Filing your taxes might not be at the top of your to-do list, but delaying it until the last moment can lead to unnecessary stress and potential penalties.
What happens if you miss the tax deadline? The consequences can vary but are especially significant if you owe the IRS money. Missing the April 15 deadline without filing for an extension means you’re technically late, and that’s when penalties and interest accumulate.
For those expecting a refund, missing the deadline might not seem like a big deal since it mainly means waiting longer for your money. However, if you owe taxes, the situation is more urgent. Penalties add to the amount you owe, and interest on your unpaid taxes also starts piling up.
Everyone should understand the importance of the tax deadline and the consequences of missing it. This blog will help you take the necessary steps if you miss the tax deadline, ensuring you’re prepared and informed for Taxes 2024.
What are Tax Deadlines and Extensions in 2024?
Knowing the deadlines is critical when filing taxes to avoid penalties. The regular deadline to file your taxes in the USA is April 15, 2024.
If you cannot file by April 15, 2024, for the 2023 tax year, you can file for an extension. This extension pushes your filing deadline to October 15, 2024, giving you extra time to get your documents in order and file your taxes properly.
However, it’s important to understand that an extension to file your return does not grant you more time to pay any taxes you owe. If you expect to owe money, you should estimate the amount and pay it when you submit your Form 4868 to request the extension. This approach helps you avoid accumulating interest and penalties on the taxes you owe.
In simple terms, while you can extend the deadline to submit your tax paperwork, you can’t delay paying the taxes due without facing extra charges. Filing for an extension is a helpful way to ensure you have enough time to prepare your tax return accurately, but remember to take care of any tax payments by the original April 15 deadline to stay on the right side of the IRS.
What Happens if You Miss the Tax Deadline?
Missing the tax deadline can lead to extra costs in the form of interest and penalties on top of what you already owe the IRS. Here’s a simple breakdown of what happens:
- Interest Adds Up: From April 15, interest on any tax you haven’t paid starts growing daily. The interest rate can change every three months.
- Late-Filing Penalty: If you file late, there’s a 5% penalty on the tax due for each month or part of your late. This penalty can go up to 25% of the unpaid taxes.
- 60 Days Late Penalty: If you’re over 60 days late, the minimum penalty is $450 or what you owe, whichever is less.
- Late-Payment Penalty: Not paying your taxes on time means a 0.5% penalty each month on the unpaid amount. This penalty increases to 1% if the IRS plans to take action, like seizing property, but it’s only 0.25% per month if you have an installment agreement. The maximum penalty is 25%.
- Payment Order: When you pay, the IRS first covers the tax you owe, then any penalties, and finally, any interest.
If you miss the tax deadline, you pay more than just your taxes due to added interest and penalties. The sooner you file and pay, the less you’ll owe in the long run. To avoid the stress of missing future deadlines and ensure a smoother tax filing process, familiarize yourself with our blog, Tax Filing Guide for 2024: When and How to Fill Your Taxes
Essential Steps to Take After Missing the Tax Deadline
If you’ve missed the April 15, 2024, tax deadline, don’t worry—there are steps you can take to resolve the situation. Here’s what to do in simple terms:
- The sooner you file your tax return, the better. This reduces the penalties and interest you might owe. You can submit your return electronically on IRS.gov until October 15, 2024.
- If you owe taxes, pay as much as possible to lower the penalties and interest. Every bit helps.
- The IRS offers payment plans if you can’t pay all at once. Visit IRS.gov to learn about these options and how to apply for them. MilTax offers free tax services to military personnel. Certain groups, such as disaster victims, overseas taxpayers, and military members in combat zones, may have extra time to file and pay.
- If you’re facing penalties, you might qualify for relief, especially if you have a history of filing and paying on time. For more information, check the IRS’s first-time penalty abatement policy on its website. If you receive a penalty notice and believe you qualify for relief, call the IRS at the number provided on your notice. Be ready to explain why you missed the deadline.
Filing late is better than not filing at all, especially if you owe taxes. The IRS provides resources and options to help you get back on track.
Guidelines for Taxpayers after Missing the Deadline
Missing the tax deadline can lead to different outcomes depending on your situation. Here’s a guide on what steps to take next.
I. If You’re expecting a refund
If the IRS owes you a refund, there’s no penalty for filing late. But you won’t receive your refund until you file it. To get your refund quickly, file your tax return as soon as possible. Filing starts the statute of limitations for audits, protecting you sooner. Some tax benefits require filing by the deadline, even if you’re due a refund.
II. If You owe the IRS
Use IRS Free File. If you qualify, you can prepare and file your taxes for free on IRS.gov until October 15. Try Free File Fillable Forms. If you’re comfortable doing your taxes and don’t qualify for Free File, this e-file option is free. To find out about your refund, use the Where’s My Refund? tool on IRS.gov or the IRS2Go app. You just need your Social Security number, filing status, and exact refund amount.
III. No statute of Limitations
The IRS has no time limit to assess taxes if you don’t file. Always file to start the statute of limitations.
