Say it’s April 19, 2024, and you didn’t e-file or have your tax return postmarked by midnight on April 15th. According to the IRS, you will have overlooked the tax deadline and be considered late in filing.
There are many reasons why a taxpayer may miss a tax deadline and fall behind on their taxes.
Falling behind could be due to unexpected circumstances, such as a medical emergency. We’re only human and it happens to the best of us.
Hindsight is always 20/20, and yes, you should have filed an extension, but you didn’t. So, what should you do now?
Stay calm, find out what you need to do, and carry on. We’re here to help.
We will go over what happens if you overlook the tax deadline, what the penalties are for filing late, and what you should do if filing beyond the time limit.
What should I do if I know I can’t file my taxes by the deadline?
First, let’s revert back to the ideal scenario.
If you know before the deadline that you can’t file your tax return on time, what should you do?
How to file an extension for your 2023 tax return
If you know you can’t or aren’t going to file a tax return by April 15th, then you should file an extension.
An extension gives you an additional 6 months to file.
This means that you now have until October 15th of 2024 to file your tax return as long as the extension is filed. Remember that your extension must be filed by the April 15th deadline.
If you owe anything on your taxes, then you must include the estimated amount of money owed using Form 1040-ES.
If you make the estimated payment that is at least 90% of what you owe, you won’t be subject to any penalties or late fees, as long as you file and pay the unpaid taxes by October 15th.
What happens if you miss the tax filing deadline and don’t file a tax extension?
There are two scenarios that play out if you overlook the tax deadline and don’t file a tax extension.
1. You missed the tax deadline but are expecting a tax refund
If the odds are in Uncle Sam’s favor, then there’s nothing to worry about.
If you overlook the tax deadline and are expecting a tax refund, then there are no penalties for filing your taxes late.
In fact, you have up to 3 years to file before losing your refund.
2. You missed the tax deadline but expect to owe taxes
If you didn’t file your tax return on time, didn’t file a tax extension, and owe taxes, then this is when you need to take action.
You need to file a tax return as quickly as possible because, in the meantime, late penalties for both filing and payment are adding up.
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What are the penalties and fees for filing your taxes late?
You basically get hit from all sides from failing to file taxes or filing late.
1. Failure-to-File Penalty
The Failure-to-File Penalty is 5% of the amount you owe each month that your tax return is late.
This carries a maximum penalty of 25%. If the return is over 60 days late, the penalty is a minimum of $435 or the balance due, whichever is less.
2. Failure-to-Pay Penalty
The Failure-to-Pay Penalty is 0.5% per month of taxes not paid by the deadline. This also has a maximum penalty of 25% on unpaid taxes.
3. Late fee interest
Interest is also charged on late taxes. This late fee interest is calculated by adding an additional 3% to the short-term federal interest rate.
If you didn’t file your tax return on time and taxes are owed, all of these fees and penalties are why you want to file your return as quickly as possible.
The late payment and late filing penalties and interest on unpaid taxes can add up quickly.
What can you do if you owe your taxes but can’t pay them?
If you’re going to owe the government on your taxes, but can’t afford to pay them, there are still some options.
The IRS does offer payment plans.
1. Short-term payment plan
A short-term payment plan is an option if you can pay off your tax debt in 180 days or less. Penalties and interest will still accrue until the debt is paid off.
2. Long-term payment plan
If you need more than 180 days to pay off your tax debt, then you may be eligible for a long-term payment plan.
This plan has a fee for automatic monthly bank payments through direct debit or non-direct debit payments.
3. Other options
A 0% intro APR credit card is another option for paying your taxes as long as you pay it off before the intro period expires.
A debt consolidation loan may be another way to go. Just make sure that the interest rate isn’t higher than what the IRS charges.
If you owe taxes, pay as much as you can to reduce the amount you will have to pay in penalties and fees.
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Frequently asked questions
What are the federal tax return filing deadlines for the tax year 2023?
The federal tax return filing deadline for the tax year 2023 is April 15, 2024. The tax return filing deadline with an extension is October 15, 2024.
What happens to your tax refund if you file late?
As long as you file within 3 years of when your tax return is due, your tax refund will not be lost.
Can I use my credit card to pay my taxes?
Yes, credit cards can be used to pay your taxes. You are better off with a 0% intro APR credit card where you can pay the balance by the expiration date of the offer.
If you miss the tax deadline, file as quickly as possible. If you owe taxes, pay as much as you’re able. That way, you can avoid paying the maximum in penalties and fees.
Also, don’t submit your tax returns twice as it won’t make the process faster and can create more complications.
Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS.
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