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Things to Know Regarding Filing Late and Paying Penalties



Deadline to file federal tax return and pay other taxes for 2016 was April 18. It is important to know that if one is due for a refund, there is no penalty if they file a late tax return. However, there is penalty if someone owes a tax but fails to file and pay on time. It is good to file the tax return and pay at the earliest possible time to avoid paying interest and penalties.



Two Penalties May Apply

Whether one is late in filing or paying, penalties are charged in both cases. Moreover, interest accumulates above the penalties.

Combined Penalty per Month

When late filing and late payment penalties are there, maximum amount charged for both the penalties is 5 percent per month.

Penalty for Late Payment

Generally, the penalty charged is 0.5 percent of the unpaid taxes each month. Overall, it can build up to about 25 percent of unpaid taxes.

Payment Options

Payment options can be explored at IRS.gov/payments. IRS Direct Pay is not only fast but also a free way to pay via checking or savings account. IRS helps in resolving the tax debt.

Late Payment Penalty May Not Apply

If one has paid 90 percent of the taxes and request more time to file the income tax return, failure-to-pay penalty may not be applied. Still, the remaining balance must be paid by the extended due date. Taxes paid after April 18 have interest with them.

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If 2015 tax return is filed more than 60 days after the due date or extended due date, minimum penalty charged is $205. If one owes less than $205, it is charged 100 percent of the unpaid tax. Moreover, the penalty is five percent of the unpaid taxes every month up to a maximum of 25 percent.

File Even if You Cannot Pay

The American Opportunity Education Tax Credit of $2,500 tax credit for tuition costs for total of four years of post high school education can be easily claimed in 2013 through 2017. Besides, the Higher Education Tuition Deduction, which lets people deduct between $2,000 and $4,000 of qualified tuition costs is restored for 2012 and extended through 2013. Obama administration will extend the education tuition tax credits in the coming time.

*All this information is provided by the Internal Revenue Service at IRS.gov.

Education Tax Credits

The American Opportunity Education Tax Credit of $2,500 tax credit for tuition costs for total of four years of post high school education can be easily claimed in 2013 through 2017. Besides, the Higher Education Tuition Deduction, which lets people deduct between $2,000 and $4,000 of qualified tuition costs is restored for 2012 and extended through 2013. Obama administration will extend the education tuition tax credits in the coming time.

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