If you missed the April deadline for filing your 2023 federal income tax return, don’t worry—the IRS has options to assist you.
Payment Programs and Penalty Relief
For those struggling to pay what they owe, the IRS offers several payment programs and special first-time penalty relief for eligible taxpayers.
Remember, paying what you can as soon as possible helps limit penalty and interest charges, which can add up quickly. Currently, the interest rate for unpaid taxes is 8%, compounded daily. The late-filing penalty is usually 5% per month, and the late-payment penalty is typically 0.5% per month, both maxing out at 25%.
If you file your return more than 60 days after the due date, the minimum penalty is either $485 or 100% of the unpaid tax, whichever is less. The failure-to-pay penalty rate is generally 0.5% of the unpaid tax per month until the tax is fully paid or the penalty reaches 25%. For more details, visit the IRS Penalties page.
Paying Electronically
To minimize late-payment penalties and interest charges, paying your taxes electronically is the way to go. The quickest and easiest method is IRS Direct Pay, a free service available on IRS.gov. Other electronic payment options are also available. Check out the Make a Payment page for more details.
File and Pay What You Can
Filing your tax return and paying any owed taxes as soon as possible helps reduce penalties and interest. An extension to file isn’t an extension to pay. The extension gives you until October 15 to file, but penalties and interest apply to taxes owed after April 15, and interest is charged on tax and penalties until the balance is paid in full.
Penalty Relief
If you receive a penalty notice from the IRS, read it carefully and follow the instructions for requesting relief. Visit the Penalty Relief page for information on types of penalties, how to request relief, and how to appeal a penalty decision.
Taxpayers who have filed and paid on time for the past three years may qualify for first-time penalty abatement. More details are available on the First-time Penalty Abatement page on IRS.gov. If you don’t qualify for this relief, you might still qualify if your failure to file or pay on time was due to reasonable cause and not willful neglect.
Interest will be charged on any unpaid tax from April 15 and on any assessed penalties. Interest stops accruing once the balance is fully paid. The law doesn’t allow for interest abatement based on reasonable cause or first-time relief.
IRS Payment Options
Filing on time helps you avoid failure-to-file penalties, even if you can’t pay in full. For those who owe federal taxes, the IRS offers several payment options.
If you can’t pay in full by the tax deadline, still file your return, pay what you can, and explore other payment options for the remaining balance. The IRS offers various options, including online payment plans, where you can get an immediate response of acceptance or denial.
Online Payment Plan Options
- Short-term payment plan: For balances under $100,000 in combined tax, penalties, and interest. Offers up to 180 days to pay the balance in full.
- Long-term payment plan: For balances under $50,000 in combined tax, penalties, and interest. Allows monthly payments for up to 72 months. Direct debit (automatic bank withdrawal) is required for balances between $25,000 and $50,000.
Though interest and late-payment penalties continue to accrue on unpaid taxes after April 15, the failure-to-pay penalty is halved while an installment agreement is in place. For more information about payment plan costs, visit the IRS’ Additional Information on Payment Plans webpage.
Get Compliant and Get Tax Relief
Morris and Associates are experts when it comes to helping individuals and companies find tax relief in Georgia but can help no matter where you live or whatever tax questions you have. Contact us to help with your taxes and possibly even reduce the amount that you owe.
