While most of us appreciated the few extra days we gained from the later tax filing deadline of April 18th this year, others could still use more time to file their 2015 tax returns. If you’ve found yourself filing late this year and are due a refund, then you shouldn’t expect to be penalized. However, late filers who owe taxes should read the information below to learn about the consequences of filing a late tax return.
Penalty For Late Filing
The penalty for filing your return late is referred to as the failure-to-file penalty. This penalty is typically calculated as 5% of your unpaid taxes due for each month that your return is late, not to exceed 25% of your unpaid taxes. Additionally, if your return is filed over 60 days after the filing deadline, then the minimum penalty you’ll owe is either $135 or 100% of your unpaid taxes due, whichever amount is less. As you can see, the penalty for filing your tax return is quite hefty, so our advice is to do your best to submit your tax returns on time or as soon as possible after the filing deadline. Even if you are not able to pay the full amount you owe in taxes, submitting your tax return on time will help you avoid the failure-to-file penalty while you work out the arrangements on paying your taxes due.
Penalty For Late Payment
A failure-to-pay penalty is assessed when taxes remain unpaid after the filing deadline. The failure-to-pay penalty is calculated as .5% of your unpaid taxes due for each month they remain past due. This penalty is calculated from the day after taxes are due and can reach up to 25% of the amount of your unpaid taxes.
Combined Penalty For Late Filing And Payment
If both the failure-to-file and the failure-to-pay penalties apply, then 5% of taxes due is the maximum amount that will be charged during that month.
If you are able to demonstrate reasonable cause (rather than simple neglect) for not filing or paying on time, you may be able to avoid paying the penalties.
How To Get Help With Your Late Tax Return
If you’re filing late, you will owe interest and penalties, and although you’re filing late, be sure to file your tax return and pay the taxes that are due as soon as you can. Paying earlier will help reduce the amount of interest you’ll owe. Preparing early for tax time is always one of the best ways to avoid filing complications. If you need assistance understanding complicated tax rules, or dealing with the IRS on your late return, contact the tax preparation professionals at E&Y Agency at 248-909-1331. We’ve been the trusted Michigan tax preparation service for over 15 years to individuals and business owners, and can help you avoid major tax headaches.