It's important to file your return by the due date.

Do you know what can happen if you don't file your taxes or pay on time?

Two words -- penalties and interest. You can avoid them both by filing and paying on time.

Even if you owe tax and can't pay in full, it's better to file on time and pay as much as you can.

That will eliminate the failure-to-file penalty and help with interest on the unpaid balance.

The late-filing penalty starts at 5% for each month the tax return is late, up to a maximum penalty of 25%. t's based on the amount of tax you owe.

So, if it looks like you're not going to be able to file your return by the due date, file an extension. That may reduce or even eliminate the penalty.

Be mindful that filing an extension does not extend the payment due date. You should still try to pay as much as you can by the original due date to minimize the late-payment penalty.

The failure-to-pay penalty is also based on the amount of tax you owe.

It is usually 1/2 of 1% for each month the tax is not paid.

The late-payment penalty is calculated from the original payment deadline -- for a Form 1040, until the balance due is paid in full. It can't exceed 25% of the total amount due.

And when failure to file and failure to pay penalties apply at the same time, the maximum combined penalties for the first five months are 25%.

More information on penalties may be found at IRS.gov/penalties.

Interest is calculated based on how much tax you owe and for each day it's not paid in full.

Interest rates are determined every three months and can vary, based on type of tax – or example, individual or business-tax liabilities More information on Current interest rates and interest information may be found on IRS.gov.The IRS can abate penalties for filing and paying late if there is reasonable cause.

Generally, interest may not be abated and continue to accrue until all assessed tax, penalties, and interest are paid in full. The law does provide some exceptions for allowing abatement or suspension of interest. Information about abatement is also on IRS.gov.

If you get a bill from the IRS, you are expected to promptly pay the tax owed, including any penalties and interest. You can search “Notice 746” on IRS.gov, which may be helpful in explaining the penalties and interest included with your bill.

It may be in your best interest to use a credit card or get a loan to pay the bill in full, rather than make installment payments to the IRS. The interest rate on a credit card or bank loan is often lower than the combination of interest and penalties imposed by the IRS.

For more information about payment options, including installment and online payment agreements, as well as to pay your taxes online, visit IRS.gov.

Look for Publication 594, The IRS Collection Process, and Publication 966, Electronic Choices to Pay All Your Federal Taxes.