Late filing penalties

[redvelvet]

For someone who did not file previous years corporate and personal tax returns, what are the penalties for each, and where (what websites, pages or resources) to use to stay up to date on this topic?

Also, what are the extension filing deadlines? Can we file an extension after having filed a first extension for the same year?

[SwapnaM]

@redvelvet Thanks for the Question!! You must file your return and pay your tax by the due date including extensions to avoid interest and penalty charges. https://www.irs.gov/taxtopics/tc653

https://turbotax.intuit.com/tax-tips/irs-tax-return/filing-your-taxes-late/L7IhvwH9b

If you have a balance due

If you haven't paid all of the tax you owe by the filing deadline:

• You'll likely end up owing a late payment penalty of 0.5% per month, or fraction thereof, until the tax is paid.
• The maximum late payment penalty is 25% of the amount due.
• You'll also likely owe interest on whatever amount you didn't pay by the filing deadline.

If you didn't get an extension

• You are also looking at a late filing penalty of 5% of the unpaid tax per month, plus interest.
• The maximum late filing penalty is 25% of the amount due.

For S -corp: When S corporations fail to file Form 1120S by the due date or by the extended due date, the IRS typically imposes a minimum penalty of $210 (for 2022) for each month or part of the month the return is late multiplied by the number of shareholders. If the corporation files its Form 941 after the deadline and it has an unpaid tax balance, a 5 percent penalty may be assessed on the balance for each month or partial month the tax is late, up to a maximum of 25 percent. Similar penalties apply to filing Form 940 after the due date as well. https://turbotax.intuit.com/tax-tips/small-business-taxes/s-corp-federal-tax-filing-dates/L1U6tYGMt

https://turbotax.intuit.com/tax-tips/small-business-taxes/filing-a-business-tax-extension/L5MDFPZkB

[redvelvet]

Thanks, I will check the links shortly.

I assume you one cannot file an extension after the extension deadline has passed, is that correct?

And one last question. What documents should we have ready when filing the 1120 form by the extension deadline ?

[GCEA]

Hi @redvelvet ,

•  "C corporation"  that file Form 1120 are subject to a penalty of five percent of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25 percent of the unpaid tax. In addition, the corporation might be charged  interest in any tax due from the due date of the payment until payment is made.
• "S corporation"  that file Form 1120s the penalty is $220 for each month or part of a month (up to 12 months) the return is late or doesn't include the required information, multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation's tax year for which the return is due.
• Partnerships that file Form 1065 the penalty is $220 for each person who was a partner at any time during the tax year, for each month or part of a month, for up to 12 months.
• For personal tax return that file Form 1040  Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes. Please also keep in mind the interest is accrued from due date. 

The links below have more information regarding penalties :

Failure to File Penalty - Personal Return Form 1040 

Late Filing of Return - Form 1120s 

Late Filing of Return - Form 1120  

You can also as for a waiver or abatement of late filing penalties. For more information, go to Penalty Relief due to First Time Abate or Other Administrative Waiver 

Thank you and good luck! 

[SwapnaM]

@redvelvet Yes you cannot file an extension now. It had to be filed before the original due dates.

Your Small Business Tax Preparation Checklist for 2023