It is not common for people who are expecting a tax refund to wait until the last minute to file their federal income tax return. The procrastination is usually reserved for those who believe that they will owe Uncle Sam money. After all, who wants to wait to get money back from the government?
For those who balk on filing, there can be arduous and expensive penalties that will not go away until they are paid in full. This post will highlight a few of these penalties and give some insight on how to avoid them.
The following is not meant to be legal advice.
Non-filing penalty – Federal law requires taxpayers to file their federal income tax returns by April 15 of each year. While this year’s deadline is April 18 (for holiday reasons), any return that is not filed by the deadline will be assessed a non-filing penalty. The penalty is 5 percent of the tax balance due for each month the return has not been filed.
Non-payment penalty – If you end up owing taxes, but fail to pay your tax bill in April, the federal government will assess a non-payment penalty that will be added on to the amount you owe. This penalty amounts to .5 percent of what you owe, and it increases each month that the past due taxes are outstanding.
Indeed, disputes over what is owed are common. But instead of doing nothing and hoping tax issues will simply go away, a conversation with an experienced tax law attorney can help.