Missed the Tax Filing Deadline and Owe Money? Here’s Why You’d Better Get Moving on That …
Although taxpayers got a couple of extra days this year to submit their returns, there are plenty of folks who inevitably missed the April 17 filing deadline. If you’re one of them, and didn’t request a tax-filing extension or have reason to believe you might owe the IRS money for the 2017 tax year, then you’d better get moving on that return.
The reason? If you submit your tax return more than 60 days after the deadline, you’ll face a higher late-filing penalty. Therefore, you must get that return in by June 14 to avoid losing even more money to the IRS.
The problem with not filing taxes on time
If you neglect to file a tax return by the original deadline and don’t owe the IRS money on your taxes, then being late isn’t such a big deal — though if you’re owed a sizable refund, you should know that the longer you wait to file, the longer the IRS gets to hang onto money that’s rightfully yours. But if you don’t submit your taxes by the deadline and you indeed owe money, you’ll face a late-filing penalty equal to 5% of your unpaid tax bill for each month or partial month your return is late. Furthermore, if your return is filed more than 60 days after the original deadline (for this year, April 17) and you didn’t get an extension, you’ll face a minimum penalty equal to $210 or 100% of your unpaid tax bill — whichever is less.
Don’t be so sure you don’t owe money
Again, the penalties associated with filing a tax return late apply only to those who owe money to the IRS. But if you haven’t yet taken a stab at that return, you may not realize that you do, in fact, owe the IRS some cash. Tax circumstances can change from year to year, so even if you’ve typically gotten a refund in the past, there’s no guarantee that you didn’t wind up on the hook for taxes this last time around. So if you’ve yet to work on your 2017 taxes, sit down and do so immediately.
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Another thing to note is that if you filed for an extension and owe the IRS money, you have until October to submit your tax return before a late-filing penalty is assessed. However, you still will be on the hook for interest on the amount you owe dating back to the original filing deadline of April 17. Therefore, if you haven’t yet begun looking at your taxes, now’s a good time to get started.
If you find that you owe money but can’t pay your tax bill in full, the IRS offers installment-plan options that allow you to fulfill your debt over time. But the point is to get moving rather than sit back and allow interest on your unpaid taxes to accrue.
Finally, be smart about taxes this year. While owing a little bit to the IRS — say, a few hundred dollars — isn’t so terrible, if you find that you owe thousands, you may want to take a look at how you’re having taxes withheld at present and make adjustments. This could mean lowering the number of allowances you claim on your W-4 or increasing the amount you pay for estimated quarterly taxes.
Keep in mind that virtually all tax brackets were lowered for the 2018 tax year as part of the recent overhaul, so seeing a little extra money in your paycheck doesn’t automatically mean you’ll owe taxes. Still, it pays to be vigilant to avoid problems come tax time next year.