It is Tax Day if you got an extension to file your 2022 tax return. Leading up to this Oct. 16 filing deadline, the ol' blog has been offering tips on how to finish up that Form 1040.
They include —
- 8 tax tips for filers facing Oct. 16 extension deadline
- 10 often overlooked tax breaks
- 10 common tax filing mistakes
- Self-employment retirement plans with Oct. 16 contribution deadlines
- Free File 2023 still open, with 7 companies offering 9 no-cost tax prep/e-file options
There are also the monthly tax tips collections. This year's January, February, March, and April tips are the ones most focused on filling out and filing your annual tax return.
That's the carrot portion of our tax filing deadline program.
But for some insistent slow filers, it's time to turn to the stick part.
Yep, we're talking tax penalties.
Tax penalty overview: The Internal Revenue Service assesses two separate penalties that most affect us regular, individual taxpayers.
There's the failure-to-file penalty, which is 5 percent of unpaid taxes for each month or part of month until filing. It can add up to a maximum 25 percent added charge.
Then there's the failure-to-pay fine, which is 0.5 percent per month or partial month that your tax payment is overdue.
Extension filers should have paid what they estimated they owed when they got the extra six months to file. If you came up short, this penalty will accrue from the April filing deadline (that was the 18th this year) date.
As you can see by the penalty amounts, the IRS really, really, really wants us to send in our tax returns. If you don't send the agency a 1040 by the Oct. 16 deadline, it will cost you more.
And, of course, interest charges also apply to both penalty amounts. The 2023 rates went up this last quarter from 7 percent to 8 percent.
Of course, if you don't owe Uncle Sam anything, your oversight will be moot. The penalties are based on the amount of tax you owe. So if you owe nothing, penalty percentage x $0 = nothing.
Still, it's a good idea to file, and on time, just to follow the law.
And keep the IRS happy.
And in case an IRS review does find you owe an amount on which a penalty can be calculated.
IRS penalty specifics: This weekend's Saturday Shout Outs head straight to the source for elaboration on federal tax penalties and interest. The info is at the following IRS.gov special web pages —
The bottom line, literally, is file your extended return by Monday, Oct. 16.
When you submit you 1040, pay any added tax you underpaid months ago. The quickest way to do this, and stop the running penalty and interest tab, is to pay electronically.
And if you are late or your due tax is more than you expected, start looking at ways to cover penalties and interest. In worst-case scenarios, the IRS offers some options if you can't pay your tax bill in full.
Yeah, I know. Dealing with taxes is not the best way to spend a weekend. But it's a necessary one if you put off filing your 2022 tax return until now.
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TaxZerone
Thank you for the insightful tax details. Your guidance on penalties and deadlines is essential. For seamless tax filing, consider TaxZerone, an IRS-authorized e-file service provider. They assist with various forms, ensuring a secure and efficient process. Learn more at http://www.taxzerone.com. Much appreciated!
Jeffrey Schultz
The Fail to File Penalty can be brutal. But really only matter if you owe money. Basically, it takes the fail to pay penalty and doubles it. 5% per month for 5 month. That’s a 25% penalty. Then add the interest on top of that. And with the current per annum interest rate of 8% and compounded daily. Just 12 months ago, the interest rate was below 4%.