Did you miss the April 15th income tax filing deadline? If you file your taxes late, you may be assessed tax penalties and interest. The two most common tax penalties are the late filing tax penalty and the late payment tax penalty.
The failure-to-pay penalty is normally .5 percent of the unpaid taxes for each month, or part of a month, that the tax payment is late. The penalty starts accruing the day after taxes are due up to as much as 25 percent of your unpaid taxes. If you file your return more than 60 days after the due date (or extended due date) the minimum penalty for late filing is the lesser of $135 or the unpaid tax.
The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month, or part of a month, that the tax return is late. The penalty starts accruing the day after tax return is due up to as much as 25 percent of your unpaid taxes.
Both the 5 percent failure-to-file penalty and the .5 percent failure-to-pay penalty run concurrently such that the maximum penalty that can be charged is limited to 5 percent.
If you filed for an extension (Form 4868) of time to file your taxes, you normally have up to October 15th to file your taxes without the failure-to-file penalty. You may still have a failure-to-pay penalty which is considerably less. No failure-to-pay penalty will generally apply if you have paid in at least 90 percent of the taxes you owe.
In certain cases, where you can show reasonable cause for not filing or paying on time, you can get tax relief from both of these penalties by applying for a tax penalty abatement.