Click here to listen to other IRS Back Tax Help episodes.<\/a><\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0I have to say I am fired up to be here today. <\/strong>It’s kind of a nice time of the year.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yay<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0You know it’s post, post craziness, post crazy filing deadline. <\/strong>The funny thing is I think we are actually busier at the office now than we were before the 18th of April.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0That’s because\u00a0it’s past\u00a0the 15th you know.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah\u00a0it might be people are I don’t know, still a great time of the year. <\/strong>The weather is still really nice and it’s always fun to talk about IRS solutions.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0That’s what you do that’s your forte, certainly not mine, but I’m always having fun on the show with you. <\/strong>But our topic for today’s show is Things you should know about Filing Late and Paying Penalties. <\/strong>That’s pretty right no time.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah new flash if you didn’t file an extension and we are live today, it’s April 28th.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0It must be we said it at the same time without looking.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah, I think it’s the 28th.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah, it is.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0And if you have not filed or filed an extension then you have a significant well maybe not a significant problem but you have a problem of sorts because you are going to pay some kind of penalty. <\/strong>And today we are going to talk about the different kinds of penalties and how to avoid them and you know what you should do if you find yourself in that situation.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Do they get\u00a0penalty\u00a0even if there’s a refund for not filing on time?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0See it’s just not fair having a co-host who’s the co-host of the show this long you know the answer to that don’t you?<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah but the person listening might not.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Ok so you are right. <\/strong>\u00a0There\u00a0is in fact\u00a0no penalty if you have a refund coming. <\/strong>There is kind of a penalty and the penalty…..<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0What? I’ve never heard this spin on it.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0 There is kind of a penalty and the sort of penalty is so if you file let\u2019s say you file a return that has a refund coming, you know you are going to get 1000 bucks back you just kind of have that figured out, it happens every single year this year is no different than any other year. <\/strong>If you file that return late without filing an extension the IRS will not impose a penalty or interest upon you because penalties and interest are calculated based on amount of tax due, right, but the penalty is that there\u00a0is\u00a0only 3 years to file that refund return, if you actually file it more than 3 years late then you do not get your refund, you do not get credit for the refund, you don’t get an offset as to other money you may owe, you just don’t pass go and you don’t collect 200 dollars.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0They don’t actually ding you? \u00a0I don’t remember what is the penalty if you file late is it a dollar amount or a percentage of what you owe? \u00a0It’s percentage isn’t it?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Let’s talk about that right now.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Ok let’s do it.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0The penalty for filing late if you, if you file more than 60 days after the due date or the extension due date if you filed one on time, the minimum payment is $205 or if you owe less than $205 it’s a 100% of the unpaid tax.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Some surprise they never like if you get a refund they don’t tack on that $205. Really surprised they haven’t done that yet.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0It’s kind of surprising to me too after doing this kind of work for almost 20 years it’s always kind of made me scratch my head because…..<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0So instead of getting a $1000 refund you get like 800 bucks or 7….<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah, I’m not really sure what the, I guess the rationale behind not putting a penalty there is probably there’s a lot of people they don’t want to file those refund returns right?<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0That makes sense.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Because if they didn’t you know lots of people don’t file refund returns I know cause I have talked to lots of them. <\/strong>I’ve talked to people who have had a refund coming for 20 years and they tell me I’m a non-filer, I say why?<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah I don’t get that.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0And they say something like well I don’t want to be in the system you know in the system and you are like but you are a…..<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0You are a W-2 employee, you are gonna get money back.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0You get a W-2 let me explain, you are in the system so I don’t really get that but…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Let me explain to you they already know who you are.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0You have a number like everybody else. <\/strong>Speaking of numbers you know I have a couple of kids and I was in the delivery room when they were born you know years ago…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Oh God I hope so poor Heather.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0And well you know in the generation before me the guy just kind of sat out in the waiting room and like had cigars, like pink or blue cigars right…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0That’s right.