What happens when you file your tax returns LATE!
Running a business is time-consuming but you can’t forget about your tax obligations, if you do there can be major consequences.
The IRS closes the electronic filing portal when tax season ends, meaning that you’ll have to file on paper. Paper filing isn’t just annoying, it increases your odds of being audited – especially when done out of season.
If you file late you’ll be on the hook for the failure to file penalty, which is 5% of your tax balance, maxing out at 25% of the balance plus interest. If you also fail to pay on time the IRS will charge you the failure to pay penalty as well, which is 0.5% of the balance per month, also up to 25% of the balance.
Under certain circumstances, the IRS will file a substitute return on your behalf. This substitute return will include only 1099 income without any deductions. For example, If you make $100k but spent $90k in deductions, IRS will assess your tax balance without the deductions.