The Internal Revenue Service (IRS) of the United States is the agency in charge of collecting taxes. All U.S. citizens who have any type of economic income must pay taxes, unless that income is very low. Regardless of whether we have to pay taxes or not, we always have to file a tax return.
Even when we do not have to pay taxes to the IRS, it is advisable to file a tax return to avoid attorney and economic problems. Besides, there is a deadline to do it. Next April 18, 2023 is the last day we can file our taxes with the IRS.
Tax season has already started, so we have no excuse to start preparing our return. If we delay filing we will be at risk of having a late payment, which will result in a fine or penalty. We must avoid this at all costs, as in many cases the fine can be very large.
Penalties for not paying 2022 taxes to the IRS on time
If we pay attention to the official IRS website, the organization calculates the penalties for late filing of taxes as follows:
- The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.
- If both a Failure to File and a Failure to Pay Penalty are applied in the same month, the Failure to File Penalty is reduced by the amount of the Failure to Pay Penalty for that month, for a combined penalty of 5% for each month or part of a month that your return was late.
- If after 5 months you still haven’t paid, the Failure to File Penalty will max out, but the Failure to Pay Penalty continues until the tax is paid, up to its maximum of 25% of the unpaid tax as of the due date.
- If your return was over 60 days late, the minimum Failure to File Penalty is $435 (for tax returns required to be filed in 2020, 2021 and 2022) or 100% of the tax required to be shown on the return, whichever is less.
So we should avoid these types of penalties whenever we can, as they will cost us a lot of money out of our own pocket.
Request an extension of time if necessary
The best option to avoid paying penalties to the IRS is to request an extension of time. If we want to file our tax return but do not have enough time within the tax season, we can request an extension.
However, it is not 100% sure that we will get this extension of time, since the IRS does not grant it in all cases. Even so, you can apply for this extension online without the need to call the organization or go to one of the offices.