Your Guide to Deadlines and Penalties

The Internal Revenue Service (IRS) has various deadlines for filing tax returns and paying taxes. It's important to note that tax laws and deadlines may change over time, so it's always a good idea to consult with your tax professional for the most up-to-date information. Here are some general deadlines and most common penalties associated them:

Tax Return Filing Deadline

For most individual taxpayers, the deadline to file federal income tax returns is April 15th of each year. For different business structures, the deadlines for filing tax returns vary. S corporations and partnerships must file by March 15th while C corporations need to file by April 15th.

However, the deadline may be extended to the next business day if it falls on a weekend or a holiday. If you need more time to file your return, you can request a six-month extension by filing Form 4868. It's important to note that an extension to file does not grant an extension to pay any taxes owed.

Late Filing Penalty

If you fail to file your tax return (Form 1040) by the deadline (including extensions), the IRS may impose a late filing penalty. The penalty is generally 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25% of the unpaid taxes. If your return is more than 60 days late, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is smaller.

If an S corporation fails to file its annual tax return (Form 1120S) by the due date, including any extensions, the IRS may impose a late filing penalty. The penalty is generally calculated based on the number of months or part of a month that the return is late, and the penalty amount can vary depending on the corporation's average gross receipts. The late filing penalty for S corporations can range from $205 to $435 per month, per shareholder.

If a C corporation fails to file its annual tax return (Form 1120) by the due date, including any extensions, the IRS may impose a late filing penalty. The penalty is generally calculated based on the number of months or part of a month that the return is late and is calculated as a percentage of the unpaid tax amount. The current penalty rate for late filing is 5% per month, up to a maximum of 25% of the unpaid tax.

If a partnership fails to file its annual tax return (Form 1065) by the due date, including any extensions, the IRS may impose a late filing penalty. The penalty is generally calculated based on the number of months or part of a month that the return is late and is calculated per partner. The late filing penalty for partnerships is $205 per month, per partner, up to a maximum of 12 months.

Late Payment Penalty

If you fail to pay the full amount of taxes owed by the deadline, the IRS may impose a late payment penalty. The penalty is generally 0.5% of the unpaid taxes for each month or part of a month that the payment is late, up to a maximum of 25% of the unpaid taxes.

If an S corporation, C corporation, or partnership fails to pay the full amount of taxes owed by the due date, the IRS may impose a late payment penalty. The penalty is generally calculated as a percentage of the unpaid tax amount and accrues from the original due date until the tax is fully paid. The current penalty rate for late payment is 0.5% per month, up to a maximum of 25% of the unpaid tax.

Failure-to-Deposit Penalty

S corporations, C corporations, and partnerships are required to make timely deposits of federal employment taxes, such as Social Security and Medicare taxes withheld from employees' wages. Failure to make these deposits or make them late, the IRS may impose a failure-to-deposit penalty. The penalty rate can range from 2% to 15% of the unpaid tax amount, depending on the number of days the deposit is late and the corporation's size.

Late or Incomplete Schedule K-1 Penalty

S corporations and partnerships must provide a Schedule K-1 to each shareholder, reporting their share of the corporation's income, deductions, and credits. Failure to provide a correct and timely Schedule K-1 to a shareholder or partner, the IRS may impose a penalty of $270 per Schedule K-1, up to a maximum penalty amount.

Estimated Tax Penalties

C corporations are required to make quarterly estimated tax payments if they expect to owe at least $500 in tax for the year. If a C corporation underpays its estimated tax payments or fails to make them, the IRS may impose penalties. The penalty is generally calculated based on the underpayment amount and the number of days the underpayment exists.

Accuracy-Related Penalty

If an S corporation, C corporation or partnership understates its tax liability due to negligence, disregard of tax rules, or a substantial understatement of income, the IRS may impose an accuracy-related penalty. The penalty is generally 20% of the underpayment attributable to the negligence or substantial understatement of tax.

Avoid Penalties With The MB Group 

When you hire a CPA you get access to our expertise and knowledge. We can help ensure compliance with tax laws, maximize deductions, minimize tax liability, and provide financial advice that can potentially save you money in the long run. We can also help you save money by helping you by monitoring deadlines and avoiding penalties, so be sure to contact our team for assistance.