The 2020 tax deadline is fast approaching. This year, federal tax returns are due on July 15th. While this dreaded date looms large in the public’s collective consciousness, procrastination is notoriously common. All too often, we feel so intimidated by taxes that we put them off until the last minute — and are ultimately forced to file them late. Unfortunately, this approach can lead to harsh consequences, as outlined below:
Late Filing Penalties
Filing late is better than not filing at all, but beware: the longer you take, the more you’ll ultimately be forced to pay up. Unfortunately, penalties may be assessed in response to both your failure to file and your lack of on-time payments.
Failure to file penalties typically constitute five percent of the unpaid tax that was supposed to be reported by April 15th. If, however, failure to pay charges also apply, the standard failure to file rate may be reduced somewhat.
New penalties are assessed for every additional month that passes without filing, so fees can add up quickly. Furthermore, if filed over sixty days late, income tax returns may subject to further late filing fees.
Assessed Interest
Late filing and payment fees are bad enough, but the financial repercussions don’t end there. The IRS also assesses interest on unpaid taxes, beginning promptly on the first day following the return’s due date. This is compounded daily. The interest rate currently rests at five percent, but this is subject to change. Interest can add up quickly, so it’s important to handle your tax situation as soon as possible — particularly if you have the means to cover your debt.
A proactive approach is always preferable, but at the Highland Tax Group, we know that life happens. Thankfully, viable options for tax relief may be available. Contact us today to learn how we can help you deal with the IRS and resolve your current tax situation.