FILING YOUR TAXES LATE IS A BAD IDEA
Image from www.kahntaxlaw.com
Filing your tax return late is never a good idea. Here’s what you should know about what happens when you file late.
Understanding What Late Means
First, let’s clarify that late means you didn’t file not only by April 15th, but by the extension date, which is usually October 15th. If you miss the extension deadline, three things can happen, and none of them are good.
#1 Consequence of Filing your Taxes Late
You’ll likely have to deal with an IRS examiner and that’s never a good thing. The IRS will notice right away that you didn’t file your taxes and they’ll want to know why.
They’ll likely send you a letter stating that you must gather your tax records and meet with an IRS examiner about the situation.
You might also increase your chances of getting audited because not filing your taxes is a big red flag and if they were already considering auditing you, it’s like a fast-pass into an audit.
#2 You’ll Pay Excessive Fees
The IRS doesn’t come down lightly with its fees. They charge 5% a month when you file late. While there’s a maximum of 25% of the tax-due, it’s still a lot of money. Why pay the IRS more than necessary when you could just file on time?
#3 You’ll Pay even More Fees
As if the failure to file penalty wasn’t enough, you’ll also pay a failure to pay penalty which is 0.5% a month. Again, this fee can’t exceed 25% of the tax due, but still, you’re paying more than necessary.
If you’re subjected to both penalties, for the first 5 months, you’ll pay just the penalty for failure to file (5%). After those five months, though, the penalty for failure to pay still applies. In the end, you could pay 47.5% of the tax due if you don’t file and don’t pay.
If you’re worried about these things happening to you, let’s talk.