Additionally, please note that an extension to file is not an extension to pay. Your 2019 tax liability will still be due on April 15, 2020, even if you file an extension. If you do not pay your tax liability in full by April 15, 2020, the IRS may assess interest and penalties.
Interest accrues on the unpaid balance of your tax liability and compounds daily from the due date of the return until the balance is paid in full. The IRS charges interest at the federal short-term rate plus 3%.
A failure-to-pay penalty is charged for failing to pay your tax by the original due date. The late payment penalty is 0.5% of the tax owed after the due date, for each month or part of a month the tax remains unpaid, up to a maximum of 25% of the unpaid amount.
A failure-to-file penalty is charged on returns filed after the due date or extended due date, absent a reasonable cause for filing late. You will not be subject to this penalty if you file an extension by the original due date, and complete your return by the extension deadline. If your return is not filed or extended timely, 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, up to a maximum of 25% of the unpaid balance. If your return is over 60 days late, there is also a minimum penalty for late filing – the lesser of $210 or 100% of the tax owed.
Interest and penalties can add up quickly. We highly recommend paying your tax liability on time to avoid excess interest and penalties. If you cannot pay the entire liability due, there are payment plans available through the IRS. If you will be extending your 2019 tax return, we can provide you with payment vouchers for your estimated tax liability. We will help you estimate this amount when we complete your extension.
Please let us know if you have any questions about your 2019 taxes, upcoming deadlines, or the extension process. We are excited to serve you and are looking forward to a great tax season!