Failure to file penalty is imposed on a taxpayer who owes some money as per tax return but does not file his/her tax return by the due date to file tax return or tax filing deadline. For example, if you owe taxes for the tax year 2022 (filing in April 2023 ) and miss filing your tax return by the due date – April 18, 2023, you may have to pay a failure-to-file-penalty of @5% per month unless you filed an application for an extension of the filing date. There are many other conditions as well that requires consideration for determining the penalty and also If the same is imposable on you.
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Failure to file penalty calculator
The failure-to-file penalty calculator can easily estimate the quantum of penalty that IRS may impose on you for failure-to-file within due date .
4 Rules Applied for failure to file penalty calculator
The failure to file penalty calculator is based on the tax law enshrined in IRC § 6651(a)(1) that lays down that the penalty for late filing shall be computed @ five percent of the tax due as on the due date for each month or partial month the return is late. It also provides a minimum amount and maximum penalty that can be imposed on a person.The rules applied to the calculator are :
- The penalty rate is 5% of the unpaid taxes for each month or part of a month that a tax return is late.
- The aggregate penalty can not exceed 25% of the unpaid taxes.
- In case, both a failure to file and a failure to pay penalty are applied in the same month, maximum combined penalty remain 5% for each month.
- If after 5 months you still haven’t paid, the Failure to File Penalty will max out. It means , maximum failure to file penalty , that is possible is 25%.
Maximum and minimum failure-to-file penalty amounts
This maximum penalty under section 6651(a)(1) can be 25 percent. However, if the delay in filing is more than 60 days after the due date (including extensions), the penalty shall not be less than the lesser of $435 or the amount due at the time of filing tax return. Year wise minimum penalty amounts are given in the table below:
|Tax Year||Minimum Penalty|
Is there some effect of failure to pay penalty on penalty for failure to file
The rate of penalty for failure to file is 5% per month or part of a month. But if you also need to pay failure to pay the penalty for which the penalty rate is 0.5 %, the penalty rate for failure to file will be reduced to 4.5 % as long as you also pay failure to pay penalty.But, since the maximum failure to file a penalty that can be imposed is 25%, ( 5 months @ 5%), it means that if you are paying both penalties, then the maximum penalty fr failure to file will be 22.5 % and failure to pay is 25%. That is an aggregate of 47.5%. We have created a calculator to compute failure to file and pay penalty.
When is the failure to file penalty not imposed ?
It is not that if someone filed late return , he/she must be punished with the penalty for failure to file . Here are few instances in which failure to file penalty may not be imposed
- If taxpayers have no tax due or expect a refund, no penalty can not be imposed.
- If you applied for an extension to file taxes, you get automatic extension for six months. It means your due date shifts from normal due date to extended due date. For example , if you file an extension for tax year 2022 tax filing , then the due date shifts from 18th April 2023 to 18th October 2923. So , say you filed in July 2023, it will not be considered late.
- As per IRC , no penalty can be imposed unless you are heard. So , if you provide reasonable cause for not filing the tax return , IRS may not impose penalty as they are authorised to consider those “reasonable cause” for the delay in filing.
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