The IRS started the new tax season last January 23, 2023. They announced that the deadline would be by April 18. Despite the fact that it may seem quite a lot of time, for the American citizens that lead a hectic life may seem the opposite. Whether you missed the deadline willingly or not, you should do something.
As the final date is over, many taxpayers that have not filed their tax returns wonder what could happen now. Unfortunately, you could have applied for putting the filing off, but you can no longer do it. It would not have helped to delay the tax you owed the IRS though. Just some extra time to gather everything.
Those who did not apply or got an extension should know that not filing is even worse than not paying what you owe. Of course, it would always be best to file and pay, but that is the way it goes. Paying additional interest rates or fines is something you should avoid. It will not help your financial situation or savings.
What are the penalties a taxpayer may face if I do not file my tax return or pay taxes to the IRS?
If you have not filed on time, you will have to pay 5% of the unpaid money every month. This amount keeps increasing. It will stop until it reaches 25% of the taxes you owe the IRS. Therefore, it is of vital importance that you file and pay today. In that way, this fine will not be as high as it could be in the future.
Some people opt for filing but they neglect the payment of taxes. In that case, there will also be a penalty. Paying 0.5% of the debt to the IRS is what will happen. Having an emergency fund will allow you to face this annual event. Try to pay as much as possible to get a refund close to zero.
What is more, there are some taxpayers that have failed to both file and pay their taxes. The IRS informs citizens that in this situation they must pay a fine for not filing their 2022 tax return on time and not paying the taxes they must have paid. This penalty will be a combined fine of 5% for each month you delay filing.
What if I file my tax return 60 days after the deadline?
According to the IRS, they state in their Topic No. 653 Notices and Bills, Penalties and Interest rates that there is a minimum penalty of 450 dollars. However, if the amount you owe is lower than 450 dollars, the payment of 100% of the taxes you owed. Interest rates are also applied when there is an unpaid fine.
From April onward it will be 7% for those payments that have not been enough if you are an individual taxpayer. Those payments that belong to a big company and are not enough will reach a 9% interest rate. Some people may not be sure whether they owe money to the IRS or not. The IRS should inform you though.
It is more than likely that you get a notice from the IRS by mail. So you should get it at home. In that notice, you will get all the details of the fine. They will explain the reason why they charge you that amount. Besides, they will provide you with the steps to take from that moment onward. Check the ID number it has. Everything will be included, from the tax you owe to any penalties and interest.
What will the IRS do if I do not pay the bill?
It is more than likely that if you do not pay that first bill, you will get a second bill from the IRS. This will be unwise because it will damage your financial situation and your debt will keep increasing. It will not stop growing until you pay it off. Do not wait until step three from IRS or you will probably regret it.
If that is the case, the IRS will start carrying out collection actions. There are several types of collection actions. For instance, the Internal Revenue Service could use the money of your next tax refund to get rid of that debt. If that is enough, that is all. Because they can also seize your property or any assets you may have.