If you can't cover your taxes in full, you should still file your return by April 15 and pay what you can, according to the IRS.While you will still accrue interest and late-payment penalties after April 15, the failure-to-pay penalty is cut in half under an installment agreement.That's the"biggest misconception" about an extension, according to Josh Youngblood, an enrolled agent and owner of The Youngblood Group, a Dallas-based tax firm.
Here's why:"Your interest and penalties are compounding quicker" if you owe taxes and don't file, said Eric Bronnenkant, certified financial planner and head of tax at Betterment, a digital investment adviser. is 5% of your unpaid taxes per month or partial month, capped at 25% of your balance due. By comparison, the, or the failure-to-pay penalty, is 0.5% per month or partial month, with a maximum fee of 25% of unpaid taxes.
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