Tax Dictionary – Overdue Tax Return
Taxpayers who owe tax, and failed to file and pay on time, will most likely owe interest and penalties on the tax they pay late. To keep interest and penalties to a minimum, taxpayers should file their tax return and pay any tax owed as soon as possible. If taxpayers are due a refund, there is no penalty if they file a late tax return.
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If you don’t file a required tax return by the due date, the IRS will charge you a 5% per month penalty for failing to file. If you owe taxes on the return, the IRS will also charge a 0.5% per month failure to pay penalty. Interest will also accrue on any unpaid balance from the day the return was due until the date you pay the tax in full.
The IRS can also file a return for you, called a substitute for return (SFR). The IRS prepares the return based on information it has from your employers, banks, financial institutions and other payers.
If you have a refund due, you must file your tax return within three years of the due date of the return or you’ll lose your refund.
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