If Your Taxes Are Late may occurs these Consequences and following these happens. Filing your taxes on time is important for a number of reasons. The Internal Revenue Service (IRS) expects taxpayers to file their tax returns by the deadline, which is usually April 15th of each year. If you miss this deadline, you may face consequences and penalties for filing your taxes late. Now, let’s see what happens if your tax are late.
Penalties for Late Filing
If you fail to file your taxes by the deadline, the IRS will charge you a penalty. The penalty for filing taxes late is usually 5% of the unpaid taxes for each month or part of a month that a return is late, up to a maximum of 25%. The penalty is calculated from the due date of the return (without extensions) until the date you actually file the return or pay the tax, whichever is later.
In addition to the penalty for filing late, you may also be charged interest on any unpaid taxes. The interest rate is determined quarterly and is based on the federal short-term rate plus 3%. Interest charges are compounded daily.
Exceptions to Late Filing Penalties
There are a few exceptions to the penalty for filing late. For example, you may not have to pay a penalty if you can show that you failed to file on time because of a reasonable cause. Reasonable causes may include a serious illness, a natural disaster, or problems with IRS systems. You must provide documentation to support your claim.
You may also be excused from the penalty if you are able to show that you filed your return as soon as possible after the reason for the delay was resolved.
Options for Late Filers
If you realize that you will be unable to file your tax return by the deadline, you have a few options. One option is to request an extension. An extension will give you additional time to file your tax return, but it does not give you more time to pay any taxes you owe. You must still estimate the amount of tax you owe and pay it by the original deadline to avoid interest and penalties.
You can request an extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file this form electronically or by mail. The extension will give you an additional six months to file your tax return.
If you cannot pay the full amount of taxes you owe by the deadline, you should still file your tax return on time and pay as much as you can. This will help to minimize any penalties and interest charges. You can also consider making payment arrangements with the IRS. The IRS offers a number of payment options, including an installment agreement, which allows you to make monthly payments on your taxes.
Filing your taxes on time is important to avoid penalties and interest charges. If you are unable to file by the deadline, you can request an extension or make payment arrangements with the IRS. It is always best to file your taxes as soon as possible, even if you cannot pay the full amount owed.