The minimum penalty for being 60 days late filing your federal income tax returns increases from $215 to $435 for 2020 returns.
Years ago, if there was no tax due, there was no penalty for filing your tax returns late. The late filing penalty was 5% of the tax, and when tax is zero so was the penalty.
The old rule was that the penalty for late filing your income tax returns was 5% of the additional taxes owed amount for every month (or fraction thereof) your return is late, up to a maximum of 25%. This still holds true today. However,now there is an additional minimum penalty that applies if you file more than 60 days late. The minimum penalty is now $435 or 100% of your unpaid tax, whichever is less. If you owe a lot of tax the sky is the limit!
The good news is that the IRS may waive the penalty if you can show reasonable cause.
- Mark S Gleason CPA