Late Tax Filer Break on Penalty for 2019, 2020 Returns
The Internal Revenue Service is giving a late filer break to many taxpayers. The penalty relief is for those who filed their 2019 and/or 2020 tax returns past the deadline.
The late filer tax break is aimed toward helping struggling taxpayers affected by the pandemic. The IRS is removing the failure-to-file penalty for most individuals and businesses who didn’t file on time.
Who Is Eligible?
Individuals who file a 1040 or 1041 return are eligible for the late tax filer break. Businesses who file a return in the 1120 series (such as an 1120S for S corporations) are also eligible. However, if you’ve filed a fraudulent return, you’re not (and that’s probably the least of your problems).
Make Sure You File
In order to be eligible for the late tax filer break, you have to file your individual tax return for 2019 or 2020 by September 30, 2022. But eligible small businesses who file an 1120 return must have already filed. The business deadline was August 1 of the year they were due.
How Much Is the Penalty? What Happens to It?
The IRS failure-to-file penalty charges 5 percent of the total tax due, compiled monthly. It maxes out at 25 percent, which can be a pretty hefty sum. The agency estimates some 1.6 million taxpayers will qualify for the late tax filer break. They expect that will translate into $1.2 billion in refunds or credits.
Other penalties, like the failure-to-pay penalty, are not eligible for relief. But you can talk to your accountant about options to get other penalties reduced or waived.
You Don’t Need to Do Anything
The IRS says you don’t need to file anything or appeal. They will automatically issue the refund or credit. They expect to start sending out payments at the end of September.
Here’s a list of the worst excuses given to the IRS for not filing on time.
The IRS has a page detailing other penalties eligible for relief and how to ask.
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