You have to take care of various aspects when you are a working professional or a business owner. Being caught up with all the other things can often make you forget about filing your tax within the timeline.
The deadline for filing taxes every year is April 15th, generally. However, you can request an extension. With the help of a tax extension, you can extend your deadline by six months.
The extension is given only for filing the cases. The payment must be made by the due date or before the deadline. Consult Pembroke pines accounting firm to get professional advice regarding tax returns and consider your available options if you have delayed the payment or filing of taxes.
However, if you fail to pay them by the due date, the IRS will sanction two different penalties: one for not filing a tax return and another for not paying the taxes you owe to the government.
A Penalty for Failure to File Taxes
The IRS sanctions a failure to file a return penalty if you don’t file your tax returns by the 15th of April or make a request to extend the deadline. The penalty amount is decided based on the taxes unpaid by you or the amount of delay you incurred in filing the return.
The IRS charges a 5% penalty on your unpaid taxes for failure to file a return every month or partial month when your tax return is late.
The penalty is capped at 25% of the tax not paid by you.
Late Payment Penalty
An additional penalty is imposed if you fail to pay the total tax bill on the due date. The penalty for failure of payment is 0.5% of your unpaid taxes for each month or part of a month you don’t pay your tax bill. Similar to the penalty for failure to file, the penalty for late payment is capped at 25% of the taxes you have not paid.
The best method to avoid a penalty for failure to file is to file your tax return before the deadline date or request an automatic six-month extension for the return. Payment of the taxes can be made via Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or by your credit or debit card. Make sure to pay it by the deadline of April 15th or request an extension for taxes. You can request it by mailing Form 4868 to the IRS.
If a situation arises in which both penalties are applied, the IRS reduces your penalty for filing a return failure by the penalty for failure to pay your taxes.