What Happens if You Miss the Tax Deadline and Can’t Pay?
Filing your tax return as soon as possible minimizes penalties and interest, and it’s crucial to file even if you can’t pay immediately to avoid larger penalties. However, if you’re worried about what happens if you miss the tax deadline and cannot pay the total amount you owe, there’s a potential solution. If you’re unable to pay the full amount, there are certain options:
- Credit Card Payments: You can pay your tax bill with a credit card.
- Installment Agreements: The IRS offers payment plans to spread your tax payments.
- Offer in Compromise: Sometimes, you may settle your tax bill for less than the full amount owed.
I. Credit Card Payments
You can pay your tax bill directly with a credit card or through third-party providers. These services charge a convenience fee, approximately 2.5% of your payment, and any interest or finance charges from your credit card issuer. This method can be a quick solution to settle your tax bill and avoid late-payment penalties.
II. Setting Up an Installment Agreement
The IRS offers a solution for those who find the tax bill too steep to pay all at once. By attaching Form 9465, Installment Agreement Request, to your tax return, you can ask the IRS to arrange a monthly payment plan. This approach is especially helpful if you owe $10,000 or less and can repay within three years, as the IRS has simplified the qualification process for these situations. You won’t need to disclose extensive financial details for debts under $10,000.
The IRS charges a setup fee for installment plans, which varies depending on the payment method and your income level. The interest rate for late payments was set at 8% for the last quarter of 2023, subject to change quarterly, with an additional late-payment penalty of 0.25% per month. This combination effectively amounts to an annual rate of 11%. Opting for an installment plan can be a wise choice to manage your tax debt without the pressure of immediate full payment, but it’s worth considering other loan options to find the most cost-effective solution.
III. Offers in Compromise
The IRS may agree to accept less than the full payment under certain conditions through an offer in compromise. This agreement allows you to settle your tax debt for less than the full amount under three specific situations: If there’s uncertainty about whether the assessed tax is correct, if it’s believed you can’t ever pay the full tax amount, and if paying the full tax would cause significant economic hardship or seems unfair or inequitable.
Start by filling out the Offer in Compromise Package, which includes Form 656. Then, to give the IRS a detailed look at your financial situation, you’ll need to fill out Form 433-A (for individuals) or Form 433-B (for businesses). Be prepared to provide additional documents and explanations as requested by the IRS.
If your offer is accepted, you might pay a reduced total amount or make scheduled monthly payments. Failure to adhere to the agreed-upon terms can lead to serious consequences, including the IRS suing you and reinstating the full original tax debt plus interest and penalties.
It’s challenging to manage the complexities of IRS payment options. Consider the benefits outlined in How to Hire a Tax Accountant in 2024 for personalized assistance and to explore the best strategies for your situation.
How to Request an Extension for Tax Payment?
If you cannot pay your tax bill on time, the IRS offers the possibility of requesting an extension. However, the process and requirements are quite strict. Here’s what you need to know about applying for an extension of time to pay your taxes using Form 1127: Application for Extension of Time for Payment of Tax.
- Your Form 1127 application must reach the IRS on or before the original due date of your tax payment. You must provide a detailed statement of your assets and liabilities as of the end of the last month, along with an itemized list of income and expenses for the three months leading up to your application.
- You must prove that paying the tax by the due date would cause undue hardship. Mere inconvenience does not qualify. You must show that paying on time would result in significant financial loss. Additionally, you should demonstrate that you lack the liquidity to pay the tax and cannot reasonably obtain the funds by selling property or borrowing.
- If approved, payment extensions are typically granted for up to six months. The IRS often requires some form of security before granting an extension. Depending on your situation, this could be a bond, notice of lien, mortgage, or another form of security.
- In federally declared disasters, the IRS may offer additional relief options. Check the IRS Disaster Relief page for more information and updates.
Applying for an extension to pay your taxes is a serious matter that requires thorough documentation and a clear demonstration of financial hardship. If considering this route, carefully prepare your application and seek professional advice.
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FAQs
Q1. What happens if you miss the tax deadline without filing for an extension?
Ans. You may face penalties and interest charges if you miss the April 15 tax deadline without requesting an extension. The IRS imposes a late-filing penalty, a late-payment penalty, and interest on unpaid taxes. These can significantly increase the amount you owe.
Q2. Can I still file my taxes if I missed the deadline?
Ans. Yes, you can and should file your taxes immediately, even after the deadline. Filing late is better than not filing, as it can reduce potential penalties. You can submit your return electronically on IRS.gov until October 15.
Q3. What if I’m expecting a refund but missed the tax deadline?
Ans. If you’re due a refund, there’s no penalty for filing late. However, you won’t receive your refund until you file your tax return. It’s best to file as soon as possible to start the process of receiving your refund.
Q4. What options are available if I can’t pay my taxes in full by the deadline?
Ans. The IRS offers payment options for those who can’t pay in full, including installment agreements and offers in compromise. Applying for an installment agreement allows you to pay your tax debt over time. An offer in compromise may settle your tax debt for less than the full amount if you meet certain conditions.
