How Much Does the IRS Charge in Penalties? 💸
Michael Raanan, MBA, EA 💰 IRSvideos . com
Former IRS Agent | Owe the IRS? Visit IRSvideos.com
No one likes dealing with the IRS, and it's no secret that the IRS isn't fond of taxpayers who file a tax return that shows a balance due to the agency. Some taxpayers can full pay with their return, but many others can't simply write a check when faced with a hefty tax balance. If you find yourself underpaying and unable to make up the difference, you’ll most likely be faced with IRS penalties.
If you fail to pay or file your taxes on time, you’ll receive either a “failure to pay” or a “failure to file” penalty. Even if you pay a portion of your taxes by April 15, a penalty will likely still be applied. While you may still get the fine, it’s always important to pay as much as you can on time. This way, you’re reducing additional interest and penalties.
The late penalty for filing is generally 5% of every month’s unpaid taxes. The penalty starts accruing on April 16 but will not exceed 25% of what you owe. However, there are exceptions. For S corporations, failure to file penalties amount to $195 per shareholder per month.
If you do not pay your taxes by the deadline, you are immediately given a “failure to pay” penalty of 0.5% of your total unpaid taxes. This accrues every month you do not pay your taxes. The silver lining is if both penalties are applied, your total penalty won’t exceed 5%.
If you find yourself without the resources to pay your taxes in full or in part, you do have options. Contact an IRS Specialist who can work with you to set up an affordable IRS installment agreement. An installment agreement is a monthly payment plan where taxpayers in need can pay down a tax debt in more manageable amounts over time. This prevents the IRS from levying any assets or bank accounts as long as payments are made on time.
You can also file for an extension before the tax deadline. If you do this, and you’ve paid at least 90% of what you owe, you may not face a late penalty at all. If you file your taxes more than 60 days past April 15 or your extended due date, the minimum penalty is either 100% of your unpaid taxes, or $135, whichever is smaller. Although, if you can prove reasonable cause for not paying on time, you may avoid late fees altogether. After you’ve made the necessary adjustments in your taxes, identify the root cause of your tax liability to ensure it doesn’t happen again next year.
If you’re concerned about the penalties you may face this tax season, contact Landmark Tax Group for immediate assistance. We can help resolve an anticipated IRS collections case way before the IRS enforcement begins. As licensed back tax specialists, we can also try to remove any penalties from your tax account, as well.