What if I Missed the Tax Filing Deadline? Ordinarily, if you missed the April 15th tax filing due date or the filing Extension deadline, the IRS may charge a “failure-to-file” and “failure-to-pay” penalty for every month (or partial month) you are delayed past the original (April) due date. Even if you file an extension by the deadline but do not pay the taxes owed, you may still incur a penalty. The IRS penalty for failure-to-file and failure-to-pay is assessed at 5% of your taxes due, but the penalty is capped at 25% of the taxes owed.
Consider this…
Consider this scenario: you find yourself owing $10,000 in taxes. For every month you delay filing, the IRS will add a $500 penalty to your bill on top of the taxes you owe. This can quickly escalate, even though the penalty is capped at $2,500. Before you know it, you could be facing a total of $12,500, plus interest on the unpaid taxes. The financial burden of late filing is not to be underestimated!
Late Filing
Regrettably, the consequences of late filing can be even more severe. The IRS has the authority to initiate a process known as a ‘substitute for return’ (SFR). Under this, they will file a tax return on your behalf, using the income reported by your employers and financial institutions. However, they will not consider any tax deductions or credits you may be entitled to. This could result in a significantly higher tax bill than if you had filed your return yourself, amplifying the risk and potential loss.
If you are late filing your taxes, the best course of action is to estimate and pay the full amount due by the original (April) tax deadline. If you cannot pay the full amount due by the April deadline but do expect to owe, pay as much as you can as soon as you can to reduce penalties!
Remember, the IRS may still expect you to file a return even if you don’t owe. But it’s important to know that if you expect a tax refund and have yet to file your tax return, the IRS won’t charge you a penalty for late filing.
To better understand the impact and penalties that could apply to your situation, consult the tax professionals at MSM Advisors! Our professionals can help you avoid the costly outcomes of missing important tax deadlines!
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