TAXES: Income tax penalties - May. 28, 2015
You could be slammed with them if you don't file on time or if you don't pay on time.
And let's not even discuss what you'll owe if the IRS concludes that you've "willfully" lied or neglected to pay.
Underpayment penalty: Most of us look to April 15 as the day we must pay our taxes. Actually, it's the day we need to finish paying our taxes for the previous tax year.
In fact, you could face an underpayment penalty if by the end of that tax year (Dec. 31) you haven't already paid either 90% of what you owe for that tax year or an amount equal to 100% of your tax liability for the prior year, whichever is smaller.
Failure-to-file penalty: If you owe money to the IRS, even if you can't pay what you owe, be sure to file your federal tax return by April 15 anyway, or at least file for an automatic extension by that date.
Otherwise, you will end up paying a failure-to-file penalty worth up to 25% of what you owe in the first place.
That penalty accrues quickly: 5% of the tax owed for every month you don't file for five months, capping out at 25%.
So say you owe $5,000 and you file your return eight-and-a-half months late. You'll owe an additional $1,125 in failure-to-file penalty.
Failure-to-pay penalty: If you don't pay what you owe by April 15, you'll be charged a failure-to-pay penalty that is also capped at 25% of what you owe.
But this penalty accrues more slowly than the late-filing penalty -- at just 0.5% a month for 50 months.
On top of that, interest on the past-due amount will also start to accrue.
Liar-liar-pants-on-fire penalty: The act of filing a false return can lead to a $5,000 penalty. And your participation in a scam of filing false returns may also lead to interest and penalties on any back taxes you might owe -- and possibly criminal prosecution.
Unreported foreign account penalties: If the IRS finds that you willfully failed to disclose overseas accounts, you could owe a penalty of 50% of your total balance or $100,000, whichever is greater, for every year you failed to disclose it up to 6 years.
CNNMoney (New York) May 28, 2015: 4:19 PM ET