Will the IRS Penalize You When You File Taxes Late & Do Not Owe Tax?

Federal Penalties

• There are late filing penalties from the IRS, but luckily, they're percentages of the amount you owe. If you file late, the IRS states you have to pay late filing fees of 5 percent of the amount you still owe on the return for every month you're late or partial month, up to five months. A quick calculation tells you this can be a maximum penalty of 25 percent. The government then charges you a half of a percent interest for each month after up to an additional 45 months. That means you could tag on anther 22.5 percent of expense. The good news is the amount you pay when you add the two numbers and multiply them times your balance, equals zero since 47.5 percent of nothing is still nothing. Since the penalty is a percent of what you owe, you simply won't owe.
  
  

Partnerships and S Corps

• Neither partnerships nor S-corporations makes money but pass any profit through to the owners' personal income. However, if a partnership or S-corporation files a tax form late, the cost after 2009 is $195 per month for up to 12 months per partner or shareholder unless they filed for an extension or showed reasonable cause.
  
  

State Tax

• If the IRS doesn't penalize you, there still could be a reason to get your taxes in on time. You may still owe state tax and have to pay a penalty on that amount. Most states use the adjusted gross income from your federal tax return to calculate their tax. If you didn't file a return, it's most likely because you didn't have all the information or simply forgot. In which case, there is probably no way you filed your state tax forms. You may owe a penalty on your state tax due.
  
  

File for an Extension

• If you know you're going to file late, regardless of whether you think you'll get a refund or not, file for an extension of time. The extension prevents a late filing fee in the event that you owe taxes for that year. Most states note your request for a federal extension and extend the time for the state tax forms without the need to file additional forms. Check with your state to make sure the federal form 4868, Application for Automatic Extension of Time, covers you for your state taxes, just in case your state has a late filing penalty.