Is There a Penalty for Filing Taxes Late?

The IRS looks at each late tax return on an individual basis and calculates penalties as they see fit. Once the IRS has received your return they will access and assign a penalty as they see fit. You’ll then receive a bill for the decided upon amount plus any accumulated interest. For this reason it’s difficult to know exactly how much filing taxes late impacts your overall tax responsibility without reviewing your individual statement. However here are the guidelines the IRS typically uses when accessing a penalty for filing taxes late.

When does the IRS access a penalty?

There is no penalty for filing a late return if you are getting a tax refund. However you must still file a return within three years of the tax deadline, April 18, 2017 (or October 18, 2017 if you filed an extension).
There is also no penalty for filing late if you requested and extension and paid any money owed by the April 18, 2017 tax deadline, as long as you submit your return by the October 18, 2016 extension deadline.
There will definitely be a penalty if you owe taxes and did not submit a tax return or request an extension by the April 18, 2107 tax deadline. This penalty also applies if you owe taxes and requested an extension but did not file by the deadline.
There will also be a penalty if you filed by the April 18, 2017 deadline but did not pay the amount owed.

How much is the penalty?

The late filing penalty is 5% of the total amount owed for every month your return is late. This penalty typically caps out at a maximum of 25%.
If you file more than 60 days after tax deadline, the minimum penalty is $135 or 100% of your unpaid tax. Whichever amount is lower.
The late filing penalty can be 10 times higher than the penalty for you being able to pay. Hence it’s always wise to file a return no matter what.

As mentioned before, the IRS accesses each case on an individual basis. Therefore if you have any questions contact one of our tax professional today for individualized tax advice!