Penalty For Filing Taxes Late If I Owe Nothing

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How Do I Get An Extension For My Tax Filing Deadline In Ca

Is there a penalty for filing taxes late if you owe nothing?

If you are concerned about your ability to file your taxes on time, there is a way to defer your deadline to a later point. To move your deadline, you can file for an extension by submitting Form 4868. People who successfully file Form 4868 will enjoy six additional months during which they can prepare to file their taxes without facing the consequences of filing late.

A filing extension through Form 4868 does not change your tax payment deadline requirements if you owe the government money. There are ways to change this extension, but they are much more complicated and harder to achieve. To hear more about extension options for both filing and paying taxes, speak to one of our attorneys today.

If You Are Getting A Refund

This is one of the great little secrets about the federal tax law. If you have a refund coming from the IRSas about three out of four taxpayers do every yearthen there is no penalty for failing to file your tax return by the deadline, even if you don’t ask for an extension. However, this might not be the case for state taxes.

That’s not to say there aren’t very good reasons for filing on time. Even if you have a refund coming, consider the following:

  • You can’t get your money back until you file, so you should file as soon as you can to get your money as soon as possible.
  • The statute of limitations for the IRS to audit your return won’t start until you actually file your return. So, the sooner you file, the sooner the clock starts ticking.
  • Some tax elections must be made by the due date, even if you have a refund coming. This applies to a very tiny percentage of taxpayers.

What Is The Failure To Pay Penalty

The Failure to Pay Penalty was mentioned above as well and this is a charge that the IRS applies when you haven’t paid the tax owed, even if you have filed your tax returns by the correct date.

In this case, there are two different calculations that can be applied, one for if you don’t pay the amount shown as tax owed on your return and one for if you owe tax that you didn’t report on your return.

When you fail to pay the amount shown as tax you owe on your return, the IRS calculates your Failure to Pay Penalty as follows:

  • The Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes.
  • If both a Failure to Pay and a Failure to File Penalty are applied in the same month, the Failure to File Penalty will be reduced by the amount of the Failure to Pay Penalty applied in that month. For example, instead of a 5% Failure to File Penalty for the month, the IRS would apply a 4.5% Failure to File Penalty and a 0.5% Failure to Pay Penalty.
  • If you filed your tax return on time as an individual and you have an approved payment plan, the Failure to Pay Penalty is reduced to 0.25% per month during your approved payment plan.
  • If you don’t pay your tax in 10 days after getting a notice from the IRS with the intent to levy, the Failure to Pay Penalty is 1% per month or partial month.

Recommended Reading: Free Irs Approved Tax Preparation Courses

How To Avoid A Penalty For Filing Taxes Late

The IRS allows taxpayers a filing extension until Oct. 15, and all individual taxpayers can use Free File to request it. The alternative is to print and mail in Form 4868.

During this extension, the taxpayer will not incur a failure-to-file penalty. However, the failure-to-pay penalty and interest on unpaid taxes might still be charged. Even if you are granted an extension to file your taxes, you still need to pay your taxes on time.

Can I File For An Extension Of Time To Pay My Tax Bill

The Penalty for Filing Taxes Late &  Past Due (Even If You Owe Nothing!)
  • The IRS must receive your Form 1127 on or before the date your tax is due.
  • Youre required to provide a comprehensive statement of all your assets and liabilities at the end of the month. You must also provide an itemized list of money received and spent for the three months preceding your request for an extension to pay.
  • You must be able to show that paying the tax by the deadline would cause undue financial hardship.
  • You must be able to demonstrate that paying your tax debt would cause undue financial loss and prove that you dont have the means to raise the money through borrowing or selling property.

If Youre Trying To See How Long Can You Go Without Filing A Tax Return

Its a risky proposition. While the government usually has just six years to charge you with criminal tax evasion, it has forever to collect the taxes you owe and assess penalties. In addition to the failure-to-file penalty, these things could happen to you when the IRS catches up to you:

  • Failure-to-pay penalty: If you dont pay the taxes you owe by the deadline, the IRS can penalize you 0.5% of the unpaid balance every month, up to a total of 25%.

Penalty For Filing Your Tax Return Late

If you file your tax return after the due date and have a balance owing, you will be charged a late-filing penalty. Filing late may also cause delays to your benefit and credit payments.

