Are you nervous because you are late with your taxes? Then you may ask yourself, what happens if you file taxes late. The repercussion of filing taxes late depends on the date you are filing your tax after the due date. Nearly everyone seems to be bored with the tedious procedures of filing taxes. According to some individuals, filing taxes is a horrifying activity that encompasses mind-deadening terms such as “withholdings” and “qualified dividends” eventually, there are many easy-to-afford tools that can help you file your taxes without migraines.
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What Happens If You File Taxes Late?
But fit yourself in a scenario where the deadline is just a day away. Will you give up and wait for the penalties? There is nothing to worry about since you can still give yourself time by filing an extension request. However, emancipate yourself from thoughts that this extension will extend your payment due date too. That’s the mistake people usually make.
Now, with the tax due date so close, you may be wondering what will be the consequences of filing the federal tax return late. Will the international revenue service (IRS) knock on your door? Will the authority jail you for missing the tax deadline? Keep reading to find out more.
Nothing Will Happen If You Are Expecting A Refund
According to the IRS term, there are no penalties for late tax returns if the taxpayers are due a refund. However, you won’t get your refund until you file your taxes. Often, it takes 21 days to receive a refund. But it may take longer than that if you are claiming the earned income tax credit. You can check your refund status IRS’ online tracking tool.
Do You Owe Taxes?
Then filing late taxes can cost you more. If that’s the case, you’ll have to pay in full before the due date, or you’ll face the penalties, and the interests will accumulate. Filing late can be pretty disastrous than paying late. The charges for past-due date filing are 5% of the outstanding taxes for every month you miss the filing, a limit of 25% of indebted taxes.
There Is A Penalty For Late Payment
Filing and paying your taxes past the due date can cause two different penalties. The late payment penalty is 0.5 for every month you have an outstanding balance. If you can’t pay in full by the due date or soon after the due date, you need to let the IRS know.
Encouraging news is that if you are paying your taxes let, but if you have an installments agreement with the IRS, the monthly interest decreases from 0.5 to 0.25 percent.
Interest Will Accumulate Rapidly
Apart from penalties, interests will add up on your outstanding taxes. Often, the interest rate is usually 3% in addition to the federal short-term interest rate. Interests accumulate day-to-day, meaning that they can quickly add up on your penalties.
Generally, filing taxes late is a bad idea, but not filing your tax return isn’t bad. With the late filing of taxes, you may not be able to file your penalty. You’ll have to pay a 5% of the tax you owe for every month that you fail to file the return up to 25% of the balance. An exciting part of the story is, even if you fail to file a tax return, the IRS can do everything for you. IRS usually receives all your income-related documents. And so, they are aware of your annual income—they know what you earn for the year. Moreover, they often use special tools to estimate your payment.
Apart from avoiding penalties, there are still many reasons you should file your tax before the due date. For example, if you want to buy a house, the mortgage company will need to go through your tax return copies to ensure that you’ve provided accurate information.
What Happens If I Miss The Tax Deadline?
The Tax Deadline Extended To May 17
The corona pandemic has influenced the economy, and many Americans struggle to cope with the new normal. Because of that, the IRS has postponed the due date of the federal income tax return. The new deadline of May 17 gives you one month extra to plan for your returns. As it seems to be quite advantageous, it doesn’t favor anyone—many will suffer, including a good number of taxpayers who will be facing complicated issues related to tax. As the reason, you need to begin as early as now. This behavior will help you deal with other tax issues such as missing stimulus money.
Finding Help For Tax Return Extension
People have different personal reasons why they may miss the tax deadline. And sometimes, it’s not our wish to skip the tax due date. There is a big difference between late filing and late payment. If you have insufficient time to prepare your tax return, it’s good to request an extension from the IRS. This help is possible if you file form 4868. If the application is approved, good for you—you’ll get five months extra, making the deadline October 15. But it would be best if you were not comfortable with such approval since you’ll have to pay the estimated taxes by May 17 to avoid penalties. You can use the assistance of tax software like TurboTax if you need it.
The Bottom Line
Tax payment means a lot. At first, if you pay your tax on time, you’ll have nothing to fear. For example, there will be no penalties or fines. Furthermore, it will boost your credit and keep you away from jail time. With filing the tax, you don’t need to wait until the last minutes. Many unexpected things usually happen. You never know. Always go through the terms before making your decision. This behavior is a slight mistake that many people assume and mess up with everything.
Don’t ignore a tax bill that seems to be unaffordable. That’s the worst mistake you would have ever made. The more you miss, the more the interest accrues, which will result in high charges. So, start today no matter how huge the bill might be. So, the ball is in your hand. Let’s pay taxes, build our economy, and have a uniform flow of income.
