60% of Millennials Don’t Have $500 to Cover Their Tax Bill

via CNBC:

  • Six out of 10 people in this age cohort don’t have $500 to cover a tax surprise, according to a survey from Varo.
  • You have until April 15 to pay your 2018 taxes, or else you’ll face penalties and interest on your balance.
  • Taxpayers can apply for a six-month extension to submit their 2018 return, but they must pay what owe today.

Drop the avocado toast. Many millennials can barely pay their tax bill.

Six out of 10 people in this age cohort don’t have $500 set aside to cover what they owe the IRS for tax year 2018, according to a recent survey from Varo, an online savings bank.

The company polled 1,200 U.S. consumers between the ages of 18 and 75 in December 2018.

Though the IRS is happy to give you more time to send in your tax return if you ask for a six-month extension, the taxman is less forgiving when it comes to paying what you owe.

You have until midnight on April 15 to pay anhy money owed for 2018, or else you risk penalties and interest.

“The best thing you can do is pay your taxes in full,” said Neal Stern, CPA and member of the American Institute of CPAs’ Financial Literacy Commission.

If you fail to pay the taxes in full by April 15, the IRS will charge you a penalty of 0.5 percent of the taxes owed each month, up to a maximum of 25 percent of the balance.

Failing to file a return comes with an even heftier penalty. In this case, the IRS will charge you 5 percent of the taxes owed for each month you’re late, up to a maximum of 25 percent.

“The worst option is failing to file your tax returns because you think you will not be able to pay them,” Stern said. In this case, it’s better to ask for an extension to submit your return.

 

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