Filing taxes can feel overwhelming, and for some, deadlines can slip through the cracks. If you find yourself in a situation where you’ve missed the tax filing deadline, it’s essential to understand the consequences and know what steps to take. Hi, I’m Bette Hochberger, CPA, CGMA, and in today’s #TaxTipTuesday, I’ll break down what happens if you file your taxes late and the actions you can take to remedy the situation.
Consequences of Filing Late
Penalties and Interest
One of the most immediate consequences of filing your taxes late is incurring penalties. The IRS typically imposes a failure-to-file penalty, which is usually 5% of the unpaid tax for each month your return is late, up to a maximum of 25%. Additionally, interest will accrue on any unpaid taxes from the due date until the tax is paid in full. This combination can significantly increase the amount you owe.
Loss of Refund
If you are expecting a refund but file late, you may lose out on your refund altogether. The IRS generally requires you to file your return within three years of the original due date to claim any refund. If you miss this window, your refund could be forfeited.
Impact on Future Filings
Filing late can also affect your future tax filings. The IRS may flag your account for late submissions, increasing scrutiny on your future returns. This can lead to audits or additional questions regarding your tax history.
What to Do If You File Late
File ASAP!
The first step you should take if you realize you’ve missed the deadline is to file your tax return as soon as you can. Even if you can’t pay the full amount owed, submitting your return will help minimize penalties. The longer you wait, the more penalties and interest you’ll accrue.
Consider Filing for an Extension
If you anticipate needing more time in the future, consider filing for an extension before the due date. While this doesn’t extend the time to pay, it does provide extra time to file your return. Just remember, you’ll still need to pay any taxes owed by the original deadline to avoid penalties.
Pay What You Can
If you cannot pay your tax bill in full, pay as much as you can to reduce the penalties and interest. The IRS offers payment plans that allow you to pay your tax debt over time. Be sure to communicate with the IRS about your situation and explore your payment options.
Seek Professional Help
If you’re feeling overwhelmed or confused about your tax situation, it might be wise to seek help from a tax professional. They can provide guidance tailored to your specific circumstances and help you address any issues stemming from your late filing. If this sounds like you, schedule a meeting with us, we’d be happy to help!
Filing your taxes late can lead to penalties, interest, and potential loss of refunds, but it’s not the end of the world. By taking proactive steps and filing as soon as possible, you can minimize the consequences. Staying informed and organized will help you avoid similar situations in the future. Remember, tax season doesn’t have to be a source of stress; with the right approach, you can navigate it smoothly.
I’ll see you next time!
