We’ve all heard the countless tales of people avoiding income tax. Maybe they don’t have enough money to pay their taxes or they don’t have the information to complete their return. No matter what the reason is, ignoring the IRS is certainly not a good idea. Mind you, delaying filing or payment can be more costly for you.
The following penalties shall be imposed for not filing or paying your taxes on time.
Tax payers who do not file or pay their income tax by the due date are subject to fees, interest and penalties in addition to the amount of tax due.
Failure to file your income tax by the April 15 deadline will incur a 5% penalty on top of the amount you owe. But if you do not pay your taxes by the due date, a penalty of .5 -1% of the unpaid tax per month applies. The penalty will take effect immediately after the deadline and will be charged for every month you delay.
Since the penalty for failing to pay is lesser than the failure to file, we urge you to file your taxes on or before the deadline whether or not full payment can be made.
In addition to the penalty, you’ll also be charged an interest for not paying your taxes in full. The interest rate is set quarterly by the federal government. Pay as much as you can to reduce the amount you owe.
Tell the IRS why you’re late
Everyone makes mistakes, especially when under the stress. So if you have a good excuse for not being able to file or pay taxes on time, do not hesitate to let the IRS know. If they consider your excuse, then you may not have to face penalties.
Filing an extension
If you requested for an extension to file and you were able to pay 90% of your tax by April 15, then you don’t have to face a failure-to-pay penalty. But be sure to settle the remaining balance on or before the extended due date.