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Worried about the tax filing deadline?
Before You Pay That IRS Penalty, Read This!
Getting a penalty notice from the IRS is never fun, but rushing to pay it could be costly.
You might not owe anything at all. And if you already paid? You might be able to get that money back.
Here’s why it matters: Today is the deadline for S Corporations and Partnerships to file tax returns. If you missed it—or forgot to file an extension—you could already be looking at a growing stack of penalties. But don’t panic. There are ways to fix it.
Understand the Consequences of Missing the Deadline
Missing the tax filing deadline can feel overwhelming, but knowing what to expect can help you take control of the situation. Here’s what you need to be aware of:
1. Penalties for Late Filing and Late Payment
If you didn’t file your taxes on time and you owe money, the IRS can impose two separate penalties:
- Late Filing Penalty: This is typically 5% of the unpaid taxes for each month your return is late, up to a maximum of 25%.
- Late Payment Penalty: If you filed but didn’t pay what you owe, the penalty is 0.5% of the unpaid taxes per month, also up to 25%.
If both penalties apply in the same month, the late filing penalty is reduced by the late payment penalty, meaning you’ll generally owe 4.5% instead of 5% for that month.
2. Interest on Unpaid Taxes
In addition to penalties, the IRS charges daily interest on any unpaid tax amount. This interest starts from the due date of the return and continues until the full balance is paid. The interest rate is typically based on the federal short-term rate plus 3%, and it’s compounded daily, which adds up quickly.
3. How It Impacts Refunds and Future Filings
If you’re owed a refund, there’s no penalty for filing late, but you still need to file within three years to claim it. After that, the IRS keeps your money.
Failing to file or pay taxes on time can also trigger additional issues:
- Your refund for future years could be delayed or withheld if back taxes are owed.
- Repeated late filings may cause the IRS to classify your return as high-risk, drawing more attention to your filings.
- You may become ineligible for certain tax credits or relief programs in the future.
File Your Taxes ASAP
Time is money when it comes to taxes—literally. The sooner you file after missing the deadline, the less you’ll owe in penalties and interest. Even if you can’t pay the full amount right now, filing your return quickly is a crucial first step.
Why Filing Even One Day Late Matters
The IRS begins calculating penalties the day after the deadline, so every day counts. The longer you wait, the more you’ll owe. Filing as soon as possible reduces:
- The late filing penalty (which is much higher than the late payment penalty)
- Additional interest charges
- Stress and the risk of further consequences like IRS notices or collection actions
How to File Quickly
If you’re late, don’t wait—there are fast and reliable ways to file your taxes:
- E-File Through the IRS or Tax Software: Use trusted software like TurboTax, H&R Block, or IRS-authorized providers to file quickly and securely.
- IRS Free File: If you make $79,000 or less, you can use the IRS Free File program to file online at no cost.
- Hire a Tax Professional: If your tax situation is complex, or you’re overwhelmed, consider reaching out to a certified tax preparer. Many offer quick turnaround even during the off-season.
Tips for Organizing Documents Fast
Speed matters, but so does accuracy. Here’s how to gather what you need quickly:
- Make a checklist: Common forms include W-2s, 1099s, receipts for deductions, and last year’s return.
- Check online portals: Many employers, banks, and investment platforms offer downloadable tax documents.
- Use a folder (digital or physical): Gather everything in one place to prevent back-and-forth searching.
- Double-check personal info: Ensure names, SSNs, and bank info for direct deposit are correct.
Filing quickly gives you the best shot at minimizing damage and getting back on track.
What the IRS Charges (and How Fast It Adds Up)
Let’s break it down:
If you’re filing as an individual or C corporation:
- You could be charged 5% of your unpaid tax every month the return is late, maxing out at 25%.
- If you’re over two months late, there’s a minimum penalty: $485 or 100% of what you owe, whichever is lower.
- On top of that, there’s a separate penalty for not paying on time—0.5% per month, up to another 25%.
If you’re a partnership or S corporation:
- The penalty is $240 per shareholder or partner per month for up to 12 months.
- That means a 3-partner business could owe over $8,000 for a year of missed filings—even if no tax were due.
It doesn’t take long for small mistakes to turn into big bills.
Good News: You Might Not Owe Those Penalties
Yes, the IRS charges penalties, but it offers relief if you know where to look.
There are three main ways to reduce or eliminate your penalty:
1. First-Time Penalty Waiver
If your record is clean and this is your first slip-up, you might qualify for a one-time penalty removal. The IRS doesn’t make this widely known, but it’s one of the easiest ways to get relief—if you ask.
2. Special Relief for Partnerships and S Corps
Some businesses qualify for penalty relief based on specific rules around required filings. If your business met certain filing exceptions or acted quickly to correct the issue, you could avoid the penalty entirely.
3. Reasonable Cause
You can still argue your case even if the other two don’t apply. If something outside your control—like illness, a natural disaster, or a tax advisor’s mistake—caused the delay, the IRS may wipe out the penalty. The key is showing you acted in good faith and weren’t just ignoring your responsibilities.
What to Do Now
If you missed the deadline or got hit with a bill, don’t wait. The longer you delay, the more those penalties grow. But more importantly, don’t pay a cent until you know whether you qualify for relief.
This isn’t about dodging taxes. It’s about not overpaying because of a mistake, a misunderstanding, or a deadline that slipped past unnoticed.
A quick review of your situation could save you hundreds—or even thousands—of dollars.
