Tax returns and all taxes owed for 2016 were due on April 18, 2017. If you failed to file your tax return and make payment of any taxes due, there will be repercussions.
The best way to minimize the fallout for late filing and paying is to take care of both matters as soon as possible. Penalties and interest will start to accrue immediately, leaving you with an even bigger bill.
Often, people who do not file on time do so because they have a complicated tax situation. They may have questions that they cannot answer, or they may be worried about a situation because they do not understand it.
In these cases, contacting a tax professional, such as a tax lawyer, can speed up the process and give you the confidence of knowing that your tax matters are being handled properly and with the most benefit to you.
Penalty for Failing to File
If a taxpayer does not file by the deadline, a failure-to-file penalty may be charged. This penalty accrues faster than the penalty for failure to pay (discussed below). The IRS wants to encourage everyone to file on time, even if an individual cannot afford to pay his or her full tax obligation.
The failure-to-file penalty is an amount equal to 5 percent of the taxes owed for each month or a portion of the month that the tax return is not filed. The total amount of the failure-to-file penalty combined with the failure-to-pay penalty is generally limited to a maximum of 25 percent of the total tax liability.
Penalty for Failing to Pay
If a taxpayer does not pay all taxes owed by the deadline, a failure-to-pay penalty may be charged. Even if you cannot pay your full tax obligation, paying as much as possible when you file is advisable in order to reduce interest and penalties.
The failure-to-pay penalty is 0.5 percent of the unpaid tax obligation. If the 5 percent penalty for failing to file and the 0.5 percent penalty for failure to pay apply in a month, the maximum penalty charged for both is 5 percent.
If you cannot afford to pay all of your taxes owed, consult with a tax professional who can review your options and discuss their ramifications with you. For example, you may be able to set up an installment agreement with the IRS. In other situations, a loan may be more appropriate. In drastic circumstances, other resolutions may be appropriate, such as currently-not-collectible status, offer in compromise, or bankruptcy.
Contact a Santa Clara County Tax Attorney
If you failed to file or pay your 2016 taxes, you may wish to contact a tax lawyer immediately. Our office can determine, among other things, what steps you should take to minimize late penalties and what steps need to be taken to reduce your tax obligation.
Call the accomplished San Jose tax attorney at John D. Teter Law Offices at 408-866-1810 to meet with a tax law professional.