- Don’t incur more charges by waiting even longer to file.
- The failure to file fee is 5% of unpaid taxes per month and late payments incur 0.5%, both capped at 25%.
- If you have a history of filing on time, you should try to have your fees waived.
Over 105 million tax returns were filed in May of 2020 (down from 130 million in May of 2019). Trust me you are not alone in this process; based on the previous statistics, you’re apart of the majority! The good news is, you may cut back on penalties by filing promptly according to the IRS. Life happens and before you know it you’ve missed the deadline. Especially if you don’t have the luxury of having an accountant in your inner circle to send out that annual friendly reminder text.
Some of my clients ask, “Is it okay to file an extension?” The answer is yes, but always remember, the deadline to file for a tax extension is the same day as the tax deadline (pro tip). While it’s too late to file an extension, you can reduce monthly tax penalties by filing as soon as possible. Failure to file costs 5% of unpaid taxes per month and late payments incur 0.5%, both capped at 25%.
You may qualify for a one-time penalty relief if you have a history of filing on time, which will allow you to file without having to pay the aforementioned late fees. If you are receiving a tax refund from the IRS instead of paying taxes, there’s no penalty for filing late. But the longer you take to file, the longer it will take to receive your refund.
If you can’t pay your bill
If you’re unable to pay your tax bill at the time, don’t worry. You have the option to pay later by setting up a payment plan with the IRS, known as an installment agreement. It is similar to setting up a payment arrangement. The only requirements are:
- You have to be up-to-date on all your returns (not filing a previous year’s tax return)
- You can’t owe $50,000 or more in taxes (this includes taxes and interest)
Talk with your accountant or CPA about your options. If you don’t have an accountant to file your taxes, give us a shout!