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 tax deadline. For example, if you owe taxes for the tax year 2019 and miss filing your tax return by the due date – Wednesday, April 15, 2020, you will have to pay a penalty of @5% per month unless you file an application for an extension of the filing date. There are many other conditions as well that requires consideration. So we have developed a quick calculator to find if you are supposed to pay a penalty for the delay in filing the tax return.
Quick calculator for failure to file penalty
Computation logic for late filing penalty calculator
IRC § 6651(a)(1) provides 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. 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 two amounts—
100 percent of the tax required to be shown on the return that the taxpayer did not pay on time, or
a minimum specific amount of penalty, which is adjusted annually due to inflation as follows:
Tax Year Minimum Penalty 2014 135 2015 205 2016 205 2017 210 2018 210 2019 435 2020 435
If taxpayers have no tax due or expect a refund, there is no penalty even if they file a late tax return. If they applied for an extension and filed within that date, there is no late filing, so no penalty for failure to file an income tax return. Check our IRS tax calculator for getting a quick view on tax for 2020.
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%