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IRS late filing penalty

3 min read

3 min read

Life happens – and deadlines are missed. Each year, taxpayers miss the tax deadline for a number of reasons, causing an IRS late filing penalty.

So, what happens if you file taxes late? We’ll uncover information about the failure to file penalty from the IRS here.

What happens if you file your taxes late?

A failure to file penalty is charged on returns filed after the due date or extended due date, absent a reasonable cause for filing late.

What’s the penalty for filing taxes late?

irs tax penaltySo, what’s the penalty for filing taxes late, you wonder? Well, it’s more complicated than a flat amount.  Let’s dig into the details.

  • The combined penalty is 5% (4.5% late filing and 0.5% late payment) for each month or part of a month that your return was late, up to 25%.
  • The late filing penalty applies to the tax that remains unpaid after the due date. Unpaid tax is the total tax shown on your return reduced by amounts paid through withholding, estimated tax payments, and allowed refundable credits.
  • If after five months you still haven’t paid, the failure to file penalty will max out, but the failure to pay penalty continues until the tax is paid, up to 25%.
  • The maximum total penalty for failure to file and pay is 47.5% (22.5% late filing and 25% late payment) of the tax.
  • However, if your return was over 60 days late, the minimum failure to file penalty is the smaller of $435 or 100% of the tax required to be shown on the return.

Who could incur a failure to file penalty?

Individual taxpayers and businesses could face a failure to file penalty. In fact, any person or entity who doesn’t pay taxes on time could face a penalty.

How to avoid an IRS penalty for late filing

If you’re sure you can’t make the tax deadline, file an extension. You can do this by filing Form 4868  This will give you additional time to file—usually until October 15.

Remember, but you should pay any tax due by the tax deadline or you’ll incur a penalty. In fact, the IRS recommends paying at least 90% of your owed taxes with your extension request, so you don’t  face a failure-to-pay penalty. You should pay any remaining balance by the extended due date.

The penalty for failing to file your tax return is 10 times as much as the failure to pay penalty.

More help with the failure to file penalty

To have an IRS late filing penalty removed (abated), you need to call or write the IRS. You may be able to get the penalty removed simply because you haven’t had any IRS penalties charged in the past three years. This option, known as first-time abatement, is available for failure to file and failure to pay penalties.

Learn more about how to address IRS penalties or Want more help? Schedule a FREE consultation

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