6 Facts on Being Late with your Taxes
Everyone knows that they can’t be late with taxes and that there are fees when you are late. However, there are other more detailed and precise rules that you should be aware of as well. They will help you set things in order with the IRS even if you are late.
In general IRS is not unreasonable and your previous behaviors is a good indicator of how you’ll get treated if you’re late. It’s best to be on time and responsible whenever you can.
Refunds
If you’ve overpaid your taxes and you’re expecting a refund it can affect you when you’re late. You simply won’t get the refund until you make the payment for your current tax debts. It also means that your fees may be deducted from or reduced by the amount you’re owed by the IRS.
There’s a limit to this in terms of time you have to do so. You must file your tax return in three years of the original deadline in order to claim your refund or you’ll lose the chance to do so even when you make the payments.
Fees
There are fees if you owe taxes and don’t send your return on time. There are no fees if you don’t owe taxes and don’t file the return on time because you’re obligated to do so even without profits. The fees depend on the amount you owe and they increase exponentially as you miss the deadline.
The fees start at 5 percent on the amount you owe for each month you haven’t paid your dues. They can increase up to 25 percent for each month if you continue not to deal with your obligations towards the IRS.
Penalties
After a while the fees become penalties. That’s what happens when you haven’t filled for 60 days. There’s a penalty for waiting this long that stands at 205 $ or 100 percent of your taxes, whichever is late. That’s the amount you’ll pay right away regardless of fees.
There are cases when you don’t have to pay this penalty and that’s when there’s a reasonable excuse for not paying your taxes or reporting on them, on time. This includes natural disasters, illness or death in your close family. IRS is reasonable about these request if they are honest.
Late payments
There’s an additional fee for when you’re late with your payments even if you have reported you taxes on time. At this point the fee is set at 0.5% of your overall tax debt. That amount is paid for each month in which you’ve been late with your payments.
There’s a limit as to how much you can pay in these fees and that is set at 25 percent of your overall debt. The fee can’t be more than that, but there are other penalties that you could get for being late and that includes shutting down your business.
You won’t be penalized both time for not paying and being late with paying. The fee for not paying is not paid when you send your return and then you only pay for being later so far. You won’t be penalized both time for not paying and being late with paying. The fee for not paying is not paid when you send your return and then you only pay for being later so far.
Interest rate
There’s also the interest you need to pay when you’re late. As is the case with any interest it accumulates over time and the more you wait the more you’ll pay in interest. It compounds until the day on which you make your payment.
At this point the interest rate is set at 5 percent but that’s obviously subject to changes and it can go higher or lower depending on the political decisions made.
Extensions
There are ways to ask for extension for personal or financial reasons and IRS will often grant these if they are reasonable and if you’ve behaved responsible before. There are no fees and penalties if you make the payments within the new deadlines set up by the extensions and agreed on with IRS.
Conclusion
One of the worst and most irresponsible thing you could with your taxes is to be late with the filling and the payments. There are rules set for this purpose and they cover both being late with the application and with the payments. These grow exponentially as you get more late and if you owe more.
There are also exemptions if you’ve overpaid your taxes before or if you have a valid reason to be late. IRS also tends to be fair and to help those who were otherwise serious with their obligations and their payments.
