Failure to file or failure to pay; is there a lesser of two evils?
There are two IRS tax penalties that you put yourself in jeopardy of paying when you don’t file your tax return on time.
- Failure-to-File Tax Penalty. This applies to you if you did not file your tax return by the tax filing deadline and owed tax to the IRS.
- Failure-to-Pay Tax Penalty. This applies to you if you filed your tax return but did not pay your entire tax liability due by the tax filing deadline.
If you are expecting a refund, you will never be held liable for a penalty fee.
How do I calculate my failure-to-file tax penalty?
The late filing penalty is 5% of the additional taxes owed amount for every month or fraction of a month that your return is late. This is capped at 25%. Let’s take a look at an example.
Let’s say you owe the IRS $950. One September morning, you wake up and it hits you. You forgot to file your 2015 tax return! You can assume that you will owe the IRS an additional $240. Here’s the math:
$950 tax liability x 5% = $47.50 per month late Continue reading “2015 IRS Late Tax Penalties”
