What happens if I didn’t pay or file my taxes by the deadline?
Tax season for 2018 is finally over. The close did not go as smoothly as expected as the IRS’s computer systems crashed on the due date. Thus, the IRS gave everyone an extra day to file and pay their taxes.
So, what happens if you didn’t file or pay your taxes by the due date? There are 2 penalties which the IRS can hit you with: failure to file and/or failure to pay.
Failure to file comes into effect when no return is submitted before the due date. It is also the much harsher penalty, at 5% of the taxes owed for every month your return is not submitted up to a 25% maximum.
Failure to pay is .5% of the tax owed for every month the taxes remain unpaid. Please note that for every month that the failure to file and failure to pay both apply, the failure to pay is waived. As you can see, it is better to file a return and then work out how to pay rather than not filing because you might owe.
When a return has not been filed timely or payment is not received, the IRS will send notices with their estimation of what you owe and demand payment.
The worst thing you can do is ignore the IRS. They will work with you to resolve your tax issues. As time goes on and if you start ignoring the IRS, they will move to lien and collections on top of the interest they are charging.
Penalties are just money that is wasted. If you do not think that you can gather all your information by the April deadline, getting an extension filed can save you the failure to file penalty as long as you get your return submitted by the October deadline. Extensions do not extend the time to pay, but that is a much lower penalty.
If you need help filing your tax return or other questions, give us a call at 260-407-5000.