The deadline for 2022 tax returns is April 18, 2023. If you file after the deadline and you owe taxes, you may be subject to late filing and/or late payment penalties.
Even if you are unable to make a payment by Tax Dayif you submit something – a return or an extension – you will not be subject to the late filing penalty.
Even if you owe taxes and can’t pay them by the tax deadline, you should still file an extension, a state tax extension, or a tax return electronically because late filing fees are typically more expensive than late payment fees.
Update on significant IRS penalty relief from August 26, 2022: According to the IRS, select 2019 and 2020 Returns will receive Covid tax relief as a result of the epidemic. To a total of 1.6 million qualified individual taxpayers (Form 1040) and corporations (Form 1120) who filed their 2019 or 2020 taxes late, the IRS will be providing refunds of up to $1.2 billion.
Penalties for filing and paying your tax return late
Based on how late you file your tax return and the amount of unpaid tax as of the initial payment due date, the IRS determines the Failure to File Penalty (not the extension due date). Unpaid tax is the total amount of tax that must be reported on your return less amounts withheld, estimated tax payments, and permitted refundable credits.
According to the IRS website, they calculate penalties for filing like this:
- The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.
- If both a Failure to File and a Failure to Pay Penalty are applied in the same month, the Failure to File Penalty is reduced by the amount of the Failure to Pay Penalty for that month, for a combined penalty of 5% for each month or part of a month that your return was late.
- If after 5 months you still haven’t paid, the Failure to File Penalty will max out, but the Failure to Pay Penalty continues until the tax is paid, up to its maximum of 25% of the unpaid tax as of the due date.
- If your return was over 60 days late, the minimum Failure to File Penalty is $435 (for tax returns required to be filed in 2020, 2021 and 2022) or 100% of the tax required to be shown on the return, whichever is less.
Other penalties the IRS takes into account are:
- Information Return applies to taxpayers who do not file or furnish their required information return or payee statement correctly by the due date.
- Failure to File applies when you don’t file your tax return by the due date.
- Failure to Pay applies when you don’t pay the tax you owe by the due date.
- Accuracy-Related applies when you don’t claim all your income or when you claim deductions or credits for which you don’t qualify.
- Erroneous Claim for Refund or Credit Penalty applies when you submit a claim for refund or credit of income tax for an excessive amount and reasonable cause does not apply.
- Failure to Deposit applies when you don’t pay employment taxes accurately or on time.
- Tax Preparer Penalties apply to tax return preparers who engage in misconduct.
- Dishonored Checks applies when your bank doesn’t honor your check or other form of payment.
- Underpayment of Estimated Tax by Corporations applies when you don’t pay estimated tax accurately or on time for a corporation.
- Underpayment of Estimated Tax by Individuals applies when you don’t pay estimated tax accurately or on time as an individual.
- International Information Reporting applies to certain taxpayers who fail to timely and correctly report foreign sourced financial activity.