(NewsNation) — This year’s April 15 tax deadline is a ways off, but it’s worth keeping in mind the potential penalties for missing that date.
The federal government will assess a monthly penalty of 5% on the amount of taxes owed, not to exceed 25% of the sum, the IRS says. Someone who owes $5,000 in taxes, for example, will get socked $250 per month.
That’s on top of the taxes owed plus interest.
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For people who can’t pay up, the smart play is to request an extension to stay in the good graces of the IRS rather than ignoring the problem.
People who are granted an extension will generally pay smaller penalties and can even work out a payment plan with the Feds, according to tax software provider TurboTax.
The IRS is already accepting individual tax returns for tax year 2024. The agency expects more than 140 million individual tax returns to be filed ahead of the April 15 cutoff.
Most states have revenue departments that also require residents to file state income tax returns, but there are exceptions.
