April 15 is traditionally known as Tax Day, but many people don’t manage to submit their forms by then. If you found yourself procrastinating beyond that date and still have not filed a tax return or extension request, don’t despair. Here is what you should know about filing your taxes beyond the deadline.
Special Deadline Exceptions
First of all, if you are owed a refund you actually have three years to file your tax return. The government is happy to continue earning interest on your money past the due date, so there is no penalty for a late filing. If you owe money, it’s a different story. Payment deadlines may be extended for some citizens due to extenuating circumstances like natural disasters, overseas residency, and military service. Also, if your adjusted gross income is less than $73,000, you have until October 17 to file using the IRS’s Free File program.
Penalties for Missing the Deadline
If you owe taxes, here is what to do if you missed the tax deadline. Even if you can’t afford the entire amount, paying what you can may help you to ward off additional penalties. Interest accrues on any unpaid balance, compounding daily starting on April 18 until the balance is paid off. Interest rates are set each quarter for tax underpayments. In addition, there is a 5% penalty for late filing, assessed monthly for as long as the payment is late. For returns over 60 days late, there is a $435 minimum penalty and 25% maximum if you continue to defer paying what you owe. When you are being penalized and make a payment, the IRS applies the funds to the owed tax, then to assessed penalties, then to applicable interest.
If these penalties sound harsh and you believe you have a valid reason for being late with your payment, contact the IRS to plead your case. Explain why you were unable to file or pay in a timely manner. If you have a good explanation, such as a serious illness or some type of disaster, they may be willing to waive penalties or grant an extension.
If you have an established history of on-time payments, you may qualify for the “first-time penalty abatement” policy, which enables those who have filed and paid on time for three consecutive years to apply for a penalty waiver.
If You Can’t Pay
If you are experiencing financial hardship and find yourself unable to pay your taxes, there are some online payment options you can explore. Visit the IRS online site to apply for a payment plan that enables payment of owed taxes on a timed schedule. If these online payment plans don’t work, Form 9465 may be used to request an installment agreement.
Missing the tax filing deadline can create anxiety when you aren’t sure what to do. Give KDK Accountancy Corporation a call at (407) 759-5363 today. We can help you stay informed so that you’ll know what steps to take if you find yourself in this situation.