Oops I missed my tax deadline! Is it a big deal? The answer is a resounding “yes” when left unaddressed. Here’s why you should take immediate action to correct your mistake!
Moving forward
People are extremely busy and sometimes lose track of time or become forgetful. If one of the things you’ve let slip by is filing your taxes, you may be wondering what you should do if you missed your tax deadline. The answer is to move forward and immediately get on track by paying taxes due and filing straightaway. Otherwise, you risk interest and penalties for paying taxes late that can snowball over time. Note that there is no penalty for filing a late tax return if a refund is due.
An important difference
Though they may be done together, paying taxes, and filing tax returns are essentially two separate actions. In cases where information is lacking, or additional time is needed to file a tax return, people may request tax extensions. This allows tax filers, regardless of income, to gain additional time to file returns. Gaining a tax extension is simple to do, but it must be done before the tax extension deadline, generally April 15, each year in most states. Despite filing status, one must still pay taxes on or before the tax deadline, if owed.
What is a tax extension?
A tax extension is essentially a request for an additional six months to file a tax return with the Internal Revenue Service (IRS). For example, in 2024, an extension moves the filing deadline from April 15 to Oct. 15. Bear in mind that even if one is granted an extension, taxes due are still owed by April 15. In other words, a tax extension does not extend the time to pay.
I missed the tax extension, so what should I do?
The date to file a tax extension for 2024 has passed. If you didn’t file a tax return or extension but should have, act by contacting the IRS or by filing a return ASAP and paying what’s due.
Confused about taxes?
Don’t let that be an excuse to not file and pay. Reach out to the IRS where you can get answers to your questions.
Tricky finances?
Contact a Certified Public Accountant, also called a CPA. CPAs stand out from basic accountants as they are licensed by a governing body to provide accounting services to the public. In addition to having continuing education to maintain licensing, CPAs are held to high professional standards and a code of ethics, and place clients’ interests first.
Timeliness counts!
The IRS expects timely tax payments and will follow-through to get what is owed. Failure to pay can initially result in notices stating the interest and penalties incurred. If folks don’t have money to pay what’s due, the IRS can work out payment plans for taxpayers. It’s important as those payments will ultimately reduce late-payment penalties.
Paying
If you missed filing and paying your taxes, act immediately to correct the situation and get back on track. Note that some payment to the IRS is better than no payment as it demonstrates effort to pay. However, those who cannot pay in full are encouraged to make payment arrangements with the IRS. Paying something, rather than nothing, can reduce some penalties and interest. Outstanding accounts may eventually be sent by the IRS to a private collection agency. Over time, people who do not pay taxes due may also be subject to tax liens and levies.
Don’t ignore the IRS!
People who fail to respond to repeated notices of tax due from the IRS risk collections and possible tax liens and levies.
What’s the difference?
A tax lien is defined as a legal claim against property and financial assets a person owns or has coming to them. These tax liens entitle the government to proceeds, should assets be sold. Tax liens, which are public record, tarnish credit and have negative effects on loans.
A tax levy refers to the actual seizure of property. Also, passports may not be renewed, or may even be revoked when federal debt exceeds a set figure as established by the IRS.
Failure to pay outstanding tax debt can result in increased consequences. Note that the IRS has the power to levy or seize property and apply that money to unpaid taxes.
Special scenarios
In special scenarios, individuals may reduce or avoid tax penalties if reasonable cause exists. However, proof must be presented to the IRS as support, and it must be approved. The IRS has programs which offer compromise. This lets qualified taxpayers “settle” for less than what is owed. Note that this is for rare cases as fewer than half of the applications submitted are typically accepted by the IRS. Those in unique situations, such as bankruptcy, should consult a tax expert regarding tax bills, liens, and more.
Recap: What you should do if you missed the tax deadline
Paying taxes on income earned is part of life. The longer taxes remain unpaid, the more problems a person can face. Those who simply forgot to file and pay taxes should do so promptly. If you fail to pay taxes due in full by Tax Day, the IRS immediately begins to charge interest and penalties. Thus, it’s in the taxpayer’s best interest to file a tax return and pay what is owed to avoid interest and penalties on unpaid taxes. To prevent owing taxes in the future, one may opt to have more taxes gradually withheld from one’s pay, rather than having taxes due all at once. Or one may pay estimated tax payments during the year.
This information is for general purposes only and is not intended as financial advice.
