Let's face it, dealing with taxes is never any fun. But one thing you definitely don't want to do is file your taxes late. If you're thinking about pushing off your tax filing to the last minute, here are a few things you should know.
If you don't file your taxes by the due date (including extensions of time to file), you may be subject to the failure-to-file penalty. The penalty is typically 5% of the unpaid taxes for each month or part of a month that a return is late, up to a maximum of 25%. So if you owed $1,000 in taxes and filed your return just one month late, you would be on the hook for a $50 failure-to-file penalty. Ouch!
Even if you file your taxes on time, if you don't pay them in full by the original due date (regardless of extensions of time to pay), you may be subject to the failure-to-pay penalty. The failure-to-pay penalty is typically 0.5% of the unpaid taxes for each month or part of a month that a payment is late, up to a maximum of 25%. So if you owed $1,000 in taxes and didn't pay them until two months after the due date, you would be penalized $10 (0.5% x $1,000 x 2). Not fun.
If you don't pay your taxes in full by the original due date (regardless of extensions of time to pay), interest will accrue on the unpaid balance from the original due date until the date of payment. The interest rate is determined quarterly and is equal to the federal short-term rate plus 3%. In addition, interest will accrue on any penalties imposed for late filing or late payment from the date the penalty is imposed until the date it is paid.
So there you have it—a few things to think about if you're considering pushing off your tax filing until next week, next month, or next year. Filing late can result in some pretty hefty penalties, so it's always best to file (and pay) on time if at all possible. If you can't swing it this year, make sure to talk with a tax professional about your options and what steps you need to take moving forward.