May 18, 2018
There can be multiple reasons for an individual or business owner not filing their taxes on time, and the following information seeks to show what might happen if you miss the deadline, irrespective of why you may have done so. However, the penalties that can occur when individuals miss their tax deadline, vary depending upon whether the taxes haven’t been filed, or they’ve been filed but not paid on time.
Not filing your taxes
This will get you a failure-to-file penalty, the cost of which is calculated at 5% of your unpaid taxes for every month that your tax return is late, and can reach up to 25% Filing your taxes more than 60 days past the deadline will see you getting hit with a further fine of $135 at the minimum, or 100% of the taxes that you owe, depending upon which is lowest.
Filing your taxes but not paying them
The IRS will slap you with a failure-to-pay penalty, which is usually 0.5% of your unpaid taxes for every month in which you fail to pay, which can be up to 25%. Your unpaid taxes will also be subject to interest, the rate if which is equal to the federal short-term rate, plus 3%
To summarize, even if you are behind on your taxes only by a month or two, the penalties can quickly build up, particularly when you take fees and interest into account.
Missing your tax deadline may also see you missing out on a potential refund, too, and the IRS have stated that they have almost $1 billion in refunds that haven’t been claimed. Each refund is said to average around $700, which is a lot of money in most peoples’ eyes.
If you’re unable to pay your taxes for any reason, you should still be sure to file them, as the penalty incurred for failing to file at all, is up to 10 times more than what you would be fined if you don’t pay your taxes. There are options available for those who are struggling to pay their taxes, one of which is a payment plan devised by the IRS to help you manage and resolve your debt.
Continue to ignore your taxes, either by not filing or not paying them in a timely manner, and the IRS may:
Whether you agree with having to pay your taxes or not, the reality is that you cannot escape paying them and if you do, then you certainly won’t escape the penalties, which can be costly and wholly unnecessary. For more detailed help and guidance on how and when you should file your taxes, seek professional help and ensure that you never miss a deadline, never incur a penalty, and always stay on the right side of state and federal laws.
Most small businesses trying to manage without a bookkeeper will struggle, irrespective of how much they may enjoy that aspect of running a business, or even how proficient they believe themselves to be at it. The simple fact of the matter is that good bookkeeping requires time, patience and more time! Some busy business owners may be prepared to dedicate a good...
April 16th may feel like a joyous occasion for small business owners and an excuse to throw down the tax towel and shake off the tax blues for another year, but this kind of approach can be dangerous, to say the least!
Ditching tax talk for the rest of the year after filing, can land you in big trouble when the next tax season...
All small businesses will go through a series of ups and downs, and solving some of the problems that can arise, takes time and patience. Most owners of small businesses complain of not having enough time to do everything that is required of them, but finding time to update the books so that their bookkeeper can do their job efficiently, is one thing business...