Tens of millions of people in the United States may encounter an unpleasant surprise in the near future. The Internal Revenue Service (IRS) has not mince d its words and it is crystal-clear that someone who does not submit a tax return by the deadline on April 15, 2025, may be penalized by as much as 25% of the unpaid taxes. To be precise, it is not filed timely not paid in full that is the root cause of this penalty.
A possible outcome of the penalty is hundreds to even thousands of dollars being drained from taxpayers’ pockets in case the unpaid balance is high. The majority of Americans are guilty of not realizing the fiscal damage that not meeting the deadline could have on their pocket, notwithstanding, it is feasible to reduce or even fully exempt from the penalty.
What is the IRS Late Filing Penalty?
Based on the statement by the IRS, in the event you file your return after the due date without an agreed extension, you will get a Failure-to-File Penalty. It is 5% of the unpaid tax every month, capping at 25%. Moreover, if your return is over 60 days late, the lowest penalty is $510 or 100% of the unpaid tax, whichever is lower.
Furthermore, not paying the taxes owed by April 15th will result in the IRS imposing a Failure-to-Pay Penalty on you. It is the same rate of 0.5% per month but here too, it is limited to 25%. On the other hand, the IRS mentions that in case both penalties are valid in the same month, there will be a little reduction in the combined penalty.
(Observe IRS official guidelines on penalties here)
What Makes This Year Especially Important?
This year, the IRS is putting a special emphasis that the due date has to be met since more people than usual are late with their filings. As per the
IRS Commissioner Danny Werfel pointed out that the various aid programs offered by the government as a result of the pandemic have now terminated, and just as with the years of the pandemic, there is no provision for automatic extension this year.
The IRS Commissioner Danny Werfel addressed a public service announcement to taxpayers that in the event of a failure to file on time and without prior notification of the IRS, a substantial and avoidable penalty may be charged.
Rather than Incur the Penalty, are There Any other Options or Optimizing It to the Minimum?
It is a great relief that the IRS has also put forward methods that are quite simple even for those who were expecting a penalty so that it can be minimized or gotten rid of if they will act in time.
- You can submit Form 4868 and receive an automatic 6-month extension, with the due date of the 2025 filing being October 15. One thing to note, however, is that the IRS stresses that the extension is only for the filing of returns and not for the payment of taxes. Still, you have to estimate and pay as much as you can by April 15.
- IRS strongly recommends that taxpayers pay as much as feasible as they can, even if the whole amount is out of their reach. This will lower the failure-to-pay penalty and the interest. You can also apply for an installment agreement via the IRS Payment Plan Portal, the official source for all financial arrangements.
- IRS specials include various opportunities such as help for taxpayers who are in a financial crisis. By contacting the IRS of the possible different situations, you can request and get a determination of your qualification for the paying of less penalty or full payment flexibility on your part before the situation worse off than it already is.
If the Deadline is Ignored, What Will Be the Consequences?
For those individuals who are not filing or paying their taxes, in time, or have not made the necessary arrangements with the tax office, they will be charged with the whole penalties including interest charges that compound daily. The IRS said they will not give the same relief as it did last year due to but only on a case-by-case basis.
Furthermore, outstanding taxes and fines would likely result in taking more extreme measures, such as levying the person’s wages or placing a lien on their properties if the person decides to turn a blind eye other than real danger of lawsuits.
It is viewed as very important by the IRS that each and every taxpayer take action at once. If you are going to delay your actions till some time after April 15, then you will find out that it will cost you more than you initially thought.
If you have a look at the amount you owe, want to make some payments, or would like to get an extension, go to the original IRS Payment & Filing Center.
