04 Feb Big Mistake: File Your Tax Return Late
Three bad things happen when you file your tax return late.
#1- IRS Notices that you filed Late or not ar all…
The ” I didn’t file at all” group receive the IRS’s “come on down and bring your tax records” letter. In general, the meeting with the IRS about non-filed tax returns does not go well.
For the late filers, the big problem is exposure to an IRS audit. Your chances of an IRS audit increase from 3% to 50%, or higher by filing late.
#2 Trigger the 5% Penalty
When you file late, you trigger the 5% penalty per month, not to exceed 25%.
#3 Falure to Pay Penalty
Generally, when you file your return late, you also pay the tax late as well.The failure-to-pay penalty is .5% percent a month, not to exceed 25%.
The penalty for failure to pay offsets the penalty for failure to file such that the 5% is the maximum penalty during the first 5 months when both penalties apply. But once those 5 months are over, the penalty for failure to pay applies; therefore, you can owe 47.5% of the tax due by not filing and paying!! Also, no tax deduction for penalties.
If you have not filed your tax return, please be advised of the consequences.