It seems that everything has a late fee: utility companies, credit card issuers, even some daycare providers will charge a late fee if parents are late in picking up their kids. Naturally the IRS has a host of late fees, most of which can be avoided. Here’s a run-down of IRS late fees.
Underpayment Penalty
The IRS wants you to pay the full amount owed. This fine is charged quarterly at the higher of either three percent of the balance or the federal short-term rate. If you’re not sure how much you should pay in quarterly taxes, check out form 1040-ES for guidelines on calculating what you owe.
Late Filing or Late Payment
The IRS expects you to pay on time, and by not doing so, you could run into some hefty fees. The late filing fee is 5 percent each month you that you are late in paying what you owe, up to 25 percent maximum. If you are more than 60 days late, the penalty the higher of $100.00 or 100 percent of what you owe the IRS.
Dishonored Checks
If you write a check to the IRS that bounces or is “dishonored,” you’ll end up paying the lower of either $15.00 or the check’s amount (for checks under $750.00). For checks over $750.00, expect to pay 2 percent of the check’s total.
Failure to Pay Tax
There is a penalty for not paying your penalty. The IRS will give you 21 days to pay what you owe before assessing a penalty. Miss the 21-day window, and you’ll be charged 1/2 of one percent on the amount you owe each month, maxing out at 25 percent each year.
At the same time, if you request an installment agreement, you’ll only be on the hook for 1/4 percent for each month you have an outstanding balance.
Failure to Provide a Social Security Number
While it’s always a good idea to be protective of your family’s social security numbers, the IRS requires them on tax returns each year. You’ll be assessed $50.00 for each missing Social Security Number. It’s always a good idea to double-check your tax forms before filing them to make sure all the required information is provided. You’ll not only save yourself the headache of a delayed refund, but you’ll also avoid penalties for missing Social Security Numbers.
Tomorrow: A look at two more IRS penalties.
