Tuesday, April 14, 2015

Eight facts on late filing & late payment penalties

Eight Facts on Late Filing & Late Payment Penalties

April 15 is the deadline for most people to file their federal income tax return and pay any taxes they owe. The IRS may assess penalties for both failing to file a tax return and for failing to pay taxes by the deadline.

Here are eight important points from the IRS about penalties for filing or paying late.

1. A failure-to-file penalty may apply if you didn’t file by the deadline. A failure-to-pay penalty may apply if you didn’t pay all of the taxes you owe by the filing deadline.

2. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement with the IRS to make payments, which will reduce the interest rate.

3. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.

4. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of one-half of one percent (.005) of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

5. If you requested the six-month filing extension in a timely fashion AND paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date.

6. If both the 5 percent failure-to-file penalty and the half-percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent.

7. 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% of the unpaid tax.

8. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time.

More information is available at http://www.irs.gov/taxtopics/tc653.html  

Get The Actor’s Tax Guide at http://www.ActorsTaxGuide.com

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