Are you wondering what happens if you file taxes late? If yes, you should click here for the important things to understand.
Are you worried about the consequences of filing taxes late? You may be asking, “What happens if you file taxes late?”
The IRS doesn’t take kindly to people that shirk their taxpayer responsibility, but how serious does it get? You may have heard about people with levies and liens, and you want to make sure you don’t become one of them.
Continue reading this article to learn more about what happens if you’re late when filing your taxes.
What Happens If You File Taxes Late?
If you are worried you won’t have the money to pay your taxes if you file, so you ignore it — not a good move. You can use a paystub generator to keep track of your income, so you know how much you owe.
If you see you’re not going to be able to pay your taxes when you file, there are things you can do.
The only time not filing your taxes on time won’t get you in trouble is if the government owes you a refund. If the government owes you a refund, they will just hold onto your money until you file for it.
How Late Are You?
Assuming the IRS does not owe any money to you and you owe the IRS, the longer you do not pay your tax bill, the more money you’ll owe. The first thing you’ll deal with is the penalty for filing late.
As of this publication, you will be charged 5% of taxes you owe for each month past the filing date. There is a maximum of 25%, but that is still a hefty price to pay for being late.
If you fail to pay your taxes for 60 days, you will get a $205 fee or 100% of your unpaid taxes. They go with whichever of these numbers is less.
If you’ve filed your taxes, but you’re going to be late paying, it’s not nearly as bad. The current penalty is 0.5% of the taxes you owe for each of the months you fail to pay.
The maximum fee is 25% for being late with payment as well.
Set Yourself Up for Success
If you are self-employed, it’s good practice to save back 25% of your income. This makes it easier for you in the long run and is a good practice to get into.
If you save 25% of your income and pay taxes quarterly, you can avoid these late fees and problems with tax time.
Avoid Filing Your Taxes Late
Now you know the answer to “what happens if you file taxes late?” and you can decide what to do next. If the above information is worrying you, you might be putting a plan of action together to get your taxes in order.
Do you need more help with taxes and other personal finance issues? Our site has many articles to help you in this area. Browse our website for more helpful information and don’t forget to bookmark your favorite articles for future reference!