The tax deadline has come and gone, but there are still people who haven’t filed or paid their taxes. Taxpayers who earned less than $12,550 in 2021 aren’t required to file and won’t be penalized. However, they may miss their chance to receive a tax refund. On the flip side, taxpayers who owe the IRS and missed the filing deadline will face two penalties. One for failing to file on time and another for not paying your owed taxes by the deadline. You’ll also accumulate interest until your balance is paid in full.
Most Americans can’t afford to cover a surprise expense with their savings. So, if you received an unexpected tax bill and were unable to pay your full balance by the deadline, you’re not alone. Unfortunately, you’ll be charged a failure-to-pay penalty. The penalty is 0.5% of your unpaid taxes for each month the payment is late, up to a maximum of 25%. If you can’t pay your taxes, the IRS does offer a payment plan so you can pay off your balance over time.
Sometimes when people know they’re going to owe money, they put off filing until they can come up with the extra cash. This is a costly mistake. The failure-to-file penalty is much higher than the penalty for not paying on time. It is 5% of your unpaid taxes each month it’s late, up to a maximum of 25%. Once your return is more than 60 days late, your minimum penalty becomes $435 or 100% of your owed taxes, whichever is less. Even if you can’t afford to pay your balance, always file on time, and pay as much as you can.
Your unpaid tax debt starts accumulating interest the minute you miss the tax deadline, and it builds daily. The interest rate is the federal short-term rate plus 3 percent.
File now to reduce penalties and interest
If you still need to do your taxes, file as soon as you can to minimize penalties and interest. E-filing is faster, easier and less stressful than filing by paper. Using tax software like ezTaxReturn.com reduces the risk of making a mistake because the program walks you through the entire process and does the calculations for you. Most people can prepare and e-file their returns in just 30 minutes. File now at ezTaxReturn.com.