Sergey Mironov | Moment | Getty Images Show
If you missed the April 18 tax deadline, you may cut back on penalties by filing your return promptly, according to the IRS. While it's too late to request an extension, you can still reduce monthly late fees. Failure to file costs 5% of unpaid taxes per month and late payments incur 0.5%, both capped at 25%. But you may qualify for one-time penalty relief with a history of on-time filings and payments, said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. More from Personal Finance: To be eligible, you can't have late filings or penalties from the three prior tax years, and you must be current on all returns and balances, or have an IRS arrangement to cover unpaid taxes. There's no penalty if you're getting a refund, said Sergio Garcia, a CFP and managing director of financial planning at BFS Advisory Group in Dallas. But the longer it takes to file, the more time you'll wait for your payment. You can still send your return through the IRS Free File service if your adjusted gross income is $73,000 or less for 2021, which applies to roughly 70% of taxpayers, or Free Fillable Forms until Oct. 20, if your AGI exceeds $73,000. Most states also require an income tax return, but several places have a due date past the federal deadline. For information, you can find your state's tax website here.  Although the federal tax deadline was April 18 for most Americans, some filers automatically have more time, including certain disaster victims, those serving in combat zones or U.S. citizens and resident aliens living abroad. "In some cases, the extension period could be anywhere from an automatic two-month extension to as long as an additional 180 days to file," said Jim Guarino, a Woburn, Massachusetts-based CFP and CPA at Baker Newman Noyes. Even if you're not required to file, it still may be beneficial to send a return, he said. It's the only way to collect a refund or refundable tax credits, such as the earned income tax credit or child tax credit. If you can't pay your billIf you're unable to cover your tax bill, you may have options, such as a long-term payment plan through the IRS known as an installment agreement. But you must be up to date on all returns, and can't owe more than $50,000 including tax, penalties and interest. Other options may include an offer in compromise for taxpayers with financial difficulties, allowing you to settle with the IRS for less than you owe, or "currently not collectible" status, where the agency temporarily stops trying to collect. But you must meet specific criteria for each one to qualify. Skip to content
What Happens if You File Your Taxes Late?
Share*This isn’t tax advice, consult a tax professional if you have any questions.* What are the Consequences of Filing Taxes Late?
The Internal Revenue Service (IRS), however, will not. That said, even in 2022, filers get a little bit of a break on the deadline. Due to when the weekend falls, and the observation of the Emancipation Day holiday in Washington, D.C. on April 15, you actually get until April 18 this year. And if you live in Maine or Massachusetts, you get another day on top of that, due to the observation of the Patriot’s Day holiday on April 18 in those two states. But that’s it. What Happens if You File or Pay Your Taxes Late?So what happens if you fail to make that deadline? Even by just a day? It depends on whether you file late or pay late – or both. It makes a difference. Taxes are owed by the deadline regardless of when you file, even if you get an extension. So if you file your taxes on time, but don’t pay the taxes that you owe on time, you’re accruing interest and penalties. That said, if the IRS owes you money, it won’t charge you a penalty – other than the fact that it has your money. If you file your taxes late, that delays when you can get your refund. You’re also missing out on other money you might be eligible to receive, such as the Earned Income Tax Credit (EITC) or a Premium Tax Credit. And here’s a nuance – if you hold a security clearance, failure to file your taxes – even if you’re owed a refund – could lose it. It’s true that if your income is low enough, you may not need to file a return. Penalties for Filing Taxes Late
“Ordinarily, the failure to file penalty is 5% of the tax owed for each month or part of a month that a tax return is late, up to five months, reduced by the failure to pay penalty amount for any month where both penalties apply,” the IRS writes. “If a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less.” How about paying taxes late? “The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached,” the IRS writes. That said, “If you negotiate an installment plan, the penalty rate is cut in half to 0.25%,” writes LifeHacker. “Eventually, the IRS will issue a notice that they intend to seize property to satisfy the bill, and ten days after that, the penalty rate increases to 1%. If you filed for an extension and missed that deadline, the penalty jumps to 5%.” There can be other types of penalties as well. On the other hand, if this is your first time, you get a certain amount of leeway. “Taxpayers who have a history of filing and paying on time often qualify for penalty relief,” the IRS writes. “A taxpayer will usually qualify if they have filed and paid timely for the past three years and meet other requirements.” What if you just don’t have the money? File your taxes anyway, so that at least you’re not accruing those penalties, and then see what you can work out with the IRS. “If you can’t pay the full amount of your taxes or penalty on time, pay what you can now and apply for a payment plan,” the organization notes. “You may reduce future penalties when you set up a payment plan.” How to File an Automatic Extension?Fortunately, there’s an easy way to avoid all those unpleasantness (aside from filing and paying your taxes on time in the first place): You can file an extension, form 4868. You can file it online, or on paper. And best of all, you don’t have to make any excuses about why you haven’t gotten around to filing your taxes. Just fill out the form and you get an automatic extension until October 17 (again, due to a weekend; normally it’s