What Happens If You Miss the Tax Deadline?Lindsay Chambers
Millions of Americans procrastinate on filing their tax returns every year for various reasons – they believe the process is too confusing or time-consuming, they find it stressful or they’re worried they’ll make a mistake or owe a lot of money.
While the IRS allows taxpayers to request an extension if they can’t file their tax return on time, you must still pay any money you owe to avoid penalties or interest. Here’s what you need to know if you missed the April 18 due date.
What Is a Tax Extension?
Any taxpayer, regardless of income, can electronically request an automatic tax-filing extension, which will give you an additional six months to file your taxes. However, it’s essential to note that an extension does not give you a reprieve from paying any taxes that are due.
To get the extension, you must estimate your tax liability on the IRS’ Free File form and pay any amount you owe.
Are There Any Penalties for Not Paying Your Taxes on Time?
2022 was the first time in two years that the IRS did not lengthen the tax deadline due to the COVID-19 pandemic. Therefore, anyone who hasn’t yet filed their 2021 tax return or requested an extension is already late and may face penalties if they owe any money.
If you are eligible to receive a refund from the IRS and miss the tax deadline, there are no negative consequences for filing late, and you can still get money back. However, you only have three years to file your 2021 tax return before the IRS turns your tax refund over to the Treasury and your money is gone forever.
People who owe money to the IRS and have not paid yet can get hit with a Failure to File or Failure to Pay penalty. These penalties are a percentage of the taxes you didn’t pay on time. The IRS will mail you a notification to let you know how much you owe based on how long your overdue taxes remain unpaid.
What If You Can’t Afford to Pay Your Taxes?
If you owe more than you can afford to pay, you may qualify for an online payment plan, including an installment agreement, that allows you to pay off an outstanding balance over time.
The IRS offers two payment plans.
- Short-term: The payment period is 120 days or less, and the total amount owed is less than $100,000 in combined tax, penalties and interest.
- Long-term: The payment period is longer than 120 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.
After you complete your online application, you’ll receive an immediate confirmation if the IRS approves it.
Do You Need Help Filing Your Taxes?
If you haven’t filed your tax return and owe money to the IRS, getting that taken care of as soon as possible will reduce your penalties and interest, while giving you peace of mind. Our experienced professionals will alleviate the stress associated with tax season and give you more time back to focus on growing your business. Reach out to us to learn more about our small business tax planning services in Tucson!