Implications of late filing of Income tax?

With so much going on in our life, it’s not always easy to file our taxes on time. So what is the tax implication of filing late?

Before I go into the details, keep in mind that there’s a distinct difference between paying your taxes late and filing your taxes late – a difference that may have a profound effect on your cash situation.

If you file your taxes on time but don’t have the cash to pay the balance owing, you’ll be subject to interest.

However, if you miss the filing deadline and file late, you’ll automatically be subject to a late filing penalty in addition to any interest on the tax balance owing.

It’s this late filing penalty that can make filing your taxes late a real nightmare.

Let’s take a look at what would happen if you filed a few common tax returns one month late with a 20,000 balance outstanding.