Our NYC CPA office reminds you that “Tax Day” on April 18 is fast approaching. If you’re not ready to file your return, we encourage you to contact our office to file a six-month extension in order to avoid any late filing fees.
Consider that if you do not file your tax return on or before the April 18 deadline, the IRS will punish you for pushing past their deadline. How severe the penalties are depends on your specific situation, but in general you’ll be subject to:
- The Failure to File Penalty. Simply put, the longer you wait to file, the larger this penalty will be. The failure-to-file penalty is 5 percent per month or partial month, up to a maximum of 25 percent of what is owed. If you file later than 60 days after the April 18 deadline, the minimum penalty rises to the smaller of $135 or 100 percent of the unpaid tax. This penalty is on top of any other interest charges or late-payment penalties that you are assessed.
- The Failure to Pay Penalty. According to irs.gov: “If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.” Remember, it is better to pay something toward your tax bill (and reduce the compounding factor of this penalty) than pay nothing at all.
- Forfeiting the value of any tax refund. If the IRS owes you a refund, you may think it’s not a big deal if you’re a little late in filing your taxes. While it’s true that you will not be charged the failure-to-file penalty if the IRS owes you money, you also won’t get your hard-earned tax dollars back until you do file.
- Losing the Earned Income Tax Credit (EITC). If your long-term tax plan was to claim the Earned Income Tax Credit, you must file within three years of the original due date in order to claim the EITC. So if you want it, get your taxes filed sooner rather than later.
- Losing international travel privileges. Under recent changes brought in under the “Fix America’s Surface Transportation Act”, or FAST Act, if the IRS certifies you as a “seriously delinquent” taxpayer they are required to notify the Secretary of State office, which may, in turn, deny you the ability to get or even keep your passport. While this penalty applies to people who owe more than $50,000 in federal taxes, have had a federal tax lien filed against them or who have received a final notice of intent to levy and let the period to file an appeal on the notice pass them by—it shows how seriously the IRS takes failure to file taxes. So don’t be one of them longer than necessary!
A common reason delinquent filers cite for not filing taxes is an inability to pay their tax bill. If you are in this situation it is especially important that you contact our CPA NYC firm to file your taxes ASAP. As you can see from the penalties noted above, not filing and not paying your taxes will only increase your total tax bill. File your taxes now avoid the failure to file penalty and consider enlisting help from our experienced NYC accountants look at options for working with the IRS to resolve your tax obligations.