Generally, if you miss the filing deadline or don't file your application before the tax extension deadline, the IRS may charge you a penalty for not filing your return. The penalty is based on your unpaid taxes, and the IRS charges 5% of your taxes due for each month or part of the month you don't file your tax return. However, the maximum amount that the IRS can charge you is limited to 25% of the taxes due. Filing an extension automatically delays the tax filing deadline and protects you from potential missed filing and from penalties.
Penalties for filing a late return can amount to a rate of 5% of the amount of taxes due for each month of delay. The late payment penalty is 0.5% of the outstanding balance for each month (or part of a month) in which the tax is not paid. The rate rises to 1% ten days after the IRS issues a final notice of intent to seize or confiscate assets. However, the penalty is only 0.25% for each month, or part of a month, in which an IRS installment agreement is in effect.
In general, the fine can reach 25% of the unpaid tax. As you can see, the longer you wait, the higher the penalties will be. If you miss the tax filing deadline and haven't filed an extension, you'll start accruing interest and penalties. There are penalties for both not submitting the application and for not paying.
If you haven't paid all of your tax liability by the deadline, you'll be subject to both. The IRS will begin its collection process. If your taxes remain unpaid long enough, the government can impose a tax on your property or garnish your assets. If your income is too high for the Free File program and you're comfortable filing your own taxes, you can also use the fillable IRS Free File forms (opens in a new tab) until October 17. The penalty for not paying is 0.5% of the tax you didn't pay on time during each part of the month that your taxes remain outstanding.
After you file a valid tax extension, you have until mid-October of the same year to file your tax return. About 2.5 million taxpayers are paying their bills under this agreement and, recently, the IRS eased the requirements. For example, you can connect to the Internet (opens in a new tab) and request a payment plan that allows you to pay the taxes due over time. Tax Exemptions Most Americans apply for the standard deduction on their federal tax return instead of itemized deductions.
In addition, you may qualify for a user fee waiver or refund if you are a low-income taxpayer. It's time to pay taxes, which means it's time to organize your company's income and expenses to ensure you get the best possible tax result. Depending on your taxable income, you may end up in one of seven different federal income tax categories, each with its own marginal tax rate. For example, filing and payment deadlines expire later for some disaster victims, Americans living abroad, and military personnel (see How to Get More Time to File Your Tax Return for more information).
If you didn't file your tax return because you can't pay your taxes, the IRS has a couple of options for you. Rocky is a senior tax editor at Kiplinger with more than 20 years of experience covering the evolution of federal and state taxes. Prepare your business for taxes Gather your income and expenses First, gather your income and expense documents. The IRS will give you an additional six months to file your tax return; all you need to do is request an extension.