Hey everyone, I’m Bette Hochberger, CPA, CGMA. Filing taxes on time is crucial, but life can get hectic, and deadlines can slip by. If you’re wondering about the consequences of filing your taxes late, you’re not alone. Let’s get into what penalties you might face for tardy tax filing and how to navigate the situation.
Understanding the Deadline
The deadline for filing your federal income tax return is typically April 15th. However, if that date falls on a weekend or holiday, the deadline is extended to the next business day. It’s essential to mark this date on your calendar and prioritize meeting it to avoid potential penalties.
Late Filing Penalty
If you miss the tax filing deadline, the IRS imposes a penalty for late filing. This penalty accrues at a rate of 5% of your unpaid taxes for each month or part of a month that your return is late, up to a maximum of 25% of your unpaid taxes. The penalty starts accruing the day after the filing deadline and continues until you file your return or reach the maximum penalty amount.
Minimum Penalty
Even if you owe no taxes or are due a refund, you could still face a late filing penalty if you fail to submit your return on time. The minimum penalty for filing late is the lesser of $435 or 100% of the unpaid tax. This means that if you owe taxes, the penalty could be higher, but it won’t exceed the maximum amount.
Reasonable Cause Exception
In some cases, the IRS may waive the late filing penalty if you can demonstrate reasonable cause for filing late. Examples of reasonable cause include serious illness, natural disasters, or unavoidable circumstances beyond your control. If you believe you have a valid reason for filing late, you can attach a statement to your tax return explaining the circumstances.
Extension of Time
If you’re unable to file your tax return by the deadline, you can request an extension of time to file. The IRS grants an automatic extension of six months, moving the deadline to October 15th. However, it’s important to note that an extension of time to file does not grant an extension of time to pay any taxes owed. You must estimate and pay any taxes due by the original filing deadline to avoid late payment penalties and interest.
Filing taxes late can result in penalties and additional stress, but it’s essential to address the situation promptly. If you’ve missed the deadline, file your return as soon as possible to minimize the penalties. Remember to include any payments you owe or request a payment plan if you’re unable to pay the full amount upfront.
Need help filing? Schedule a meeting with us, we’d be happy to help.
I’ll see you all next time!
