Things You Should Know about Filing Late and Paying Penalties

If you are due a refund there is no penalty if you file a late tax return. If you owe tax, and you failed to file and pay on time, you will most likely owe interest and penalties on the tax you pay late.

April 18 was this year’s deadline for most people to file their federal tax return and pay any tax they owe.

 Here are some facts that you should know.

 

1. Two penalties may apply. One penalty is for filing late, and the other is for paying late. They can add up fast. Interest accrues on top of the penalties.

 

2. Penalty for late filing. If you file your 2015 tax return more than 60 days after the due date or extended due date, the minimum penalty is $205 or, if you owe less than $205, the penalty is 100% of the unpaid tax. Otherwise, the penalty can be as much as five% of your unpaid taxes each month up to a maximum of 25%.

 

3. Penalty for late payment. The penalty is generally 0.5% of your unpaid taxes per month. It can build up to as much as 25% of your unpaid taxes.

 

4. Combined penalty per month. If both the late filing and late payment penalties apply, the maximum amount charged for the two penalties is 5% per month.

 

5. File even if you can’t pay. Filing on time and paying as much as you can will keep your interest and penalties to a minimum. If you can’t pay in full, getting a loan or paying by debit or credit card may be less expensive than owing the IRS. If you do owe the IRS, the sooner you pay your bill the less you will owe.

 

6. Late payment penalty may not apply. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90% of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 18 due date.

 

7. Payment Options. Click here to explore your payment options. Most people can set up a payment plan using the Online Payment Agreement tool.

 

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them.