The Price Of Keeping The Irs Waiting

By Author: Jeff Parrack
Total Articles: 4762
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Filing your taxes on time will save you a wide variety of fees and administrative headache. However, sometimes life steps in the way and for some reason you may not be able to promptly file taxes. If this is the case, the best plan is to file for a six-month extension. If you fail to file for this extension, then be sure to plan for the various financial penalties the IRS will enforce.

Penalties for late filing and payment

When you are late filing your taxes with the IRS, there are three penalties you will incur: failure to pay, failure to file and interest. The failure to file penalty is commonly 5 percent for every month (or part of the month) that you are late, up to 25 percent. The failure to pay amount is one-half to one percent per month or (part of month that you are late.) If you are hit with both fees, you will be charged the failure to file amount minus the failure to pay amount. If you file more than 60 days past your deadline, the minimum penalty is the lesser of $135 or 100 percent of your unpaid taxes. The interest for late payments has ranged range 4 to 8 percent since 2000 and is reset every quarter.

The ...
... IRS Extension

You may file your tax extension electronically, by mail or in conjunction to a partial tax payment. The file used to request an extension is Form 4868. If you think you need more time for your taxes, consider online tax service that can assist in the process. These services link to the Internal Revenue Service and can process an extension request in as little as two minutes. Your information is kept confidential, and the nominal fee could be worth it, considering the penalty for late filing. While the normal deadline for taxes is April 15, you can extend that deadline to Oct. 15.

What do you do?

The failure to file penalty is commonly larger than the failure to pay penalty, so it is generally recommended to file no matter what. If you have good reason for not filing your taxes, you will not be required to pay the failure to file penalty. This option could be exercised, for example, if you were in combat at the time tax filings were due. It is important to note that extensions -- including those processed by online tax services -- can't get you out of your payment deadline. Those who have filed an extension and have paid at least 90 percent of their taxes will not be hit with a failure-to-pay penalty.

What happens if you don't pay?

If you do not file your taxes voluntarily, the IRS will file them for you and you will incur all three of the IRS fees. You will not be given the deductions and exemptions you may be eligible for, and you will still receive a tax bill, penalties included. Repeated neglect of tax filing will result in more extreme enforcement measures. The IRS avoids jailing people for tax errors; however if criminal activity or a blatant disregard for complying is detected, jailing is a possibility. If you need assistance in paying your amount, you contact the IRS to secure a payment plan.

Promptly filing taxes or using an online tax service can save the taxpayer a significant amount of money in the long run. Be sure to mark April 1 on your calendar, and if you know that Oct. 1 would be a better time for you, file for an extension as soon as possible. Ignoring the problem will not go away, and you can ultimately lose out on many deductions and exemptions, as well as be hit with major penalties.
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1040-Tax Extension will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit online for automatic extension on your individual tax return.