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0But in my generation we are expected to be in there and it was a beautiful lovely thing but the oddest thing\u00a0was they won’t let\u00a0you out of the hospital without having a number assigned to your kid.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yes.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Bizarre and I think that’s only been in about maybe the past 15 years or so.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0It’s kind of good though when you think about the baby switching thing.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Ok, we are not to the point where they chip you or tattoo that number on you right?<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0I’m just saying. <\/strong>No,\u00a0but they do check you like every single time they come into the room.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah that’s true. <\/strong>So but I met a couple one time it’s been a long time it’s been about 10 years ago that now but they had a religious objection to Social Security numbers and so consequently and they had a number of kids they were one of these religious sects that\u00a0has\u00a0lots of kids, almost like an\u00a0Amish or Mennonite kind of situation..<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0And no Social Security numbers for any of them?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0And they had no Social Security numbers for any of the kids and I could not actually, this was back when I wasn’t quite as experienced as I am now, I actually couldn’t figure out how to solve the problem…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0That’s hard.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0You know we had this religious objection and it just didn’t fit in like the box on how to solve the case.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0I don’t, to be honest with you, hopeful if there is somebody out there that can solve that problem please call us 888-404-1010 \u00a0because someone that we know we think he was like stolen from a hospital and he’s never had a Social Security number.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Really.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Always working under the table.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Like we mutually know or…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0No it’s somebody my husband knows.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Ok, Ok that is interesting. <\/strong>Yeah I have also had another gentleman who had a Social Security number he was a little bit older than I am so he was a Vietnam Vet and when he was drafted the I think it was the Navy actually assigned him an incorrect Social Security number like they said no that’s your number and he is like but that is not my Social Security number and\u00a0they\u00a0just kind of dictated well you are drafted that’s your number…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0There should be like an attorney like you that specializes in helping IRS issues there should be an attorney that does nothing but help fix Social Security issues.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0I actually solved his problem and I can’t remember how but we did get it worked out I think it did default to the non-DOD Social Security number that was correct.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah but was that pre or after 9\/11?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Oh\u00a0it was pre 9\/11 actually.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Cause\u00a0see\u00a0that’s changed a lot.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah\u00a0the whole security apparatus in the United States, the Patriot Act all that has really changed.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0 Because it’s not like you can just, Oh I never got one let’s file it’s not that easy.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah it’s funny you know I was of the generation that I went down to the Social Security Office probably on my bicycle and applied for a card when I was like 14 years old and I got the number and for years and years and years I carried the little card around in my wallet which is really bad practice don’t do\u00a0that people.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah don’t do that.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Because but back then that was pre-identity theft.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0But for your kids didn’t you get them like right away like?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah in the hospital and the funny thing is that you need those for the tax returns and what not but their cards are actually in a safe cause I can’t remember what their numbers are and I kind of don’t want to think of them as a number you know.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Yeah I never thought about it like that it makes sense to me.<\/p>\nPAT GEORGE:\u00a0 <\/strong>\u00a0Back then you only had to remember like 5 numbers for your card wasn’t it?<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0No Pat that was your generation you are mixing it up.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0No Pat’s of the 2 number the 2 digit generation.<\/p>\nPAT GEORGE:\u00a0 <\/strong>\u00a0No mines A or B. <\/strong>AB1, AB3.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0They are random numbers.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0So let’s get back to the penalty thing as fascinating as my stories are you know if you didn’t file a return you know on the 18th this year than 2 penalties could actually apply and 1 is for filing late and the other one could be potentially paying late. That’s one of the reasons we were talking about the refund here if you have a refund you are not going to have a late payment penalty and you are actually not going to have a late filing penalty either but…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0They wouldn’t want to pay a percentage\u00a0on\u00a0money they owe you because then they would actually owe you a little bit more.