are late. The longer you wait to file the more money you are going to end up paying in the end. And remember, your penalty is added to the money that you still owe in taxes.
The penalty for filing taxes late is calculated on the original amount of taxes owed. The maximum penalty for failing to file by the due date is 25 percent, which is reached in five months or on September 16th. If you do not file within 60 days of the date that the money is due. The minimum penalty is the less of 100 percent of the unpaid amount or $135.
The IRS makes it clear that they want every taxpayer to file their return by April 15th. While there are always going to be situations that call for an extension, you should not rely on this â€“ it does not give you more time to pay any additional money. If you do choose to file an extension this can lessen your penalty because you will only be charged the failure to pay penalty (for the time that the extension was granted), which is only .5% a month.
If you do have a reason for missing the filing date and not paying ontime, it is a possibility that you can get these penalties removed through abatement. The IRS allows individuals that have a reasonable excuse for not staying in compliance with IRS guidelines to have their penalties removed.
As you can see, the penalty for filing taxes late if you owe can be very large. Instead of taking the risk, file on time and forget about causing more problems for yourself.