What if You Haven’t Filed Your Taxes Yet? Make a Crucial Deed Here!
Many of us make resolutions to do our taxes early each year, only to find ourselves on the verge of missing the deadline and being unable to file our returns. If that’s how you’re feeling right now, you’re certainly not alone. You don’t want to be late, but you also don’t want to be late.
To be fair, if the IRS owes you money, there is no penalty for filing your taxes late. In that situation, being late will cause your refund to be delayed, but since it is your loss, not the IRS’s, you will not be penalized for missing the deadline.
When you owe money to the IRS, filing a tax return late becomes a major issue. And if you believe you’re in that circumstance, there’s one critical move you’ll need to undertake as quickly as possible.
Request more time
If you don’t think you’ll be able to file your tax return by April 18, which is this year’s deadline, you should request an extension from the IRS as soon as possible. To do so, you’ll need to fill out Form 4868, which may be done online.
Once you’ve submitted that paperwork, you’ll have an extra six months to finish your tax return. You are not required to wait for the IRS to approve your request.
In fact, you don’t even need a good reason to request more time from the IRS. You’ll also observe that Form 4868 does not ask for one.
When is it a bad idea to be late with your taxes?
If you owe the IRS money from 2021 and don’t file your tax return by April 18, you’ll face a steep penalty for not filing on time. If your return is late for a month or part of a month, you will be charged a penalty of 5% of your tax amount (up to 25 percent in total).
Assume you owe the IRS $3,000 as of 2021. If you’re a month late with your tax return, you’ll be charged $150 if you don’t have an extension. Ouch.
To be clear, if you don’t pay your tax bill by April 18, you’ll still be charged interest and penalties. You won’t receive extra time to pay the IRS if you get a tax extension; you’ll just get more time to finish your return.
However, the benefit of that extension is that you’ll escape the 5% penalty that applies when you’re late with a return and owe money.
For example, if you owe the IRS money on a tax bill and don’t pay it by the filing deadline but file your return on time or seek an extension, you’ll be charged a penalty of 0.5 percent of your unpaid total per month or partial month you’re late (up to 25 percent in total).
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On a monthly basis, that’s one-tenth of the penalty for missing a deadline.
Obviously, if at all feasible, it is preferable to avoid all fines. The failure-to-file penalty, on the other hand, is the one you really want to avoid because it might cost you the most money.
Make plans for the coming year
There’s no need to beat yourself up if you’re behind on filing your taxes. At the same time, consider this as a learning opportunity for next year.
It’s a good idea to try to do your taxes on time, even if you don’t owe any money because having to wait longer for your tax refund to arrive in your bank account only affects you.
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