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What are the penalties for filing and paying my taxes late?

Tax_questionQ) What are the penalties for filing and paying my taxes late? A) According to the IRS, Interest is compounded daily and charged on any unpaid tax from the due date of the return (without regard to any extension of time to file) until the date of payment.

  • The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months.
  • For current interest rates, go to News Release and Fact Sheet Archive and find the most recent Internal Revenue release entitled Quarterly Interest Rates or alternatively, search “quarterly interest rates” on our website, www.irs.gov.

In addition, if you didn’t pay your tax on time, you’ll generally have to pay a late payment penalty.

  • The late payment penalty is one-half of one percent of the tax (0.5%) owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent.
  • You will not have to pay the penalty if you can show reasonable cause for the failure.
  • The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.
  • Currently, if you filed a timely return and are paying your tax via an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect.

If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause.

  • The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%.
  • The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax payments.
  • After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid.
  • The total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed.
  • If your return was over 60 days late, however, the minimum failure-to-file penalty is the smaller of $135 ($100 for returns required to be filed before January 1, 2009) or 100% of the tax required to be shown on the return.

 

Filed Under: IRS

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  1. According to the IRS: You can fix mistakes or omissions on your tax return by filing an amended tax return. If you need to file one, these tips can help.

    Must be filed on paper. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return. It can’t be e-filed. You can get the form on IRS.gov/forms at any time. See the Form 1040X instructions for the address where you should mail your form.

    Amend to correct errors. File an amended tax return to correct errors or make changes to your original tax return. For example, you should amend to change your filing status, or to correct your income, deductions or credits.

    Don’t amend for math errors, missing forms. You normally don’t need to file an amended return to correct math errors on your original return. The IRS will automatically correct those for you. Also, do not file an amended return if you forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail you a request for them in most cases.

    Form 1095-A, Health Insurance Marketplace Statement, errors. Some taxpayers may receive a second Form 1095-A because the information on their initial form was incorrect or incomplete. If you filed a 2015 tax return based on the initial Form 1095-A and claimed the premium tax credit using incorrect information from either the federally-facilitated or a state-based Health Insurance Marketplace, you should determine the effect the changes to your form might have on your return. Comparing the two Forms 1095-A can help you assess whether you should file an amended tax return, Form 1040X.

    Three-year time limit. You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. That means the last day for most people to file a 2012 claim for a refund is April 18, 2016 (April 19 for taxpayers in Maine and Massachusetts). See the Form 1040X instructions for special rules that apply to some claims.

    Separate forms for each year. If you are amending more than one tax return, prepare a 1040X for each year. You should mail each year in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. Check the form’s instructions for where to mail your return.

    Attach other forms with changes. If you use other IRS forms or schedules to make changes, make sure to attach them to your Form 1040X.

    When to file for corrected refund. If you are due a refund from your original return, wait to get it before filing Form 1040X to claim an additional refund. Amended returns take up to 16 weeks to process.

    Pay additional tax. If you owe more tax, file your Form 1040X and pay the tax as soon as you can to avoid possible penalties and interest from being added to your account. Use IRS Direct Pay to pay your tax directly from your checking or savings account. Source https://www.irs.gov/newsroom/amending-your-tax-return-ten-tips

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