Tick- tock, time is almost up on that six- month extension you filed back in April for your 2011 individual income tax return.
If you fail to file your return by October 15th, unless a disaster- relief exception or you have a valid reason, you may be charged penalities and interest.
The penalty for filing your return by October 15, 2012, is 5% of the amount of yolur unpaid tax, per month, up to a maximum of 25%. After 60 days, a minimum penalty of $135 or 100% of the tax due applies.
In addition, a lte payment penalty of 1/2 of 1% of the tax may apply for each month or part of a month that you fail to pay the tax due. The two penalities interact and can be combined.
You will also have to pay interest on the tax due. During 2012, the rate on underpayment of tax has been 3%. The interest is compound daily and can be charged on penalities.
Since the penalty and interest are based on unpaid tax, neither appllies when you return shows a zero balance. Filing a return is still a good idea. Limiting the IRS to a three- year period for assessing tax begins when you file.
Give us a call if you have any questions or need assistance.