Time and time again, Americans list tax season as one of the most stressful times of the year. Just figuring out how much tax you have to pay is difficult enough, but then there are ramifications to consider when you’ve made a mistake—or missed the tax deadline.
Missing the tax deadline is certainly the cause of much strain and pressure for those who are doing their own taxes. But late filing can be difficult to avoid. Especially when you’ve got a million other things going on in your life.
Nobody’s perfect, so late filing will happen from time to time. But what happens when you do file late taxes? This blog will take a look at some of the tax penalties you may be liable for and what you should do if you’re filing taxes past the deadline.
Late Filing: How Late Is Late?
The first thing to note is that if you know you’re going to be late, it is possible to file for an extension. In May of this year, the IRS gave the entire country an extension, in light of everything that was going on in the world.
So, if you feel in advance that you may miss the tax deadline, the first thing you should do is to apply to the IRS for an extension. You can do this online and free of charge.
Failure to File on Time
So, you’ve officially missed the tax deadline, and you didn’t file an extension. Now what happens? Well, that depends on a few things.
If you are owed a refund from the IRS, for example, there is no late filing fee. If you find that you’re late and you’re not owed a refund, the best thing you can do is to file as soon and as accurately as possible. How soon you file will impact how much you end up having to pay in tax penalties.
When you’re late, you pay interest on the money you owe to the IRS, which accrues in proportion to how late you are. As well as this, there may be additional fees owed.
For every month your tax return is tardy, the late-filing penalty is 5% of the tax due for that month. The late payment penalty, on the other hand, will be 0.5% of the balance for each month unpaid. If you have a legitimate reason for your late filing you may be able to avoid some fees.
Avoid Late Filing
How to avoid late filing? The first step is to keep on top of your taxes as much as you can. Mark your calendars for deadlines and try to get things in early.
If taxes are just not your thing, you may want to consider hiring the services of a tax preparation company. This way, you’ll never have to worry about filing late again.
Keep That Tax Deadline in Mind
The tax deadline can be hard to hit. If you’re an individual or business struggling with preparing your taxes, Pacific Tax Group can help. Give us a call today to discuss how we can help make tax season stress a thing of the past.