The bottom line here is that if you owe the IRS money, get your tax return in as soon as possible. As of early 2017, the IRS interest rate is set at a 4% annual rate, and this is subject to change over time. If you pay late, interest will accumulate on your past-due balance, in addition to these penalties. That's why I say that it's better to file and owe the IRS money than to not file at all. On the other hand, the late payment penalty is 0.5% per month or partial month, just one-tenth of the amount it'll cost you if you don't file at all. As I write this, it's just a couple of weeks past the tax deadline, so you still have time to file your 2016 return and limit your late filing penalty to just 5% of your balance. The failure to file penalty is 5% per month (or part of a month) after the tax deadline has passed, up to a maximum of 25% of your unpaid balance. If you owe the IRS money, here's what you need to knowĮven if you can't pay what you owe yet, it's important to file as soon as possible.
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