Note: Sometimes taxpayers living in areas that have experienced disasters like fires, floods, hurricanes, or earthquakes, are given extra time to file when a federal disaster has been declared. If you think this might apply to you, check this page to confirm and let us know during your appointment that you live in an impacted area.
If the April deadline is approaching, but you're not ready...
Let's say it's April 13, or 14, or even the day of the deadline, and you're not ready or haven't had a chance to book an appointment. You can still file for an extension. Extensions are quick and easy to file and, even if you don't have your numbers in order, you can still submit one all the way up to the tax deadline (that's April 15 most years).
We've got a handy article all about extensions that you can read here. (Note: As that article says, we can file the extension for you.)
If the April deadline has passed...
There are two general scenarios:
Your return shows you're entitled to a refund:
If, after putting in all your numbers and info, we figure out that you're entitled to a refund from either the federal government, or the state(s), or both, then you won't have to pay any penalties at all. Just get that returned filed and you'll collect that refund check no problem.
Why? All the penalties that the government charges for filing late are actually just interest charges on your balance due. So if you don't owe them anything, they have nothing to charge interest on. Hence, no penalty.
Note: The IRS only allows people to collect refunds for the prior 3 years. In other words, if it's 2023, you can only request refunds for tax years 2022, 2021, and 2020. So if you figure out that you were entitled to a refund for a 5-year old tax return you never filed, unfortunately you won't be able to collect that money because you didn't get it in on time.
You owe taxes:
For folks who are filing late and end up having a balance due, you are going to end up paying some of those penalties/interest charges, which generally come in a few different flavors:
- Failure-to-Pay - If the full amount due to the IRS is not paid by the due date (whether or not you have filed for an extension), the late payment penalty is 0.5% for each month (or part of a month) the balance goes unpaid, up to a maximum of 25% of the amount owed. You can reduce this amount to 0.25% for any month where you have a payment plan set up.
- Failure-to-File - If you owe tax and don't file on time (this includes folks who didn't file an extension or missed the extension deadline), the late filing penalty is 5% of the tax owed for each month (or part of a month) that your return is late, up to a maximum of 25% of the amount owed. If your return is more than 60 days late, there's also a minimum penalty for late filing: the lesser of $435 (for tax returns required to be filed in 2022) or 100% of the tax owed. You may be able to request a waiver for failure to file penalty if it's the first time it's happened for you and you're caught up on any other balances due.
- Underpayment of Estimated Taxes - For those with freelance/untaxed income who didn't pay any estimated quarterly tax payments. You may owe some additional penalties on any amounts that should have been paid quarterly during that tax year.
- Interest - This can get a little complicated, because the IRS charges interest on balances due, and can also charge interest on penalties. Trying to add all that up can get a little overwhelming, and feel intimidating. But the thing to remember is that none of this should stop you from filing. Knowing the numbers is actually better than the anxiety of not knowing and not filing (we promise; we help folks do back taxes all the time and they consistently tell us this).
When you are paying the IRS for a late tax return, they'll first apply your money to the original taxes due, then they'll apply it to any penalties, and last, they'll pay off any interest you owe.
And remember, you can set up a payment plan.
NOTE: States generally have a similar set of penalties for late filing and/or payments, but there are so many variations, we can't get into them all here. That said, if you're filing late and owe state taxes, you should assume you will also owe some penalties/interest there as well.
You may be able to request the removal or reduction of your penalties...
Filing late can happen for lots of different reasons, like the federal disasters mentioned above, or employers who don't send you your paperwork. The good news is that the IRS does offer the chance to request an abatement (i.e. removal or reduction) of your penalties if you can show reasonable cause. Many states also offer this. We can help you figure out if you are likely to qualify.
If you have multiple years that are late...
It's okay, this happens more often than you might imagine. We help people get these situations sorted out all the time. It will take a bit of work, but nothing you can't handle. And at the end of the process, you won't have to carry around any anxiety about not filing. Check out our article on back taxes here for tips if you're in this situation.
Have more questions? Just reach out to email@example.com and we'll set up a consultation or help you figure out what you need to get your appointment done.