Can’t file your taxes on time? Do this to avoid a penalty

Finance

ROCHESTER, N.Y. (WROC) — The IRS personal income tax filing deadline is May 17.

While most Americans have already filed their 2020 income tax return, others have yet to do so. CPA Jamie Block discussed the key last-minute steps to take Thursday during News 8 at Sunrise.

“The tax filing and payment deadlines for individuals are this coming Monday, May 17,” said Block. “If someone is unable to file their tax return by Monday they can file an automatic extension of time to file. This is a simple IRS form, Form 4868. With this form, you will need to pay any tax that may be due. So, you will need to have a good guestimate of what tax return looks like so you can pay the appropriate amount in with the extension.”

Block noted that if you cannot pay the full amount of tax that may be due on the tax return with the extension, it is best to pay as much as possible. If you do not pay the tax when due, you may have a penalty to pay. “The failure to pay the tax when due if 0.5% of tax not paid by due date, May 17, per month until the tax liability is paid. There is limit on how high this penalty can accrue and that is 25% of the tax balance.”

There are also fines for not filing a tax return or extension request on time. “The failure to file penalties are more severe than the failure to pay penalties,” explained Block. “The failure to file penalty is 5% per month with a maximum of 25%. So as you can see, be sure to file your tax return or an extension by Monday to avoid a failure to file penalty. If you cannot afford to pay all your tax, you can also request an installment plan. This is where you make periodic payments to the IRS to pay any taxes that you owe. Note that this is not free money and the IRS will charge you interest on the balance.”

For more information on your personal situation, consult a trusted CPA or visit IRS.gov.

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