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah I think the longer we talk about this and why there is not a penalty for late filing of a refund return it’s got to be that they don’t want to incentivize those millions of people who don’t file their refund returns and therefore never get their refunds because our Government is essentially broke and they probably need those you know that’s probably hundreds of millions of dollars at a bare minimum.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0It’s probably one of those things that slide under the radar and nobody talks about it except for us so you know.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah, tax geeks.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Well that’s not me I talk about it with you, you are the tax geek but you know. <\/strong>But you are good at\u00a0it you\u00a0are good at the Attorney IRS stuff.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0So…<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Penalty so the penalty for late filing?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0The penalty for late filing I said was $205 or if it’s less than $205 at a minimum then it’s a 100% of the unpaid tax so if you \u00a0filed a return and you owed $117 hypothetically then your penalty is not $205 it’s $117 which is kind of steep if \u00a0you look at it in that perspective but if you only owe $117 on a tax return you should probably be doing a happy dance because that is really not bad in the overall scheme of what I see every day anyway.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0So I’m looking at our outline and it says that if you owe less than $205 a hundred percent of the unpaid tax I think you should elaborate on that.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0That is what I just said so if you filed a tax return and you owed $117 of tax then your penalty would be $117.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0No, no, no but if it was over $205 let’s say you owe a thousand…<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah if you owe over $205 so if you owe a thousand the penalty can be as much as 5% of the unpaid taxes each month up to a maximum of 25% so that is really steep.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0And is there a grace period or anything for that like a\u00a060 day\u00a0rule or anything extra we should throw in that after the break.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0No any portion of any month counts as another month.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Gotcha. <\/strong>Well, you are listening to the IRS Solution Attorney show if you have not filed those tax returns and you are late and you have a question you can call us 888-404-1010 you should already have that saved into your phone but it’s 888-404-1010 we will be back in a minute.<\/p>\n <\/p>\n
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KATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Well\u00a0thanks\u00a0Pat George for keeping the music real and right on time for\u00a0topic\u00a0of the show.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0I just about let loose.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Started singing?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah absolutely. <\/strong>I forgot I wasn’t in the shower.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Oh no I don’t know if that would be pretty. <\/strong><\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0That would be very bad actually.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0You are listening to the IRS Solution Attorney show with Mr. Darrin T. Mish that’s him obviously.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0That’s me.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0I’m your co-host Katrina Madewell and today’s topic is things you should know if you file late or you have to pay penalties.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0On your tax returns. <\/strong>So\u00a0let\u2019s\u00a0recap real quick what we talked about if you actually file late or you don’t do an extension and so you don’t have any more time then there’s 2 penalties that can apply one if for filing late and \u00a0one is for paying late. <\/strong>Common\u00a0misperception is that if you get an extension until October 15th that you have until October 15th to pay your taxes, negative that is not correct. You are actually supposed to calculate and pay your taxes by the deadline which is usually April 15th but this year was April 18th and it’s always been kind of counter intuitive to me right so….<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0I don’t think people realize there\u00a0is\u00a02 penalties\u00a0that’s\u00a0the thing, you get one penalty for not filing on time and you get another one if you owe money.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0And we kind of glossed over this because we ran out of time in the last segment and that is that the payment for late filing is it can be as much as 5% of your unpaid taxes each month up to a maximum of 25% and a month is a fraction of a month so if it’s 32 days that’s not 1 month that’s 2 months.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0What?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah so that’s 2 months so any fraction of a month counts as another month so.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0Are you serious?<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yes\u00a0so what \u00a0see typically when we have non-filers, my\u00a0bread\u00a0and butter, people that just don’t file tax returns for 6,7,10, 20, 50 years in some cases. <\/strong>We get their last 6 years of tax returns prepared and filed but what we typically see is that taxes the tax balances with penalties and interest accruing actually double every 6 1\/2 or 7 years it depends on you know the interest rates at the time and the economy and things like that but pretty much that’s the general rule.<\/p>\nKATRINA MADEWELL:\u00a0 <\/strong>\u00a0\u00a0So that 1000 bucks after 6 years is 2 grand.<\/p>\nDARRIN T. MISH:\u00a0 <\/strong>\u00a0\u00a0Yeah, well and that’s not all that’s scary but when you owe 100 grand and now its 200 grand now we are talking right I mean this is a lot different situation.<\/p>\n
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