The top total failure to file penalty would be 47.5% of the unpaid taxes, the IRS said — that’s a total 22.5% for late filing and 25% for late payment.
A topsy turvy tax season, replete with a payment deadline extension and mid-stream tax code changes, is coming to an end on Friday.
The extra time afforded the IRS some breathing room to juggle a third round of stimulus payments authorized in the $1.9 trillion American Rescue Plan, as well as tax provision changes in the freshly-passed law. One change said the first $10,200 in jobless benefits an unemployed person received during 2020 were exempt from income tax, an effort to help the millions forced to the unemployment line by the pandemic.
The price of blowing the deadline is based on the tax bill a person faces, Walker explained. If a person owed taxes and didn’t seek an extension, they would be facing failure to file and failure to pay penalties from May 17 onwards. The failure to file penalty starts at “5% of the unpaid taxes for each month or part of a month that a tax return is late,” the IRS notes. The payment penalty starts at “0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid,” the IRS said. Both come with interest.
This year, an estimated 1.3 million taxpayers were in danger of missing out on 2017 tax refunds if they didn’t file a return, the IRS said. The IRS is working off 2020 tax returns to determine eligibility, or 2019 returns if the 2020 returns aren’t available. The advance payments will send eligible parents monthly checks up to $300 for each child under age 6 and $250 for kids between the age of 6 and 17.
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