File even if you can’t pay
According to early reports, more people are finding out that they owe the IRS money than have in recent years as a result of the tax changes and revised withholding rules. If you find yourself in a situation where you owe the IRS more money than you can pay by the tax deadline, file your return anyway.
Here’s why. The IRS penalty for failure to file is 10 times worse than the penalty for non-payment. If you owe the IRS money, you’ll be assessed a penalty of 0.5% of the unpaid balance per month or partial month. For failure to file, the monthly penalty jumps to 5% of the amount owed.
So even if you can’t pay, it’s important to file your tax return (or file an extension) by the tax deadline. Send the IRS whatever you can afford to pay, even if it’s not your entire tax bill. Despite its reputation, the IRS is great about working with taxpayers who are trying to pay their taxes.
