If you haven’t heard already, the tax deadline was extended to July 15 of this year as a means of providing extra time for taxpayers during the pandemic. The IRS recently announced that it will NOT be extending the July 15 deadline for filing 2019 taxes. If taxpayers fail to meet this deadline, they may face penalties and interest charges.
What If I Don’t File My Taxes on Time?
If you miss the July 15 deadline, you will be penalized for 5% of the unpaid taxes for every month that the return is late – up to 25% of your unpaid taxes. This penalty applies for a full month, even if the return is filed less than 30 days late.
Income tax returns are also subject to a minimum late filing penalty when filed more than 60 days after the return due date, including extension. The minimum penalty is the lesser of two amounts – 100% of the tax required to be shown on the return that you didn’t pay on time, or a specific dollar amount that is adjusted annually for inflation.
What If I Don’t Pay My Taxes on Time?
If you don’t pay the taxes you owe by the July 15 deadline, the penalty is 0.5% of the unpaid taxes. It’s important to remember that even if you have requested an extension, you are still required to pay if you expect to owe $1,000 or more when the return is filed. If you don’t estimate at least 90% of your tax liability by the deadline, you may face penalties.
What If I Incorrectly Estimate the Taxes I Owe?
You will be penalized for incorrectly estimating your taxes after filing an extension. If your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. During this process, the IRS will calculate the penalty separately for each required installment. The number of days late is first determined and then multiplied by the effective interest rate for the installment period.
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