The federal tax deadline of April 15 has come and gone for most filers, and if you missed it, experts urge you to take immediate action. Filing your return and paying your balance as soon as possible is crucial to avoid accruing additional penalties and interest. The IRS emphasizes that until you file and pay your outstanding balance, you will continue to face consequences. The late filing penalty stands at 5% of your unpaid balance per month, capped at 25% of the total owed. Additionally, there is a failure-to-pay fee of 0.5% per month, up to a maximum of 25% of the unpaid taxes. Interest on the balance is calculated based on current rates. Mark Steber, chief tax information officer at Jackson Hewitt, warns, “The longer you wait to file, the bigger the risk of higher penalties and interest from the IRS and state.”
While it is important to address your tax obligations promptly, rushing to file a return without all the necessary information can lead to problems. If you are missing key details such as tax forms for investments or other earnings, filing an inaccurate return can result in audits, processing delays, or notices from the IRS. Steber emphasizes the importance of accuracy, stating, “A return needs to be completely accurate. No guessing or estimating.” It is essential to wait until you have all the required information before submitting your return to avoid complications.
If you find yourself unable to meet the tax deadline, there are online resources available for late payments. The IRS offers convenient options such as IRS Direct Pay and online account management for tax-related transactions. In cases where full payment is not feasible, the IRS provides various payment plans to help you settle your balance over time. These options include short-term payment plans for balances less than $100,000, allowing up to 180 days for full payment, and long-term payment plans for balances under $50,000, with monthly payments spread over 72 months.
Seeking Relief
For individuals facing tax penalties for the first time, there is a potential solution in the form of first-time penalty abatement. Considered a “get out of jail free” request by tax expert Nicole DeRosa, this option is available based on the type of penalty incurred and your compliance history with the IRS. While seeking relief through penalty abatement, it is essential to demonstrate a willingness to comply with future tax obligations to improve your chances of approval.
Missing the federal tax deadline is not the end of the road, but immediate action is necessary to address your tax liabilities. By filing your return accurately, utilizing online payment options, and exploring penalty abatement if eligible, you can navigate the consequences of late filing with greater ease. Remember, it is better to take proactive steps now than to face escalating penalties and interest in the future.