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tax deductions

Will You Incur a Penalty if You Miss the Tax Filing Deadline?

Goffstown, NH Resident Has Questions

Not filing your taxes on time could result in a failure-to-file penalty.  This penalty is 5% of the unpaid taxes for each month that the tax return is late, up to five months.  Continuing to ignore your taxes could result in the IRS taking action in the form of a federal tax lien on your property, seizing your property and even filing charges for tax evasion.

A Goffstown resident had neglected to file his 2019 tax return.  Concerned about the long-term implications and what the next steps would be, he contacted Merrimack Tax Associates for advice.

What Happens If You File Your Taxes but Don’t Pay?

Filling your taxes on time but failing to pay an outstanding tax debt will result in the IRS charging 0.5% of the unpaid taxes for each month that you fail to pay.  This amount cannot exceed 25%.  Interest, equivalent to the federal short-term rate, will also accrue on this debt.

If you are unable to pay your taxes at the time, there are options.  It is best to file the paperwork regardless.  You can then apply for a payment plan with the IRS to pay off your tax debt over a set period of time.

Keep in mind that if you don’t think you can get your taxes prepared and filed by the deadline, there is always an option to file for a tax extension.  This is different from an extension to pay, as you will still need to estimate taxes that you owe and pay this up front to avoid any penalties from the IRS.

The experts at Merrimack Tax Associates were able to work as a liaison between the Goffstown resident and the IRS to ensure the late taxes were filed correctly and any amount would be paid, with the lowest penalty possible.

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