If you owe taxes, the Internal Revenue Service will calculate penalties and interest on the amount owed. If you have a tax refund, the IRS may pay you interest on the delayed refund. (Note the difference between "will" and "may" – the IRS generally pays interest on tax refunds that have been delayed because of slow processing by the IRS. Since most late tax return take longer to process, the IRS "may" pay you interest on based on the extra amount of time it takes them to process your return.) If you have a refund, there is no penalty for Tax Filling late. Penalties are calculated on the amount due. Since there is no amount due, there is no penalty.
If you have a balance due on a late tax return, the IRS will calculate additional penalties and interest. There are three separate penalties:
Failure to File Penalty
Failure to Pay Penalty
Interest
The IRS penalty for failing to file a tax return is 5% per month – per month, not per year! – For every month that you have not filed your taxes. The maximum penalty is 25% of the taxes you owe.
By contrast, the penalty for failing to pay is half of one percent (0.5%) per month of the amount of taxes you owe. The IRS will also charge you interest on the amount of tax you owe, currently 7%.
If you have a balance due on a late tax return, the IRS will calculate additional penalties and interest. There are three separate penalties:
Failure to File Penalty
Failure to Pay Penalty
Interest
The IRS penalty for failing to file a tax return is 5% per month – per month, not per year! – For every month that you have not filed your taxes. The maximum penalty is 25% of the taxes you owe.
By contrast, the penalty for failing to pay is half of one percent (0.5%) per month of the amount of taxes you owe. The IRS will also charge you interest on the amount of tax you owe, currently 7%.
Labels: Paying Late Taxes is always better than filling late.
