Individuals have to file their taxes every year on or about April 15th. As that date approaches, many people keep putting it off until the deadline has passed. Failure to file your taxes on time when you owe is subject to a failure-to-file penalty. If you have any questions about the failure-to-file penalty, contact Juda Gabaie at Gabaie & Associates, LLC for help.
Failure to File Taxes on Time
Failure to file taxes by the deadline is subject to a failure-to-file penalty. The failure-to-file penalty is generally 5% of the tax owed for each month or part of the month your return is late. The maximum penalty for failure to file is generally up to 25% of taxes owed, which maxes out after the fifth month of failure to file.
If your tax return is filed over 60 days late, there is also a minimum penalty for late filing, which is the lesser of $210 (for tax year 2018) or 100% of the taxes owed. This is in addition to any failure to pay penalties and interest.
Failure to File if You Don't Owe Taxes
While you are generally required to file a tax return, there are no penalties for failure to file a tax return if you don't owe any taxes. However, if you do not file a tax return, you may also be letting a refund go unclaimed. Filing your taxes not only indicates how much you owe, but it can also indicate a refund owed to you. Failure to file your taxes can mean missing out on your own money coming back to you.
Failure to File After an Extension
Most taxpayers can request an automatic extension to file their tax returns. Form 4868, Application For Automatic Extension of Time To File U.S. Individual Tax Return, allows for a six-month extension, until about October 15. Individuals can also e-file for an extension, or they can pay all or part of the estimated tax due and indicate the payment is for an extension.
It is important to understand that requesting an extension is not an extension to pay taxes. Any amount of unpaid taxes between April 15th and the date the taxes are filed may be subject to interest or penalty payments.
After requesting an extension, if the taxpayer fails to file their taxes by the extension deadline, they will be subject to penalties for failure to pay taxes back to the April 15th deadline and any penalties for failure to file by the extension deadline.
Living and Working Outside the U.S.
Taxpayers who are living outside of the U.S. with the main place of business or military service outside of the U.S. have an extra two months to file tax returns and pay any taxes due without requesting an extension.
Good Cause for Failure to File
If the taxpayer can show reasonable cause that the failure to file was not due to willful neglect, the IRS may abate your penalties for filing and paying late. By making a good faith payment as soon as possible, it may help show the failure to pay was not due to willful neglect. Talk to your reliable tax lawyer about challenging any failure to file penalties to reduce your tax liability.
Questions About Failure-to-File Penalties
If you missed the tax deadline and are concerned about the failure to file penalties, late payment penalties and interest, contact Gabaie & Associates, LLC for a free consultation. You can contact Juda Gabaie online or call (410) 862-2198 for help with your IRS or Maryland tax issues.