October 15). And that’s all the extension you get. You can’t file another extension in October and get another six months. You may also have additional options if you’re affected by a natural disaster, if you’re living outside the country, or serving in the military. Remember, filing the extension doesn’t change the fact that you still are supposed to pay the tax by April 18. How are you supposed to know how much you owe if you haven’t filed your taxes yet? Make your best guess, based on factors such as how much in taxes you had withheld. The closer you are, the smaller your penalties and interest will be. And as long as you get within 90% of what you owe, you won’t be charged a penalty at all. What Happens if You Don’t Pay Your Taxes at All?Remember that filing your taxes late delays when you receive your tax refund and payments such as the EITC, if any. If you wait three years or more before filing your taxes, you’ll lose the ability to receive that tax refund or EITC at all. In fact, if your taxes are late enough, the IRS will file a tax return for you, and then tell you how much it thinks you owe – but it won’t bother looking for factors such as exemptions and tax credits that you would normally be able to use to lower your tax bill. That’s called a substitute return. Also, if you’re self-employed and don’t file your taxes, the income you earned doesn’t get applied to your Social Security account, which has the effect of reducing your benefits later. In addition, if you apply for a mortgage or other type of loan, they will typically want to see your most recent tax returns. The IRS can also garnish your wages, and seize your property, such as refunds you’re owed, other government payments like Social Security that you would normally receive, bank accounts, your car, and even your house. It gets worse. If the IRS thinks you’re actually evading taxes, it can put you in jail. But the good news is, that doesn’t happen very often, according to the nonprofit organization Upsolve. “Lucky for you, the IRS rarely uses criminal prosecution against taxpayers,” it writes. “The IRS doesn’t have the resources to criminally prosecute every non-filer. So, when it uses the criminal laws against a taxpayer, they make sure it’s for a high-profile reason or there’s a large tax debt involved. In this way, the prosecution gets maximum coverage. Other taxpayers see these prosecutions unfold and it motivates them to file their taxes to avoid going to jail.” Finding a Tax ProfessionalYou don’t have to handle this yourself. Just like you may take your car to a mechanic to be serviced, or hire a lawn service to mow the grass, you can turn to professionals. The IRS has a lot more details on this. In fact, in some cases, they might even be free. The IRS offers a service called IRS Free File which, just like the name says, helps you file your taxes for free. If your adjusted gross income (AGI) is $73,000 or less, it hooks you up with an IRS partner; if your AGI is more than $73,000, it gives you the online equivalent of the basic 1040 form. It doesn’t give you any guidance, however. IRS Free File can be used only for the current tax year. Even if services are not free, you may find that the amount of money they save you in preparing your taxes might pay for itself, or even more. Remember, they’re professionals. These days, “professionals” can also mean computer software, running either on your own computer or in the cloud. You give the software all the information, and it knows what exemptions and deductions you’re eligible for. Just be sure that you update your software each year so it has the most current information. Other services let you come in and work with people in person. This time of year, they’re easy to spot; they’re the businesses featuring people dressed up as the Statue of Liberty holding a sign and dancing, or an inflatable character, in front of the office. Just bring in your shoebox of receipts and forms and they can help you out. If your taxes are complicated enough, such as if you’re self-employed or have a lot of investments, you may want to hire an accountant who can help you all year with aspects such as estimated taxes. If you hire a particular kind of accountant, a certified public accountant (CPA), they can even represent you to the IRS if you were to get audited. Hardly anybody really likes doing taxes – except for, maybe, accountants. But just like going to the dentist, it doesn’t get better by putting it off. And by the way, have you been to the dentist lately? Share This ArticleRelated PostsPage load linkWhat is the penalty for filing taxes late?Unpaid tax is the total tax required to be shown on your return minus amounts paid through withholding, estimated tax payments, and allowed refundable credits. -The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes.
What happens if you forget to file taxes?
What happens if I am late paying my taxes?
What is the penalty for filing late?There is no penalty for filing late if you’re owed a refund, but there is if you owe taxes. The easiest way to avoid this is to file for an extension by the time the deadline arrives. The Failure To File Penalty depends on how late you file and how much you owe in taxes.
What happens if you file tax returns late?We calculate the Failure to File Penalty in this way: The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes.
What happens if I miss tax deadline?Generally, if you miss the filing due date or fail to file by the tax extension deadline, the IRS may charge a failure-to-file penalty. The penalty is based on your unpaid taxes, and the IRS charges 5% of your taxes due for every month or partial month your tax return is not filed.
Do you lose your tax refund if you file late?Losing your refund.
There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether.
What happens if you file taxes late 2022?Those who miss the June 14 cutoff will normally face a minimum late-filing penalty, also known as a failure-to-file penalty. By law, If the return is more than 60 days late, the minimum penalty is either $435 or 100 percent of the unpaid tax, whichever is less.
|
What happens when you file late taxes
Related Posts
Copyright © 2024 themosti Inc.
