Even though tax season isn’t upon us quite yet, you might be wondering what the consequences of missing the tax deadline are. Missing the deadline can lead to extra fees and penalties, so it is important to know what the tax deadline is and what the consequences are if you can’t meet it for whatever reason. Here is a look at what to expect and a few tips to help you meet the tax deadline in future years:
Assessment Of Fees
You will be required to pay a few different penalty fees plus interest if you miss the tax deadline. The penalties you will be required to pay include:
- Underpayment Fee: This fee is assessed if you aren’t able to pay the full amount due on your taxes. The amount of the fee depends on your filing status and your circumstances. You can avoid this fee by paying any unpaid balance as soon as possible.
- Failure To File Fee: This fee is assessed if you fail to file your taxes by the deadline. The penalty fee is 5% of the total balance owed for every month you don’t pay your balance, with a maximum of 25%. The IRS will occasionally waive this fee after the fact if you can prove there was a valid reason why you had to pay late.
- Failure To Pay Fee: This fee is assessed if you fail to pay your tax balance. It is 0.5% of your unpaid total for every month the balance remains unpaid.
In addition to the penalty fees listed above, the IRS can also add interest fees.
What Should You Do If You Miss The Tax Deadline?
If you just realized you missed the tax deadline, you can prevent more damage by filing your taxes as soon as possible. If the IRS owes you a refund, you won’t be subject to any interest payments. However, if you need to pay the IRS and don’t make payment immediately, you will be subject to both penalty fees and interest.
If you haven’t filed your taxes because you are waiting on late arriving tax documents or have incorrect figures, you can file your taxes now, and then re-file an amended return once your documentation arrives. Doing this will help you avoid paying extra penalty fees. You can also file your taxes online via e-file for little to no cost as long as you submit by October 15th of the current tax year.
File For An Extension
Another way to avoid the consequences of missing the tax deadline is to file for a tax extension from the IRS. You will still need to pay the tax balance due by the filing date, but it will give you extra time to file your tax forms. You can ask your CPA to file an extension for you, or do it yourself by filling out Form 4868 on the IRS website.
Filing an extension will give you up to October 15th to get your taxes filed. You can also print and mail your form directly to the IRS or you can file it online.
Send Payment To The IRS As Soon As Possible
You can avoid paying additional penalty and interest fees by paying the IRS as soon as possible. You can even do an estimate of your total tax bill if you aren’t ready to submit your completed tax return. You can send payment to the IRS by check or pay online using your bank account or credit card. If you do choose to send a check, make sure the check includes all necessary identifying information.
Work With The IRS On A Payment Plan
If your tax balance is more than you can pay, you can apply with the IRS for a payment plan. You can set up a payment plan easily by filling out the Online Payment Agreement with details of how you plan to pay your tax payment and penalties via regular installments. Be sure to apply for a payment plan as soon as possible so that you avoid extra interest and penalty fees.
Avoid The Consequences Of Missing The Tax Deadline In The Future
You can avoid missing the tax deadline in the future by setting up a good bookkeeping system. Get set up with a good accounting software, such as QuickBooks, to help keep track of your income and expenses. You can also look into hiring an accountant or bookkeeper to help you keep track of your financial data.
You can also stay prepared by setting up a time each quarter to check in with your accountant or go through your reports on QuickBooks. Then set up an appointment with your accountant as soon as tax season begins to review your financial information. You can remove a lot of tax time pressure by taking the time to prepare for taxes all year long.