The obvious reason why you should strive to avoid the failure to file penalty is because it costs you money, and nobody wants to pay for something that could have been avoided! The failure to file penalty is charged if you file after the due date (usually April 15th for individuals), owe taxes and don’t pay by the deadline, and neglect to file for a tax extension.

How Much Can You Be Fined?

If you fall into the example listed above, then you could end up paying a fine that amounts to as much as 25% of your unpaid tax!  The IRS will assess 5% of unpaid taxes for each month or partial month that your tax return is late, not to exceed 25% of your total taxes owed.   As an example, if you owed $2,000 to the IRS, that could result in a $500 penalty!

This heavy fine can easily be avoided by filing for a tax extension. 

How to File for an Extension

The most obvious solution, when it comes to avoiding paying the failure to file penalty, is to file for an extension. This gives you more time to get your tax return completed and helps you avoid paying more than you should. However, it is important to remember, that while you will avoid paying the failure to file penalty, you may still be subject to interest and late fees for not paying on time.

Filing an extension is easy.  We can help you e file from wherever you can access the internet, and get an immediate response from the IRS, or you can mail in form 4868 for free.  We can help you in either circumstance, however, know that the IRS does not provide confirmations for extensions received through the mail. 

If you are granted an extension, (and 99% of people who complete the form correctly are), you will have until October 15th of the current filing year to complete your return and submit it.

Another way to avoid extra fees is to send an estimated payment by April 15th. You can then take until October to finish your return and determine the final number. If it turns out that you owe more, you can send it in at that time.  If you have overpaid your obligation, you will receive a refund. Keep in mind that if you don’t file your return by the extension deadline, you will be subject to additional penalties.

Ultimately, filing for a tax extension is a good idea because it saves you from having to pay the failure to file penalty if you are unable to pay the tax you owe by the deadline.  Even if you do not owe any taxes, many find that taking the extra time to prepare their return enables them to uncover additional credits and deductions that reduce their overall tax liability. 

Interested in e-filing your tax extension?  It is super easy to do so.  Just get started here and you’ll have a response from the IRS in no time, along with 6 extra months to file.

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