If you missed the April 15th tax filing deadline, it’s imperative to take immediate action to file your return and pay your outstanding balance. Failure to do so will result in the accumulation of penalties and interest, which can add up quickly. The Internal Revenue Service (IRS) imposes a 5% late filing penalty on the unpaid balance per month or partial month, capped at 25% of your balance. Additionally, a 0.5% failure-to-pay penalty is charged per month or partial month, with a maximum fee of 25% of unpaid taxes. Interest on the unpaid balance is based on the current prevailing rates. As Mark Steber, chief tax information officer at Jackson Hewitt, cautions, “The longer you wait to file, the bigger the risk of higher penalties and interest from the IRS and state.” Avoiding penalties should not lead to rushing the filing process, as accuracy is paramount. Ensure you have all necessary tax documents, such as those related to investments and other earnings, before submitting your return. Filing an incomplete or inaccurate return can raise red flags for the IRS, potentially triggering an audit, delaying processing, or prompting an agency notice. Steber advises filing an accurate return as soon as all information is available. For those impacted by natural disasters, automatic extensions are granted for filing federal returns and paying taxes owed. If you’re unable to pay your tax balance in full, the IRS offers various payment options, including installment plans. Short-term payment plans are available for balances under $100,000, with a 180-day window to pay off the debt. For balances less than $50,000, long-term payment plans provide up to 72 months to settle the obligation. Additionally, you may be eligible for first-time penalty abatement, which Nicole DeRosa, a tax partner at accounting firm Wiss & Company, describes as a “‘get out of jail free’ request.” However, eligibility is contingent on the penalty type and your compliance history with the IRS.
Missed the Tax Deadline? File Your Return ASAP to Avoid Penalties
