I worked in the US until May 2012, then I moved abroad. I am a US citizen. I did not file my taxes for the 2012 tax year. What are the penalties for failing to file on time and pay my tax liability?

ANSWER

The BIDaWIZ Team's Answer:

You should certainly file your 2012 tax return to avoid interest and penalties for not filing on time. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of 1/2 of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If both the 5 percent failure-to-file penalty and the 1/2 percent failure-to-pay penalties apply in any month, the maximum penalty that you'll pay for both is 5 percent. The key here is to file as soon as possible. Unfortunately, the deadline to file electronically of October 15, 2013 for the 2012 tax year has passed. You will need to have the return physically sent to the IRS. Also, did you earn income abroad? If so, you can file Form 1116 to claim a tax credit on foreign taxes paid.