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It is essential to file your federal tax return in Campbell and Santa Cruz by June 14 if you missed the filing deadline in order to avoid paying more in penalties. After the tax deadline has passed, the Internal Revenue Service’s (IRS) fines and interest can mount up quickly. Read on to find out how tax preparation services in Campbell and Santa Cruz can reduce them.
Late on your taxes? To prevent higher penalties, file before June 14th.
When taxpayers do not file their tax forms by the deadline or make their tax payments on time, the IRS imposes late filing penalties. For each month or portion of a month that the tax return is late, there is typically a 5% failure-to-file penalty equivalent to the amount of unpaid tax. No more than 25% of your unpaid taxes will be penalized. This penalty continues to build up after you file. The minimum failure-to-file penalty, however, is $485 or 100% of the tax owed, whichever is less, if your tax return is filed more than 60 days after the due date.
The IRS levies a failure-to-pay penalty, which is equal to 0.5% of the remaining taxes for each month or portion of a month that the tax is not paid, as well as to the failure-to-file penalty. The late payment penalty is restricted to 25% of your tax owed, the same as the failure-to-file penalty.
1. Penalties combined
The IRS imposes fines if you fail to submit your tax return or pay your taxes. The failure-to-pay penalty is deducted from the failure-to-file penalty if both penalties are assessed in the same month. For each month or portion of a month that your return was late, you will be charged a 5% cumulative penalty.
2. Reducing tax penalties and special circumstances
You can be qualified for penalty relief if you have a good reason for skipping the deadline. For example, people who had filed and paid on time for the previous three years without suffering penalties are qualified for a first-time abatement. While interest costs are not qualified for abatement under this program, American taxpayers can request a decrease or waiver of penalties. If you have fair cause for filing or paying late, you can still qualify for penalty relief even if you are not eligible for first-time abatement.
If you live outside of the United States, are a member of the armed forces abroad, or reside in an area designated as a natural disaster by the federal government, you are also subject to special filing deadlines.
Make sure to carefully read any IRS notice you get outlining penalties for filing late or late payment, and if required, follow the steps necessary to obtain penalty relief.
3. Extensions and Internet-based resources
You will have till October to submit your tax return if you requested a tax extension. It is important to remember that the initial deadline of April 15, 2024, still applies to any tax liabilities for the 2023 tax year. You can use the IRS website to view your federal tax account and obtain more details about your tax status. It allows you to create payment plans, see or make payments, and examine your tax history.
The bottom line
In order to avoid additional late filing penalties, make sure you file your taxes by June 14th. Potential fines can be minimized by filing as soon as possible and making the required payments. The most efficient approach to submitting your taxes to the IRS is to do so electronically. If you need help requesting an IRS payment plan, tax software can help you securely and swiftly e-filing your federal tax return.