IRS Penalties for Late Filing of Income Tax Return
IRS Penalties and interest may be for a number of different occurrences. Some examples
are: understating your tax liability, understating a reportable transaction, file an erroneous
claim for a refund or credit, or file a frivolous tax submission. But the easiest way to receive
a penalty is by filing late.
When it comes to penalties and interest, the Internal Revenue Code may impose many
different types of penalties. These can be as simple as a civil fine, or as harsh as
imprisonment, depending on the particular scenario.
How IRS Penalties Are Calculated
Penalty for Filing Late: If a return is not filed by the due date, you may have to pay a failure-
to-file penalty. This amount is typically 5% per month, but not greater than 25%. The
penalty is based on the unpaid amount as of the due date.
Penalty for Paying Late: The Failure-to-Pay Penalty of .5% of unpaid taxes per Month is
incurred each month after taxes due are not paid.
NOTE: If there is no tax balance due (or you qualify for a refund) there will be no penalty for
late filing.
Avoiding Penalties
Out of Country: Individuals who live and work out of the country automatically receive a two
month extension without filing a Form 4868. However, a return must be filed by October 15
at the latest.
Reasonable Cause: The IRS does also waive penalties for those individuals and
businesses that had Reasonable Cause to not file or pay on time. This is a more subjective
reason to be reserved for the most extreme circumstances, and to be determined by the
IRS.
Extend Your Deadline: An individual or business may elect to file for an extension of up to 6
months. This is not an extension of time to pay; this is an extension of time to file.
Obviously the best way to avoid penalties and interest is to simply file on time! However,
sometimes this is easier said than done. There are many different services available for
use by individuals and businesses to extend filing deadlines. www.expressextension.com is
a simple online tool that can help you avoid late penalties by filing for an extension.
Ironically, one of the easiest ways to incur a penalty is also very easy to avoid.
Expressextension.com provides easy to use, quick and secure navigation process to file
IRS Tax Extension Forms 4868, 7004 & 8868. E-file IRS Tax Extension Forms and get up
to six months extension of time to file your Federal income tax return.