Today is the deadline for taxes.
You either file your taxes or request an extension.
This is also the deadline for paying any taxes owed, as extensions do not extend the paying of taxes. At the very least, every effort should be made to pay as much as possible to reduce the liability at the time of the extension.
Let’s explain the penalties and interest if you chose not to do any of these actions.
The IRS can, without your permission, collect the taxes by garnishing wages, taking money from your bank account and or seizing and selling assets (homes, cars, etc.).
Failure-to-file penalty
IRS assesses a penalty of 5% of your unpaid taxes for each whole or partial month your return is late.
Failure-to-pay penalty
The IRS assesses a penalty of 0.5% of your unpaid taxes for each whole or partial month that the taxes remain outstanding and capped at 25% of taxes owed for the year.
Failure-to-file penalty & failure-to-pay penalty
The IRS can assess both penalties, but when both penalties apply, your failure to file penalty is reduced by your failure to pay penalty.
Remember the interest
Interest accrues from their original due date until paid in full, at 7%. This rate is updated quarterly based on prevailing interest rates.
Refunds
If not filed within three years, the refund will not be issued.
Payment arrangements can be made with the IRS.
Please contact me, if you need to do so, to discuss.