Happy Tax Day 2015!

Did you get your individual income tax return filed in time? Don’t worry if you didn’t—the fact is more taxpayers are opting for the automatic six-month extension. The tax code’s growing complexity and filing requirements are slowly but steadily making October 15th our real annual tax day.But that extension to file isn’t an extension to pay and you must submit or postmark Form 4868 by midnight tonight to get the extension to file. If you owe tax, send your payment with your extension request.Our bottom line up front: be sure you’ve done something by midnight tonight to avoid incurring a penalty to file and/or a failure-to-pay penalty.

• Consider the following:The failure-to-file penalty is often more expensive than the failure-to-pay. Again, do (pay) something to show Uncle Sam you acknowledge and take responsibility for your tax debt.
  • The failure-to-file penalty is 5% of the unpaid tax for each month that a return is late and starts accruing the day after the filing deadline. It will not exceed 25% of your unpaid taxes.
  • The failure-to-pay penalty ranges from ½ to 1% of your unpaid taxes.
  • If both penalties apply in any month, the maximum you’ll owe for both is 5%.
  • If you file more than 60 days after your final due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
• You can lessen the added interest and penalties by paying as much as possible with your tax return. The IRS even offers installment plans; as its website states, “The IRS will work with you.”
• You’ll avoid any penalty if you file your extension request in time and include at least 90% of the tax owed and then include the balance due with your filed return (by Oct. 15th).

You won’t owe either penalty if you can show “reasonable cause” for not filing or paying on time. The IRS is the judge of what’s reasonable—that point alone should convince you to file and pay timely!Remember, taxes themselves aren’t much fun, but they do pay for governing and protecting the greatest country on earth, so let’s be a little bit thankful for them.Moreover we’re here to help. The tax accounting team at Patrick & Robinson CPAs is here for you on deadline day—and we’ll be here for you tomorrow. Contact us at office@CPAsite.com or 904-396-5400.