Are you putting off filing your taxes? What occurs if you fail to pay on time?
The 2022 tax deadline of April 18, 2023 is less than three weeks away. The IRS anticipates that the majority of individuals will have submitted their returns by this date. Those who do not may find themselves in some issues – or not. Here’s what you need to know about the consequences of failing to submit your taxes on time.
If any of the following pertain to you, failing to submit your return on time may not cause you any problems.
You live in an area hit by a federally declared disaster
To give people more time to recover and collect all required paperwork, the federal government frequently extends the tax-filing due date for those who reside in an area affected by a federally declared catastrophe. The duration of the extension varies, but it is typically at least a month longer than the standard tax date. The IRS website has a record of all tax extensions given in catastrophe regions.
You filed a tax extension
Individuals can always submit their own tax extensions if they so desire. You have until October 16, 2023, to submit your 2022 taxes. To do so, you must complete an application and send it to the IRS. It should be noted, however, that a delay to submit your tax return does not give you an extension to settle any overdue tax debt. You should be alright if you anticipate a refund. However, if you owe the IRS and do not pay by the April deadline, you will begin to accrue fines, as detailed below.
You don’t have to file your taxes
Not everyone is obligated by law to submit federal taxes. Those with earnings less than the standard exemption for their age and filing status are not required to submit a return if they do not wish to. The table below indicates how much you can make before having to file a 2022 tax report.
|Filing Status||Age at the end of 2022||You must file a tax return if your annual income exceeded:|
|Single||65 or older||$14,700|
|Head of Household||Under 65||$19,400|
|Head of Household||65 or older||$21,150|
|Married filing jointly||Both under 65||$25,900|
|Married filing jointly||65 or older (one spouse)||$27,300|
|Married filing jointly||Both 65 or older||$28,700|
|Married filing separately||Any age||$5|
|Qualifying widow(er)||Under 65||$25,900|
|Qualifying widow(er)||65 or older||$27,300|
Data source: IRS.
It is important to note that just because you are not required to submit a tax return does not mean you should not. Those who qualify for refundable tax credits, such as the Earned revenue Tax Credit, can profit from submitting a return even if their yearly revenue is less than the amounts shown in the chart above. This could result in a reimbursement cheque that you can spend on whatever you want.
You could face penalties
If you neglect to submit your tax return on time, the IRS may charge you with one of two fines. You could repay either one or both.
Failure to File penalty
This penalty may be owed if you do not file your return by April 18, 2023, or whatever your delayed tax date is. This penalty is equal to 5% of the outstanding taxes for each month or portion of a month that your return is late. It is limited to 25% of your outstanding amount.
Failure to Pay penalty
This punishment is calculated based on the length of time your taxes stay unpaid. You could due this if you did not pay enough taxes in 2022. This punishment is 0.5% of the outstanding taxes for each month or portion of a month that your taxes are not paid. It will not be more than 25% of your current amount.
If you owe both
Monthly fines for those who incur both a Failure to File and a Failure to Pay penalty will not surpass 5% of their unpaid tax debt. The sum will vary depending on how much you debt, but it could easily run into the hundreds of dollars.
How to avoid late filing penalties
To prevent penalties and facetime with the IRS, you should try to submit your taxes as close to the deadline as feasible. Even if you think you will owe more in taxes than you can afford, you should still submit your return right away.
This will assist you in avoiding the Failure to File penalty, and there are payment options available that will reduce your Failure to Pay penalty in half. You’ll need to set up regular payments from a connected bank account to accomplish this. This will allow you more time to settle your debts without the IRS showing up at your door.