With just days to go before this year's April 18 tax deadline, you're probably feeling the heat to get this headache-inducing task off your to-do list. You're not alone if you're a procrastinator either. Nearly 1 in 4 Americans says they wait until the last minute to file their taxes.
But what if you wait too long and actually miss the deadline? If you can't get your taxes done on time, don't panic. You've still got options to fix the issue so you can claim a refund or minimize the consequences if you file late.
You have until April 18 to request a deadline extension
Taxpayers who ask the IRS for more time will be given a six-month extension, but this request has to be made by the original April 18 deadline. If you know in advance you're going to be late, you can request an extension by submitting Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).
You can also use the IRS free e-file service to request this extension or use a tax program like TurboTax. Asking for an extension will give you until October 16, 2017 to file — but this is an extension of the time you have to submit your forms only. You still need to pay all taxes due before the deadline or you'll owe interest and penalties.
If tax day has come and gone though, it's too late to request an extension. That means it's time for Plan B.
File your late return ASAP
If you've missed the deadline and didn't apply for an extension, it's wise to file your return as soon as you possibly can. The sooner you file, the sooner you will get your refund if the IRS owes you money, and the less you'll pay in interest and penalties on unpaid taxes if you owe money to Uncle Sam.
You can file a late tax return using IRS e-file or other online programs, as long as you submit your return before the IRS stops processing e-filed returns in November.
After November, you'll have to file a paper return. Sorry. While you can still use tax software to complete your returns (or download the forms off the IRS website), you have to print out and mail your return along with any money you owe the IRS.
When filing taxes late is penalty-free
Filing your taxes late isn't the end of the world. As TurboTax notes, "This is one of the great little secrets about the Federal tax law. If you have a refund coming from the IRS — as about three out of four taxpayers do every year — then there is no penalty for failing to file your tax return by the deadline, even if you don't ask for an extension."
If you're late and owe money, however, you will owe both interest on unpaid taxes and additional penalties. This is not good.
This is how much you'll be penalized if you owe Uncle Sam money
Interest accrues on your unpaid tax balance from the date the tax was due until your balance is paid in full. The interest rate is the federal short-term rate plus 3%. But that's nothing compared to the penalties you'll face, which can be as high as 47.5% of the total taxes you owe if you both file and pay late.
And because nothing is ever simple with the IRS, there are all kinds of special rules and exceptions, like avoiding a late payment penalty if you've paid at least 90% of what you owe and filed an extension by the April 18 deadline.
But here's the key takeaway: File ASAP, even if you can't pay right away, because the penalties for not letting the IRS know what's going on could be up to 10 times higher than just being late with payments.
This is the absolute last date you can file your returns
If you are owed a refund and you want to claim it, you have until April 18, 2020 to file your return and get your money back. If you asked for an extension, you have until October 17, 2020. If you wait longer than this, your time runs out and the U.S. Treasury gets to keep your unpaid refund, according to TurboTax.
If you owe money, the IRS can come after you to try to collect for 10 years, after which time they can no longer try to recover the money you owed. The longer you wait, the larger the amount you'll owe in penalties and interest.
The IRS will probably find you eventually, so if you owe, file your back returns as soon as you can and try to work out a payment plan with the IRS if you don't have the cash to pay.
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