What are the penalties for late-filing tax returns?

The penalty for late-filing tax returns is based on the amount of tax due and the duration of the delay in filing. A penalty of 5% per month up to a maximum of 25% of the unpaid tax is assessed, which reflects the IRS's goal of encouraging timely compliance with tax filing obligations. This means that if a taxpayer files their return late but still owes taxes, they will incur a 5% penalty for each month the return is late, until they reach the cap of 25%.

For example, if someone owes $1,000 in taxes and files their return three months late, they would incur a $150 penalty (5% of $1,000 for each of the three months). This penalty structure increases the financial repercussions of failing to file on time, emphasizing the importance of meeting deadlines to avoid excessive penalties.

In contrast, other options provided do not accurately represent the IRS guidelines. It's crucial for taxpayers to be aware of these penalties so they can take appropriate actions to avoid or mitigate additional financial burdens on their tax obligations.