We have noticed the the IRS is starting to exercise it’s right to charge penalties and interest that have been on the books for years but they haven’t enforced until recently. They will charge you penalties when you miss certain tax deadlines. If you filed an extension you have until October 15th to file. If you miss this deadline you may be assessed a failure to file penalty.
The failure to file penalty is calculated based on the time from the deadline of your tax return (including extensions) to the date you actually filed your tax return. The penalty is 5% for each month the tax return is late, up to a total maximum penalty of 25%. The percentage is calculated on the tax due on the tax return.
If you filed for an extension and owe taxes, those taxes were due on April 17th, 2012. An extension is for filing only, it doesn’t extend your time to pay the taxes you owe. Failure to pay penalties are calculated differently and in addition to failure to file penalties. The failure to pay penalty is calculated on the amount of tax you owe. The penalty is 0.5% for each month the tax is not paid in full. There is no maximum limit to the failure to pay penalty. The penalty is calculated from the original payment deadline (for 2012 that date was April 17th) until the balance due is paid in full.
Interest is calculated based on how much tax you owe. Interest rates change every three months. The interest is calculated for each day your balance due is not paid in full.
Don’t wait until the last day to make your appointment or send us your documents. Do it now to ensure we have enough time to complete your tax return on time. There is a list of income and deductible expenses you may be entitled to here on our website. This is a comprehensive checklist of what to bring (or send to us) to complete your tax return. For your convenience, you can fax, email or mail your documents to our office.