Penalty for filing taxes late : How to Prevent ?

Penalty for filing taxes late is also called penalty for failure to file . In simple legal terms, filing tax return by due date is obligatory on all tax payers. If you file taxes late means you are inviting penal provision under Paragraph 1 of section 6651 of US code 26 which basically says that you will be imposed  penalty @ 5% on tax outstanding as on due date of filing tax return ( 15th April or extended date) .The  computation of penalty shall be  for the period of lapse ( in months or part of months) to file tax return.

How to Prevent Penalty for filing Taxes Late ?

(i) Show Reasonable  cause for failure to file

The answer to this question is hidden in the law for imposing penalty which is section 6651(1)(a) of Internal Revenue Code or US Code 26 .The law under  section 6651(1) (a) says that  penalty for the failure to file penalty may not be imposed if it is shown that such failure is due to reasonable cause and not due to willful neglect. Relevant provision of Internal Revenue Code ( section 6651(1)(a) is as under:

(a) Addition to the tax In case of failure—

(1)to file any return required under authority of subchapter A of chapter 61 (other than part III thereof), subchapter A of chapter 51 (relating to distilled spirits, wines, and beer), or of subchapter A of chapter 52 (relating to tobacco, cigars, cigarettes, and cigarette papers and tubes), or of subchapter A of chapter 53 (relating to machine guns and certain other firearms), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate;

Thus .the law under IRC 6651 also provide a relief to all those who had genuine reasons for filing taxes late. So the answer to question like ” what happens when you file taxes late”  is not  a definite penalty for failure to file tax return. So you can move a petition to IRS ( off course after paying penalty imposed for filing late return ) explaining the situation  or reasonable cause for failure to file tax return in time. If you’re billed for penalty charges and you have reasonable cause for abatement of the penalty, IRS advises taxpayers as under

send your explanation along with the bill to your service center, or call us at 800-829-1040 for assistance. The IRS doesn’t generally abate interest charges and they continue to accrue until all assessed tax, penalties, and interest are fully paid.

2. Apply for extension of due date

You can apply to IRS for extension of the due date . This is to be done before the due date of filing of tax rerun. For example 15th April 2018 for tax return for year 2017. Request the extension of time to file by the regular due date of your return . Just E-file Form 4868 (PDF), . This will give you extra six months to file tax return .

3. Try to Pay Tax by Due date

There can not be penalty for filing taxes late if i owe nothing is a god thought.The penalty for failure to file return within due date is computed on tax outstanding as on due date for filing tax return. So if there is no outstanding , the penalty can not be imposed . Just note that , even in such case if the late is more than 60 days, maximum penalty is $ 205

4. Check if your case falls under exception

The due date for filing of tax return does

  • If you’re in  Armed Forces and  serving in a combat zone . Read IRS guide
  • If you’re a citizen or resident alien working abroad
  • If you were a victim in certain disaster situations. In those situations, the IRS can  extend filing deadline

You should note that  two extra months (generally until June 15) is automatically available for filing tax return and paying  any tax due without requesting an extension if you’re a U.S. citizen or resident alien, and on the regular due date of your return you’re either:

  1. Living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside of the United States and Puerto Rico, or
  2. In military or naval service on duty outside of the United States and Puerto Rico.

Infographics on Penalty for filing taxes late

So how can you free from botheration from thought ” what happens if you file taxes late” is to give attention on following 5 rules to prevent the failure to file penalty
what is the penalty for filing taxes late
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  • Filing Taxes Late Penalty Calculator

    […] Filing taxes late penalty calculator is based on the law under section 6651 of the US Code 26 that provides that if any taxpayer who files tax after the due date for filing of return , he/she/it will pay a penalty @ 5% per month for the period of delay. I have written in detail about filing tax late and its consequences in the post titled Penalty for filing taxes late : How to Prevent ?. […]