Uncertainty, fear and confusion are only some of the familiar feelings that flood our thoughts during the inevitable tax season. If you a
re prepared, organized and don’t anticipate an outstanding balance this year, you should be sweat free. If you do, however, have an unpaid balance and don’t have the cash to pay in time, not all is lost! Make the financial decision that has the least impact on your bank account.
FILING your taxes late and PAYING your taxes late hold completely different penalties. In general, here’s what you can expect to pay for each scenario.
(Based on information provided by the IRS)
What if I don’t have the money to pay on time? (failure-to-pay penalty)
- Every month or part of a month that the tax goes unpaid after it’s due, a 5% penalty is charged on the unpaid taxes (up to 25%)
- If you filed on time and opted for a payment plan, the penalty drops to 25% once the plan is in effect
- If you paid up to 90 percent of your taxes and you file for an extension, you may not be responsible for the failure-to-pay penalty (note ̶ you will still pay interest on any outstanding taxes)
What if I file late and I still owe tax? (penalty for failure to file)
- Every month or part of a month that the return was late, a 5% penalty is charged on unpaid taxes (up to 25%)
- If you file over 60 days past the due date, the minimum penalty is the lesser of $135 or 100 percent of unpaid tax.
As a general rule, it is important to always file on time regardless of if you can pay, as the penalty for failure to file is typically much higher than the failure to pay penalty.If you need help learning about and preparing your taxes this year, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444. We’re excited to hear from you!