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The number of electronic filing and payment options increases every year, which helps reduce your burden and also improves the timeliness and accuracy of tax returns. When it comes to filing your tax return, however, the law provides that the IRS can assess a penalty if you fail to file, fail to pay or both.

Here are eight important points about the two different penalties you may face if you file or pay late.

1. If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty.

2. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and pay as much as you can, then explore other payment options. The IRS will work with you.

3. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

5. If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

6. If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.

7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.
Link:

Avoiding Penalties and the Tax Gap http://www.irs.gov/newsroom/article/0,,id=181068,00.html

Go to https://www.pay1040.com/MakeAPayment

This is not a Personal Accountant Inc sponsored link, but it is an IRS approved link

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EXTENSION FACTS…

1)      An income tax extension is an extension of time to FILE, not an extension of time to PAY.  Your income tax is due on April 15 (generally).

2)      If you do not expect to owe money, you should file your tax return by the end of the year

3)      If you do expect to owe money, you should file an extension with a payment for the amount you expect to owe (preferred) or a minimum of $50

4)      FORM 4868 is to apply for 6 more months to file your federal tax return (Form 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ).

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HOW DO YOU KNOW WHAT YOU OWE…

Go to our website http://personalaccountant.net/ and under TAX CENTER, chose 1040 Tax Estimator.

1. Reference your last year tax return copy to fill in some of the numbers if you need to
2. Have your tax documents available. Total income is ALL of your box 1 totals from W2s and 1099s. Total withheld is all of your box 2 totals from W2s, and may also appear on some1099s

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HOW CAN YOU FILE A FEDERAL EXTENSION WITH PAYMENT…

You have four payment options for Form 4868 extension:

1)      To pay with your bank account electronically – FREE EFTPS https://www.eftps.gov/eftps/login/loginInitial

2)      To pay with a credit or debit card electronically – An IRS approved site https://www.pay1040.com/MakeAPayment

3)      For our clients, to pay with your tax preparer electronically  – LSM Accounting Solutions, email admin@personalaccountant.net

a)     Primary name on the tax return and SSN

b)     Amount you wish to pay

c)     Bank account info you’d like to use to pay our $25 fee + your extension payment to IRS (include bank name, Routing, account #)

d)     Payment date (between today and April 15^th)

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4)      To mail in a the extension with a check payment

a)      Complete form 4868 http://www.irs.gov/pub/irs-pdf/f4868.pdf

b)      Make your check payable to “US Treasury”

c)      Mail your check and Form 4868 (voucher) to:

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Department of the Treasury

Internal Revenue Service Center

Fresno, CA  93888-0426

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HOW CAN YOU FILE A HAWAII EXTENSION…

All of the same rules regarding extensions apply to Hawaii as they do the IRS.   We recommend that you pay 1/3 of the federal extension amount.

1)     Complete form N-101A http://www6.hawaii.gov/tax/2011/n101a_f.pdf

2)     Make your check payable to “State Tax Collector”

3)     Mail your check and Form N-101A (voucher) to:

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Hawaii Department of Taxation

P.O. Box 1530

Honolulu, HI  96806-1530

Filipino Community Center
94-428 Mokuola St #301
Waipahu, HI 96797