It’s not too late to avoid interest and penalty charges

 

March 3, 2022

Filing season is here with a deadline of April 18, 2022, for individual 1040 filers. What can happen if you don't file your taxes or pay on time? Two words — penalties and interest! You can avoid them both by filing and paying on time. Even if you owe tax and can't pay in full, it's better to file on time and pay as much as you can.

Here are some tips on how to avoid paying penalty and interest charges:

  • File on time to eliminate the failure-to-file penalty
  • Pay as much as possible to avoid paying interest on any unpaid balance
  • Pay as much as you can by the original due date help to minimize the late-payment penalty

The IRS can abate penalties for filing and paying late if there is reasonable cause. Generally, interest charges may not be abated and continue to accrue until all assessed tax, penalties, and interest are paid in full. The law does provide exceptions for allowing abatement or suspension of interest. Information about abatement is also on IRS.gov. If you get a bill from the IRS, you are expected to promptly pay the tax owed, including any penalties and interest. It may be in your best interest to use a credit card or get a loan to pay the bill in full, rather than make installment payments to the IRS. The interest rate on a credit card or bank loan is often lower than the combination of interest and penalties imposed by the IRS. For more information about payment options, including installment and online payment agreements, visit IRS.gov. Look for Publication 594, The IRS Collection ProcessPDF, and Publication 966, Electronic Choices to Pay All Your Federal TaxesPDF.