What happens if I don’t file my tax return on time? IRS penalties and fines
Tax season is coming to an end and filers must submit their returns by April 15, 2024. Here are the fines and penalties for not paying or filing on time.
This year, tax season began on January 29. Since then, the Internal Revenue Service (IRS) has been receiving and processing the returns for tax year 2023.
The deadline for filing is April 15, or October 15 for taxpayers who have requested an extension. If the return is not filed or the corresponding taxes are not paid, taxpayers are subject to fines and penalties.
Late filing of returns and payment of taxes are not the only cases where the IRS will impose penalties. Here are the types of fines levied by the IRS:
- Fine for information return
- Penalty for not submitting the tax return
- Penalty for non-payment
- Accuracy-related fine
- Penalty for erroneous refund or credit claim
- Penalty for failure to comply with deposit requirements
- Fines to the tax preparer
- Penalty for rejected check or other form of payment
- Penalty on corporations for underpayment of estimated tax
- Penalty on individuals for underpayment of estimated tax
- Fine for declaration of international information
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Penalties for not filing the return or paying taxes
The penalty for not filing the return on time is 5% of the unpaid taxes each month. This fine begins to accumulate one day after the deadline until it reaches 25% of the taxes owed. If you do not pay your taxes before the due date, the monthly penalty is 0.5% of the unpaid taxes.
If both fines apply- for not filing the tax return and non-payment of taxes- 5% of the amount will be the total payment.
If you file your return 60 days after the April 15 deadline or the October 15 extension date, the fine will be $480 or you will have to pay 100% of taxes owed if the amount is less than $480.
The IRS also charges interest on penalties. Interest for underpayments is set quarterly, but interest is calculated daily. Nonpayment interest rates for the first quarter of 2024, from January to March, are 8% for underpayments.
READ ALSO: Who can request Additional Child Tax Credit?
How do I know if I owe the IRS a fine?
When the IRS imposes a penalty, the tax agency sends a notice or letter by mail to your address. This will give you information about the penalty, the reason for the charge, and what you should do next.
Although the recommendation is to file the return and pay taxes as soon as possible, the penalty for not filing the return is much greater than the penalties for non-payment of taxes, so filing is essential.
For more information and to learn about other types of fines, visit the penalties section of the IRS website.