DO YOU HAVE TO PAY TAX PENALTY ?
May 24, 2019 - Douglas Myser
Do you have to pay tax penalty ? What's the harm in filing your taxes late ? It depends on whether you owe Uncle Sam or Uncle Sam owes you. If the IRS owes you a refund you face no repercussions aside from losing the opportunity to invest or spend that money while it's still in the government's hands. In this case, you actually have until Tax Day 2021 to file your 2018 tax return. Wait longer and you forfeit your refund to the U.S. Treasury. The IRS says taxpayers leave $1.4 billion on the table this way. What if you owe the government money ? The IRS can charge you penalties and interest on the amount you owe. Do you have to pay tax penalty ?
If you owe and don't file by the tax deadline very year you do face penalties. The IRS will charge you a failure to file penalty that grows every month that you don't file your return. The tax penalty is typically 5 percent of the amount you owe. After on month, if you still haven't filed it rises by another 5 percent--to 10 percent--of the original amount owed. This could continue until your total tax penalty rises to 25 percent of the principal owed.
If after 60 days you still haven't filed, and IRS rule may kick in that charges you a minimum penalty of $205 or 100% of what you owe, whichever is less. This may not apply, however, depending on how much you owe the IRS. The IRS lets you know whether you will be charged the 60 day penalty or whether you'll continue to be subject to the 5 percent growing penalty. "You should always at least file your tax return by the tax due date," says Tim Steffen, a CPA financial planner, and director of advanced planning for Baird Private Wealth Management in Milwaukee. "The IRS is more understanding of someone who at least makes an effort to get right with them rather than someone who ignores their responsibility." If you owe back taxes and want to explore Tax Relief options in the IRS Code, including but not limited to the code in the IRS Fresh Start Program, then contact this 35 year old Tax Resolution Company for help. We can file your back taxes and explore all options for your Tax Resolution.