If you cannot pay your balance owing, you should still file on time to avoid being charged the late-filing penalty.

The late-filing penalty is 5% of your 2021 balance owing, plus an additional 1% for each full month you file after the due date, to a maximum of 12 months.

If the CRA charged a late-filing penalty for 2018, 2019 or 2020 and requested a formal demand for a return, your late-filing penalty for 2021 will be 10% of your balance owing. You will be charged an additional 2% for each full month that you file after the due date, to a maximum of 20 months.

The late filing penalty still applies when you get interest relief if you received COVID-19 benefits.

Can I File An Extension Past The Tax Deadline

Unfortunately, no. Tax extensions provide taxpayers six additional months to complete their tax returns, but they must be filed by the tax deadline. Taxpayers filing extensions must also include the estimated amount of money that they owe using IRS Form 1040-ES. Online tax software can also quickly calculate your estimated taxes.

If your deadline has passed, it’s too late to file an extension.

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Can’t File Your Tax Return By Midnight Here’s How To File A Tax Extension

Today’s the last day to file your tax return on time. An extension gives you six more months and avoids late penalties.

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Writer

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Income tax returns are due tonight by midnight in your local time zone. That means it’s your last day to submit your return and file your taxes on time to receive a prompt tax refund. Letting the deadline pass will slow down your refund and could lead to fines and penalties if you owe money.

If it isn’t possible to file your tax return by tonight’s deadline, you’ll want to file a tax extension to give yourself another six months. Along with completing your tax return, online tax software can also help you file a tax extension.

Will An Extension Delay Any Taxes You Owe To The Irs

No. Extending your filing deadline doesn’t delay when you have to pay taxes that you may owe. According to the IRS, you need to estimate and pay at least 90% of your tax liability by the deadline to avoid late fees. Otherwise, you will have accrued interest on what you owe, which you’ll eventually have to pay — plus possible penalties — on top of your income taxes.

The late-payment penalty is usually 0.5% per month of the outstanding tax not paid by the filing deadline, maxing out at 25%. The IRS can also issue a late-filing penalty of 5% of the amount due for every month or partial month your tax return is late. If your return is filed more than 60 days after the due date, the minimum late-filing penalty is either $435 or 100% of the unpaid tax .

For individual taxpayers, penalties and interest will stop accruing only when your balance is paid in full. For more on penalties or to work out a payment plan with the IRS, check out its web page.

Forgetting About Your Extension Deadline

  • Miss your extension deadline and the IRS can sock you with that 5% penalty for filing your taxes late.

  • If you really blow the deadline and your return is over 60 days late, youll pay either $435 or what you still owe, whichever figure is smaller. And remember, thats on top of what you still owe in taxes.

  • The good news is that the IRS may throw you a lifeline: You might not have to pay the penalty if you have a reasonable explanation for filing late and attach a written explanation to your return.

» MORE:How to set up an installment plan with the IRS

File An Extension Pay What You Can

What Happens If You File Taxes Late?

Because not filing taxes garners the most severe penalties, the IRS suggests that taxpayers who can’t pay the total amount they expect they owe file their returns anyway or file an extension and pay whatever amount they can afford.

“Taxpayers who are thinking of missing the filing deadline because they can’t pay all of the taxes they owe should consider filing and paying what they can to lessen interest and penalties,” the agency advises.

Taxpayers should make an effort to figure out what they owe and pay what they can, CPAs advise. Eric Bronnenkant, tax head at Betterment, suggests that people use the previous year’s taxes as a starting point for how much they might owe.

“If your prior year is a good barometer for your current year, start with that as a way to come up with some sort of reasonable estimate,” Bronnenkant told CBS News recently. “Don’t let perfect be the enemy of good enough.”

Even if you missed the filing deadline, you can avoid future hefty penalties by filing as soon as possible.

“The thing is, per month. Whether you’re one day late or 30 days late, it’s per month,” said Davidoff. “So get that return done by May 15. And even if you can’t pay, you’ll at least have the return filed by that date.”

If You Have A Balance Due

If you haven’t paid all of the tax you owe by the filing deadline:

  • You’ll likely end up owing a late payment penalty of 0.5% per month, or fraction thereof, until the tax is paid.
  • The maximum late payment penalty is 25% of the amount due.
  • You’ll also likely owe interest on whatever amount you didn’t pay by the filing deadline.

