With the final March 31st deadline to e-file your 1099s & W-2s right around the corner, I thought it would be a grand idea to explain the IRS penalties associated with tax returns. It’s always good to know what happens if you miss a deadline; perfect motivation to keep you from waiting until the absolute last minute. When it comes to IRS penalties associated with tax returns, there are two: failure to file and failure to pay.
Failure To File
If you file past the deadline then you may incur IRS Failure-To-File Penalties. This type of penalty is generally more than the failure-to-pay penalty, so you want to be sure an file on time. Here’s the breakdown of the failure-to-file penalty:
The failure-to-file penalty is generally 5% of the unpaid taxes for each month or part of the month it is late: up to 25% of your unpaid tax.
If the return is more than 60 days late, the minimum penalty is $135 or 100% of the unpaid tax, whichever is smaller.
Failure To Pay
The failure-to-pay penalty kicks in if you do not pay your tax liability by the deadline. Basically, if you owe taxes and do not pay by the deadline, you may be hit with a failure-to-pay penalty from the IRS. Here’s the breakdown of the failure-to-pay penalty:
Generally there is a penalty of 1/2 to 1% of your unpaid taxes for each month or part of the month after the due date that your taxes are not paid: up to 25% of unpaid taxes.
If you filed a tax extension and paid at least 90% of your tax due by the original due date and pay the remaining balance by the extended due date, you will not incur a failure-to-pay penalty.
If both penalties apply in any month, the 5% failure-to-file penalty is reduced by the failure-to-pay penalty: unless your return is more than 60 days late. The minimum penalty will be $135 or 100% of the unpaid tax, whichever is smaller. If you can show reasonable cause for filing or paying late, the penalties could be waived. Contact your tax professionals for more information pertaining tax penalties.
If you have any questions about e-filing your 1099
before the March 31st deadline, contact the ExpressTaxFilings Support Team via phone: 704-839-2270 or email: firstname.lastname@example.org