IRS warns of impending higher tax penalty for late filers
The IRS is cautioning those behind on their 2018 taxes to act now, before they face stiffer penalties.
As of Friday, taxpayers who have not yet filed and owe taxes will face an escalation in consequences, as it approaches 60 days beyond the filing deadline.
If you don’t file your return, the penalty is 5 percent of the unpaid taxes for each month that a return is late. When a return is filed more than 60 days after the deadline, it is subject to a minimum late filing penalty that is the lesser of either 100 percent of the tax required to be shown on the return that was not paid on time, or a specific dollar amount that has been adjusted for inflation ($210 for returns due between 1/1/2018 and 12/31/2019).
The penalty applies for a full month, even if it is less than 30 days late. The penalty begins accruing the day after returns are due – up to a maximum of 25 percent of your unpaid taxes.
The failure to pay penalty is 0.5 percent of the taxes not paid. The penalty is weighed each month after the due date until the bill is paid or the levy reaches 25 percent of unpaid taxes.
If the pair of penalties are due, the maximum a person will pay for both during any given month is 5 percent.
For the 2018 filing season, the IRS expanded its penalty waiver for people who underpaid throughout the year. Taxpayers that paid at least 80 percent of their total tax liability through income tax withholding and/or quarterly estimated payments will be exempt – usually the required threshold is 90 percent.
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Certain taxpayers may be eligible to further extend deadlines – including those on military duty.
If you are unable to make your tax payments, the IRS says you should still file your return. You can contact the agency and set up installment agreements or settle a tax bill for less, through an offer in compromise.