You have until midnight on the April 15 Tax Day deadline to either electronically file a tax return or have a paper return postmarked by April 15. If you miss that deadline, your tax return will technically be late and possibly subject to penalties and interest.
However, you can electronically request an automatic, six-month tax extension by filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This moves your filing deadline to Oct. 15, 2024.
Unfortunately, the extension to file is not an extension to pay. The IRS requires you to pay an estimate of what you owe by the regular April deadline. As long as you pay an estimated amount that’s close to what you owe, you won’t be subject to fines or penalties if you file your return and pay any remaining tax liability by Oct. 15, 2024. For the IRS, that means your estimated payment needs to be at least 90% of your total tax liability.
Expecting a Refund
If you’re due a refund, there’s no IRS penalty for filing your return late, but filing more quickly means you will get your money back sooner. Remember, however, although you might not be hit with a penalty for filing late, you probably still need to file a return. The IRS has a strict definition of who has to file a tax return based on annual income, among other factors.
You have three years to file your 2023 tax return before the IRS turns your tax refund over to the Treasury and your money is gone forever. Your tax refund might be delayed by filing late, but you should still expect to receive your money in four to six weeks after filing.
Owing Money to the IRS
However, if you owe on your taxes, you don’t want to wait — penalties and interest can pile up quickly. There are two basic penalties that the IRS charges for filing taxes late when you owe money: a failure-to-file penalty and a failure-to-pay penalty. On top of that, you’ll also have to pay interest on the amount you owe.
• The failure-to-file penalty is generally 5% of the amount you owe for each month or part of a month that your return is late, with a maximum penalty of 25%. If your return is more than 60 days late, the minimum penalty is $435 or the balance of your taxes due, if less than that.
• The failure-to-pay penalty is usually calculated at 0.5% of any taxes owed that aren’t paid by the deadline. The IRS again charges the penalty for each month or part of a month that your payment is late, with a maximum 25% penalty total.
• Interest on late taxes fluctuates and is determined for individuals by adding 3% to the short-term federal interest rate. That rate is adjusted quarterly, and interest is compounded daily.
State Tax Return Deadlines
State income tax deadlines are typically the same as the federal tax deadline, but some exceptions exist. Check with your tax practitioner if you have questions about the deadlines for specific states.
Paying the IRS
If you can’t pay your tax bill in full, you can set up an installment payment plan with the IRS. If you can pay off your tax debt within 180 days, the IRS will let you apply for a short-term payment plan at no cost, although you’ll still accrue penalties and interest until your debt is paid off.
Check on Your Refund
Taxpayers expecting a refund can use the Where’s My Refund? tool on the IRS web site www.IR.GOV. (Remember that it is DOT GOV, not DOT COM.) To use the tool, taxpayers need to enter their Social Security number, filing status and exact refund amount expected.
Your CPA can help you with all of the above issues.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR [email protected].
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