Missed The Tax Deadline? Here’s What You Should Do | Bankrate

No one wants to be in trouble with the tax man. If you missed this year ’ mho filing deadline, don ’ triiodothyronine panic — but act fast. The majority of taxpayers had until April 18 to submit their 2021 tax return, unless they live in Maine or Massachusetts, where residents have until April 19 to file because of the Patriots ’ Day state vacation. Taxpayers who filed an extension will have until Oct. 17 to submit their recurrence, though they still should ’ ve already estimated and paid any taxes they owe. In the eyes of the Internal Revenue Service ( IRS ), missing the tax deadline lone matters if you have a tax beak. In early words, taxpayers who were in line to receive a tax refund once they submit their returns won ’ metric ton get slapped with any penalties or fees.

“ As with all things IRS, the money you owe them is very different from the money they owe you, ” says Rob Cordasco, CPA, laminitis of Cordasco & Company, an accounting firm. But if you have an outstanding tax indebtedness, you ’ ll want to consider all of your options. April 18 besides marked the deadline to request an extension with the IRS. here ’ s what to do if you missed the tax deadline, whether you ’ re in line for a refund or owe the IRS money .

1. File as soon as possible

If the calendar has turned from April 18 to beyond and you missed the tax deadline, you ’ ll want to file immediately, careless of whether you have a tax charge. That ’ randomness because submitting your tax return is your chief opportunity to claim rear any money that you overpaid to the IRS throughout the year, a well as the credits for which you ’ ra eligible. Underscoring the importunity to file, Congress expanded many of those tax breaks entirely for the 2021 tax year. For exemplify, millions of U.S. households were in occupation to receive up to $ 1,600 or $ 1,000 in extra child tax credit payments than normal, american samoa well as up to $ 5,900 extra to help reimburse any money that they spent throughout the class on child worry. so far this year, tax refunds are up 11.5 percentage from end year, with the IRS giving taxpayers an average refund of $ 3,226, according to the latest IRS data. “ If you are owed a refund, the penalties won ’ t use because there ’ s no unpaid libra, ” says Lisa Featherngill, national director of wealth planning at Comerica Bank. Taxpayers will have up to three years after the original tax due date to submit their return and claim their refund. For your 2021 tax return, for case, you ’ ll be able to file up until April 18, 2025. But if you do choose to wait that long, remember that the IRS will plainly hold onto the money that ’ s technically yours. If you forget to file, you ’ ll lose your refund. If you owe taxes, however, you ’ ll want to file ampere soon as possible — both for the peace of mind of settling up and besides to help reduce the supernumerary charges that will add up the longer you wait .

2. Know the penalties and fees

If you fail to pay your tax bill on time, be aware of the two chief penalties and fees you ’ ll be hit with : the failure-to-file penalty and the failure-to-pay penalty. Both immediately start accumulating on April 19, and they can all add up, importantly snowballing your tax indebtedness. “ Basically, these penalties and consort interest are equitable like credit card debt, ” says Tony Molina, CPA, product evangelist at Wealthfront. “ You should take care of it ASAP. ”

here ’ s how they work :

  • Failure to file: This penalty is worth 5 percent of the unpaid taxes, increasing by 5 percent for each month up to 25 percent. In other words, the penalty maxes out once you’re five months late. If your tax return was more than 60 days late, the minimum penalty is $435.
  • Failure to pay: This charge is worth 0.5 percent of your tax balance for each month the tax remains unpaid. If you don’t pay your tax within 10 days of getting a notice from the IRS, that penalty will increase by 1 percent per month. The penalty won’t exceed 25 percent of your unpaid taxes.

The IRS applies those wax levies, even if you pay your tax in fully before the month ends. In the instances when both penalties are applied, the IRS reduces the failure-to-file penalty percentage by the failure-to-pay punishment for that month. For exemplar, in your first month of an outstanding tax poise, the IRS would apply a 4.5 percentage failure-to-file penalty and a 0.5 percentage failure-to-pay penalty. The IRS besides charges pastime on any outstanding symmetry, whether it ’ s a punishment or amateur tax. The representation sets that matter to rate quarterly, but presently that rate is 4 percentage for underpayments. In some instances, taxpayers can qualify for punishment easing, particularly if they ’ ve never failed to file or paid late ahead. The IRS says it may be able to remove penalties if you can show fair cause for missing your obligations .

3. If you can’t afford your bill, set up a payment plan

many Americans might avoid file taxes because they know they can ’ t afford to pay their bill. But if affordability is the concern, experts say you should still immediately file. You ’ ll be able to set up an installation plan with the IRS that besides helps you limit how many penalties and fees you ’ re collision with. For model, if you have an approved payment plan even after missing the tax deadline, the failure-to-pay punishment is reduced to 0.25 percentage each month during your payment design, the IRS states. “ An installment agreement is the IRS concede you the ability to pay your tax over time, ” Cordasco says. “ The rate of interest they charge you for such arrangements is much more golden than the late payment penalty. ” The payment plans you ’ re eligible for depends on your individual situation and tax liability. If you pay the IRS back within 180 days, you ’ vitamin d be considered on a short-run payment design. long-run plans can be set up on a monthly footing, and many of the agreements involve directly debits from your account. You can apply for a payment plan by mail, telephone, in-person or on-line, but the latter tends to be the cheapest when it comes to setup fees, according to Comerica ’ s Featherngill. Setting up a long-run requital design by call, chain mail or in person, for exercise, can cost up to $ 225 compared to a utmost of $ 130 if you apply on-line.

“ With both plans, you will still owe the standard belated fees and accrued concern, so it ’ sulfur best to set up a plan that works best for your position, ” Wealthfront ’ s Molina says. “ The downside is, if you miss the deadline and don ’ t agree to a design with the IRS, you ’ ll likely incur even more future penalties on peak of the standard late fees. ”

Bottom line

Filing your taxes is a complicate summons, but it ’ s a part of living and working in the U.S. Taxpayers do have options if they miss the deadline, but the longer they wait to figure out their game plan, the more expensive those penalties and fees will grow .

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source : https://www.peterswar.net
Category : Finance

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