What happens if I pay my taxes a week late?

The tax payment deadline is April 15th. And many people who file their taxes will receive their refunds a few weeks later.

But what happens if you’re on the other side and end up owing money to the IRS? Ideally, you’ll want to pay your balance in full by April 15th. This is because you may be penalized if you are late. However, if you file your tax return on time and pay your tax bill a week late, the consequences may not be as severe.

You will receive a penalty, but the damage may be minor.

When you owe the IRS, filing your taxes late can result in steep penalties. A separate penalty will also be assessed if actual taxes are paid late.

However, if you do not file your tax return on time, the penalty is 5% of your unpaid tax bill for each month or part of a month you are late, up to a maximum of 25%. The penalty for late tax payments is as little as 0.5% of your unpaid tax bill for each month, or up to 25% for any part of the month your return is late.

Ultimately, both fines are maximized to the same amount. However, while the penalties for late tax returns are very harsh in the first place, the penalties for late tax returns are less severe.

So let’s say you file your tax return by April 15th and find that you owe $400. But maybe you don’t have $400 in your checking account. Maybe you’ll have to wait another week to get your money, and then send it to the IRS from there.

In this case, you will not be subject to a failure-to-file penalty because you filed your return on time. And because you pay a week late, you’ll only be penalized 0.5% on your $400 tax debt. In this case, we’re talking about losing $2. That’s probably not an amount you’ll cry about.

And for your information, if you are late with your tax payment, interest will be charged in addition to a 0.5% penalty. But if you turn in $400 a week later, the interest will be negligible.

Of course, if you owe the IRS thousands of dollars, the financial hit could be much greater. If you owe $40,000 and pay that bill a week late, you’ll be fined $200. But the point is, as long as you actually file your tax return on time and your tax bill isn’t that big, paying your taxes a week late may not be the end of the world.

You may be given more time to pay if you need to, but you will still be penalized.

Let’s say this tax season, instead of paying the IRS $400, you run the numbers through your tax software program and find out that you owe $4,000. That’s an amount you can’t come up with in a week. It may take months to pay that bill.

In this case, what you want to do is contact the IRS and set up a payment plan. You will still be subject to the aforementioned penalties and interest, but you will be considered to have satisfied your tax obligation.

Now you might be thinking, “Why does it matter? I’m still at a disadvantage, so why not just send the money when I can instead of setting up a payment plan?”

However, the reason for starting a payment plan is to show the IRS that you are not paying off your tax debt. If you owe money and aren’t making an effort to pay, the IRS may eventually try to garnish your wages for repayment. If you don’t want that to happen, continuing your payment plan is your best option.

Paying your taxes a week late might not be such a big deal. But if you’re in debt, the sooner you pay it off, the better.

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