If you didn’t get an extension

  • You are also looking at a late filing penalty of 5% of the unpaid tax per month, plus interest.
  • The maximum late filing penalty is 25% of the amount due.

I Cant Pay My Tax Debt In Full What Are My Options

  • Pay with a credit card: If you dont have the money to pay for your tax debt currently, you can choose to put in on a credit card. At its core, this is essentially trading one debt for another, but choosing the right credit company could help you pay less in the long run, as you can likely qualify for an interest rate that costs less than the penalties the IRS will enforce.
  • Offer in Compromise: If its apparent that youll never be able to pay your total tax debt, the IRS may agree to an Offer in Compromise . This solution requires the taxpayer to come up with a new balance if the IRS agrees to this offer, the remainder of your balance is forgiven.
  • When there is reasonable doubt that the tax debt owed is incorrect
  • When there is doubt you could ever hope to pay off your debt in full
  • When paying the total amount due would cause undue financial hardship
    • Installment Agreements: If you cant currently pay off your tax debt in full and would like to receive more time, the IRS may approve your request for an installment agreement.
    • Filing for Bankruptcy: This is typically a last-ditch effort for taxpayers in difficult financial straits and should only be considered as a last resort.
  • Your debt is three years old: You can only discharge tax debt through bankruptcy if your tax return was due at least three years prior.
  • What Happens If You Do Owe Taxes

    If you are self-employed or dont have money withheld from your paycheck, odds are that you will owe the government money when you file your taxes. That means if you fail to file your taxes by April 18, you may start facing penalties because you owe the government money.

    You can delay some of these penalties by filing for a tax extension. This gives you an additional six months to file your taxes, allowing extra time to get everything in order and delaying some of the penalties for failing to file that you may otherwise face. Filing an extension will prevent the government from penalizing you for failing to file. Your tax payment is due by April 18 regardless of when you file. Potential penalties and interest may apply for not making your payment on time, regardless of whether you have extended your filing deadline.

    How Quickly Does Irs Audit

    When Do Tax Penalties Apply and What Can I Do About Them?

    How long does an IRS audit take to complete? Now for the answer to the all too familiar question every tax attorney gets: How long does a tax audit take? The IRS audit period itself should generally take no more than five to six months. Sometimes with proper preparation, they can be resolved faster.

    Real Tax Experts On Demand With Turbotax Live Basic

    Get unlimited advice and an expert final review. Done right, guaranteed.

    • Estimate your tax refund andwhere you stand

    • Know how much to withhold from your paycheck to get

    • Estimate your self-employment tax and eliminate

    • Know which dependents credits and deductions

    • Estimate capital gains, losses, and taxes for cryptocurrency sales

    • See which education credits and deductions you qualify for

    The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

    If You Owe Pay As Much As You Can To Reduce Penalties

    Although thereâs no penalty for submitting your taxes late when youâre expecting a refund, the IRS may assess penalties if you owe taxes.

    Even if you miss the tax deadline, you should pay as much as possible as soon as you can. Taking this step can reduce any interest or penalties on your tax account, such as the Failure to File or Failure to Pay Penalty.

    If you file your tax return late, the IRS may assess the Failure to File Penalty for failing to pay unpaid tax due on the original due date . Unpaid tax is the tax required to be reported on your return less any withholding, estimated tax payments, and refundable credits.

    The IRS calculates the Failure to File Penalty as 5% of the unpaid taxes for each month that the tax return is late. However, the penalty wonât exceed 25% of your unpaid taxes.

    You may also be assessed a Failure to Pay Penalty if you fail to pay taxes you report on your return by the original due date or an approved extended deadline, such as a federally declared disaster. Taxes that remain unpaid for a month will be assessed a Failure to Pay Penalty of 0.5% per month.

    In months where both the Failure to File and Failure to Pay penalties apply, the Failure to File penalty will be reduced by 0.5% . So instead of a 5% Failure to File Penalty for the month, youâll be charged a 4.5%.

    To get a better understanding of how penalties may affect your account, speak to a tax professional to determine which penalties may apply to your tax situation.

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