What happens if I have not paid my taxes before tax deadline day 2024?

Today is Tax Day, and the millions who have yet to submit their 2023 tax returns may wonder how much the IRS will charge them for failing to turn them in on time.

If taxpayers fail to pay their taxes on time, they will be charged a penalty of 0.5 percent of the unpaid taxes each month. This penalty is charged in full even if the taxpayer pays before the end of the month.

For individual taxpayers who file their return on time and have an approved installment agreement, the penalty is reduced to 0.25 percent during the agreement period. However, if the taxpayer fails to pay tax within ten days of receiving a notice of intent to levy or seize property, the penalty increases to 1 percent.

Getting a payment plan established

“If you are a qualified taxpayer or authorized representative (Power of Attorney) you can apply for a payment plan (including installment agreement) online to pay off your balance over time,” reports the US tax authority.To do so, you can visit this webpage, which takes you to the payment portal and will prompt those using it to establish a payment plan with the necessary tools.

There are two types of plans: short-term and long-term payment plans. The short-term plans can be paid off in 180 days or less and are eligible to those that “owe less than $100,000 in combined tax, penalties and interest,” while those established for the long-term determine a monthly payment that will be paid in installments until the debt is paid off completely. In order to set up a long-term payment plan, one must owe the IRS “$50,000 or less in combined tax, penalties and interest.”

Larger fees to be aware of

The penalty will continue to be charged until the tax is fully paid or until the maximum penalty of 25 percent is reached. In addition to the penalties, the IRS will start charging interest on any unpaid balance of taxes owed, which will accrue and compound daily from 15 April until the balance is paid in full.

The current interest rate for underpayments is 8 percent for corporate and non-corporate filers, calculated using the federal short-term rate plus three percentage points. Any outstanding penalties will also accrue interest while they remain outstanding, so you must complete your tax return on time.

What if I’m owed a refund? Will I still be penalized?

It is important to note that if you are owed a tax refund, there is no penalty for filing your tax return late. However, the longer you wait to file, the longer it will take for you to receive your refund from the government. It is also important to remember that there is a three-year time limit to claim any tax refund you are entitled to.

Similarly, you have three years to correct any errors on your tax return and claim any refund that you may have missed out on. If you file for an extension, you will have until the date you filed your return with the IRS to claim any money owed to you. It’s important to note that after the three-year period, the federal government will keep any unclaimed money.There are exceptions to the three-year refund rule. In the case of deductions for bad debt or worthless securities, taxpayers have seven years to claim a refund. The limit does not apply for those who are unable to manage their financial affairs due to physical or mental impairments.