Where did the time go?

Where did the time go?

butterflyOops!  You meant to file but ________ happened and now it’s after April 18th.   Well hopefully you at least filed an extension.  If not….AAAHHHHH!!!!!!…..HURRY AND FILE!!!!

The good news?  If the IRS owes you a refund then there isn’t a penalty  for filing late.  The IRS is MORE than happy to hold onto your hard earned funds and use them.   And if you leave your money with them long enough, they will even pay you interest on it.  WOW! What a deal!  (of course that interest will be taxable to you….come on, you knew I’d say that).

Now for the bad news…..if you owe the IRS then there are penalties for filing late, whether or not you filed an extension.  Here are some tips:

  • if you filed an extension and owe…at least make an extension payment now for the amount you estimate that you owe
  • if you didn’t file an extension and owe, try to file and pay as much as you can asap.

If you are going to owe the IRS more than $1,000 for 2016 you should also be making your first quarter 2016 estimated tax payment.  Remember, the IRS is a “pay as you go” system.  They want you paying in the tax every quarter during the year so that you can break even by year end AND so they can use the money throughout the year.

There are interest and penalties for:

  • filing late if you owe
  • paying late whether or  not you filed an extension
  • not making estimated payments on time or for the correct amount if estimates are needed

PENALTY FOR LATE FILING: If you file your return more than 60 days after the due date (if you didn’t file an extension) or after the extended due date (if you did file an extension) then there is a MINIMUM PENALTY of $205 (or if you owe less than that then the penalty is 100% of the amount you owe).  As far as maximums go, the penalty can be as much as five percent of the unpaid tax each month up to a maximum of 25%.

PENALTY FOR LATE PAYMENT:  .5% of your unpaid taxes per month. Up to 25% of the tax.

If BOTH the late filing and late payment penalties apply: the max is 5% per month

If you filed an extension AND you had already paid in 90% of the tax then you may not face the failure to pay penalty if you pay the remaining balance by the extended due date of the return.

 

2016 Estimated Tax vouchers and info

 

 

Linda Reinhardt

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