Tax season is the most dreaded time of year for many Americans. Not only is the process confusing, but it can also result in owing the government a significant amount of money. The tax deadline was extended by about a month in 2021, but we’ve encountered some folks who still neglected to file their taxes.
If a missed deadline applies to you, keep reading. This post will cover the different penalties the IRS can impose if you fail to file your taxes or pay your tax bill on time:
- Fines: The first action the IRS takes is imposing some fines. In addition to what you already owe for your taxes, you’ll need to pay a late fee. Unfortunately, this fee accumulates interest over time, so you’ll want to pay that ASAP.
- Accumulating interest: Your tax bill also accumulates interest that’s compounded daily. The interest rate charged is the Federal short-term interest rate (currently 2 percent) plus an additional 3 percent. This interest starts accumulating one day after your unpaid taxes are due.
- Levies: The IRS will continue to contact you via mail about late filing or if you already owe taxes. After a while, the IRS will start seizing your wages until they’ve collected the entire amount you owe.
- Criminal prosecution: The last action the IRS can take against you is criminal prosecution. The maximum penalty for tax evasion—which is a felony charge—is five years in prison and up to $100,000 in fines.
Is it too late to file?
You’re already way past the tax deadline. The good news is that it’s never technically too late to file those taxes. Although you’ll have to pay those fines mentioned above, late filing is better than not filing at all.
We recommend talking to a CPA about your options for filing. A professional can help you navigate the waters to ensure you don’t accidentally pay more than you owe.
What if you can’t afford your tax bill?
One of the main reasons folks try to avoid the IRS is that they know they won’t be able to pay their due taxes. The good news is that the IRS has payment options. Although there is a small interest fee, you can pay your tax bill in installments to avoid legal troubles.
What if you’re owed money?
While the majority of tax evaders don’t file to avoid paying the government, there are still people who don’t file even if they’re going to get a refund. There are no actual fees or fines if you’re owed money but fail to file in time; however, you’ll get a smaller refund if you don’t file before the deadline.
Call Kedean’s Generation for help
If you’ve yet to file your taxes—don’t fret. Our tax professionals at Kedean’s Generation may be able to help you with your missed deadline. Our CPAs can work with you to ensure you get everything squared away to keep you out of any legal trouble with the IRS.
Give us a call today to see how we can help, or to set up an appointment with one of our helpful tax pros.
Categorised in: Tax Preparation