Still Haven’t Done Your Taxes? File ASAP!
by Susannah McQuitty
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Not to induce panic or anything, but April 17 is coming up quick. You have one week left to file, so it’s time to finally get that done.
You may have questions about the fallout of filing late, such as penalties (if there are any), effects of filing an extension, and what to do if you just can’t pay your taxes.
What happens if I miss the deadline?
For those ending up with a tax refund, you’re off the hook for penalties, but you also won’t see any refund money until you file your return. On the other hand, if you owe taxes, you’ll face two penalties for every month that you don’t file or pay: the failure-to-file penalty and the failure-to-pay penalty.
It may come as a surprise, but the failure-to-file penalty is 10 times the amount of the failure-to-pay penalty. The IRS really wants you to file that return: Until you do, 5% of your unpaid taxes will be added to your bill each month. After the first 60 days, that penalty amount automatically goes to $135 or 100% of the unpaid tax, whichever is smaller.
If you file but don’t pay, you’ll have 0.5% of your unpaid taxes added to your bill each month, which can build up to 25% of your taxes owed. The good news is that the failure-to-file and failure-to-pay penalties don’t stack, so the most you’ll pay for a month of penalties is 5% of your taxes owed.
Hold on—I filed a tax extension. I won’t be penalized for not paying by April 17, right?
Not necessarily. Remember, a tax extension is an extension of time to file your taxes, not to pay them. If you filed an extension and paid at least 90% of your taxes owed, you may not owe the failure-to-pay penalty. But you will have to pay the remaining tax balance by the October deadline, and there will be interest on that remaining balance.
You can still pay your taxes online, even if you haven’t filed your tax return yet. Check out our post on filing tax extensions for more information.
I just can’t afford my tax bill. What do I do?
It happens. Maybe you’re a freelancer and didn’t realize that you should have been making quarterly estimated payments last year. Maybe you weren’t able to claim a credit that you’ve qualified for in years past, and your tax bill hit a growth spurt.
Whatever the reason, sometimes you simply can’t cough up the money you owe in taxes in one payment. Our advice is still very similar: File your return. Once you’ve done that (and prevented penalties from being added to your tax burden), look into payment options on the IRS site. You can use credit card payments, apply for a loan, or set up an IRS payment plan. Read more about payment options for those who can’t afford their tax bill.
As you can see, it’s in your best interest to file as soon as possible, whether you’re owed a refund or owe taxes—even if you currently can’t afford your entire tax bill. The penalties for not paying and not filing are no joke, and if you’re owed a refund, why not file? You can file with 1040.com until mid-October, and we’ll help you get your tax return processed in record time.
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