The tax deadline always seems to sneak up on us every year. If you’re like many Americans who wait until the last minute to file your taxes, you’ve probably wondered what would happen if you filed your taxes late or not at all.
In section IRC 6651(a)(1), IRS is clear about assessing penalties if someone files their taxes after the deadline. For those who don’t have time to read the tax code (who does right?), here’s a quick summary of what happens if you don’t file your taxes on time.
Filing Taxes Late?
Get Ready for a Penalty if You Owe the IRS
If you owe money to the IRS and fail to pay your taxes by the deadline, the IRS will assess a penalty based on the amount you owe. The IRS penalty is 0.5% (1/2 of 1 percent) of the outstanding tax balance owed. This is assessed monthly and will be calculated month after month up to a maximum of 25%.
If you fail to file your taxes on time and you owe money to Uncle Sam, the IRS will assess a 5% late filing penalty to the additional taxes owed each month. This is also capped at 25%.
What if I’m expecting a refund?
If you know that you’re going to get money back, then the IRS won’t charge you a penalty if you’re late in filing your taxes. In fact, you can wait up to 3 years before the IRS takes action – which is forfeiting your refund. You will essentially donate your tax refund to the government.
I know you don’t want to do that, so take 30 minutes, and file your taxes with Turbo Tax. (You can file free or use one of these Turbo Tax discount codes to make it easier on you.)
How can the IRS tell if I file or not?
If you received a W2 this year, the IRS know that you didn’t file because they received your W2 as well. Each employer is required to submit your W2 to the IRS, so if you don’t file, you’ll be found out.
How to File a Tax Extension
If you want to file an extension, you can do so as long as you file it by the tax deadline. You won’t be penalized for filing late if you file the tax extension form. You will have until October to actually file your taxes, but don’t wait until then! Be proactive and file as soon as you can so that you don’t end up filing the night before they’re due!
Have you ever been late in filing your taxes? What did you have to do in order to correct it?