Filing taxes

What are the Penalties for Filing Taxes Late?

filing taxes late
Avatar photo
Written by Claudia Gantt
Author Claudia Gantt on March 28, 2023

Fact checked by Clinton F Wassor

All of the information on this page has been reviewed and certified by a tax professional.

The US Tax Code is complex, and because of that, it can be difficult to know when you owe taxes. What’s more, once you are late filing your taxes, you run into penalties depending on the type of taxes you owe. That means having success with filing taxes requires you to stay on top of these things and know what can happen if you miss a tax deadline.

Once you know the penalties for filing taxes late, you often develop a good plan of action, never again to have to face the substantial penalties for filing late. Because when it comes to the penalties for filing taxes late, three different rates can apply to you.

Please keep reading if you want to learn more about filing your taxes and what penalties you face if you file your taxes late.

Filing Taxes Late

When it comes to the penalties for filing taxes late, there are three different rates. IRS rates apply depending on how much you owe. The first 10% penalty will be applied if the tax due amount is $1-10,000.

However, if the tax bill is more than $10,000 but less than $100,000, the charge includes a penalty of 25% that becomes part of your tax bill. Any tax amount that exceeds $100,000 will incur a penalty of 28%.

It also is dependent on whether or not you file your taxes as an individual or a corporation. The IRS often has different rates for various criteria for a diverse list of penalties. That means you can be assessed at different rates depending on whether or not the IRS thinks you or delinquent or filed late.

Late Payment Penalties

Typically, late payment penalties range from 0-25% of what your unpaid tax bill is. The penalty rate is based on how much you owe to the IRS and if you are a company or an individual. However, there is good news in that the maximum late payment penalty is 25%.

If you are an individual filing taxes late and owe more than $1,000, but you don’t owe any more than $10,000, then the penalty you are charged is 0%. But the bump-up happens if you owe the IRS more than $10,000 but less than $100,000.

Your late payment penalty for that rant is between 1% to 15%.

Tax Payment Options

When you know you have to file your taxes late or already did, there are some viable financial options available. These options include an installment agreement or a tax payment plan. If you agree to an installment agreement, you will be required to pay at least 90% of your tax due amount.

The installment agreement is good for a maximum of 72 months or six years. The second option when you are filing taxes late is the payment plan option. This plan allows you to reduce your outstanding balance by making monthly payments.

Filing Tax Returns When You Are Filing Late

There’s no getting around IRS fact, which is even if you cannot pay your tax owed to the IRS, you file your taxes as soon as possible after the tax due date. The penalty for not filing your taxes in addition to not paying the IRS is very steep. The more time that passes where you don’t pay the tax return increases what you will owe the IRS when you do file.

The IRS provides tax extensions of time when they haven’t filed their taxes on time. If you file for an extension with the IRS, you are given six months from the original deadline to file your return.

No matter what, if you file your taxes on time but haven’t been able to pay what you owe the IRS, the best thing to do is pay your taxes as close to the April 15 tax deadline as possible. If you pay what you owe the IRS as close as you can to the April 15 tax deadlines, you won’t have to pay any penalties for filing late.

State and Federal Taxes

There are all kinds of different taxes, and when you are dealing with state and federal taxes, the rules and regulations are quite different. When it comes to filing taxes late, state taxes have different criteria and responses to late tax filings most of the time. You can file state taxes late if it’s not more than sixty days after the tax due date in your state.

If you are more than sixty days late, the state penalty will be 15% on the tax due. That means the penalty amount is applied even if you didn’t owe the state a dime in taxes on the tax due date. A state tax return that’s more than sixty days can range from a 5% penalty to up to a 25% penalty.

Avoiding Late Payments

Your best plan of action to avoid filing taxes late or avoiding late payments is to make sure you don’t miss your IRS tax deadline, so you’re not assessed any late payment penalties. If you cannot avoid the penalty and late payments, you must file your tax return before the due date that appears on a notice of assessment the IRS sends you.

They may also send you a notice of reassessment. If you can’t file or pay your taxes, it’s time to reach out to the Tax Relief Professionals. The Tax Relief Professionals provide expert help on any tax situation you are in or may be dealing with soon. When dealing with the IRS, it is always better to be proactive and reach out to someone who can help you.

The IRS and your tax payments can be negotiated but not if you don’t provide information that helps extend when you owe the taxes and penalties. Sometimes it helps with negotiating the number of your late payment penalties. But if you never reach out for expert help, you’ll never know what you missed that could have made a big difference to your financial situation.

About the author

Avatar photo

Claudia Gantt

Leave a Comment