Have you ever wondered if it really matters that a tax return is filed late?
To answer the question, YES, it matters if you file a tax return late and NO, you should never do so!
And, I’m not talking about filing within an extension timeframe, but neglecting to file a tax return on time and doing so whenever it’s convenient for you.
Today I’m going to explain why you should never file a tax return late and what to do to be in good standing with the IRS!
Why Does it Matter?
First off, when you don’t file a return, the IRS will notice and this will most likely trigger an audit. They have an automation system in place to be able to easily see who has filed a return in the past and did not do so in the present year. This would typically result in receiving a non-filing notice from the IRS and depending on the circumstances, a list of things you need to do to correct your non-filing status, and also puts you in a position to possibly be audited.
Secondly, when you fail to file on time, the IRS will penalize you and the penalties are not light. The IRS says that they will penalize a late filer with a 5% fee for every month that the tax is late. Imagine, if you owe even just $5,000, that’s $250 each month that you would have to pay in penalties and those penalties you pay are not tax-deductible.
The IRS also says the maximum amount they will penalize you is 25% of the tax owed but still, on $5,000, that would be a total of $1,250 in penalties. On top of that, the IRS also applies penalties for failing to pay, which is another 5% per month. After five months if you still haven’t filed or paid, you’ll essentially be paying double penalties, which would be almost 1.5x the amount of tax owed!
On top of the penalties, the IRS also tacks on interest. So, as your tax bill sits there unpaid and your penalties start to add up, there is also interest added to the total amount owed. I’ve witnessed unpaid tax bills, penalties and interest completely shut down businesses, don’t let that be you! The tax due date is the same every single year, so be sure to plan ahead and be prepared to file on time.
Contact Us For Help with Your Tax Return!
If you are looking for someone to prepare your business or personal taxes, now is the time to contact us and schedule a consultation to see if we’re a good fit for your tax needs!
At Steadfast, we work with businesses all over the United States and file taxes in almost every state.
Visit steadfastbookkeeping.com/contact today!