Tax day is right around the corner. Are you ready?
Taxpayers will have an additional three days to file their taxes this year. Most people associate April 15 with the tax deadline, but tax day 2016 will fall on the 18th. The IRS received over 99 million returns in 2015, and issued over 77 million refunds.
What if your tax return won’t be among those filed by the deadline this year? What happens if you miss the tax deadline?
First, the good news. If you will be receiving a refund, you have up to three years to file your return in order to claim that refund.
However, if you will owe taxes, there are penalties for missing the tax deadline:
- The late-filing fee is 5% of your balance. The penalty for paying your tax bill late is 0.5% of the balance you owe. If you file late and pay your balance late, you’ll be hit with both penalties.
Penalties will accrue for every month you don’t file your return or pay your tax bill.
If you know you will have trouble paying your tax bill in one lump sum, you can file a request for an installment agreement through the IRS. Keep in mind you will still need to file your return on time in order to apply for the installment plan.
If you’re confident in filing your own return, you can use one of the many tax filing software packages available, or you can file through the IRS’s Free File portal, available to taxpayers who earn $62,000 or less.
Even with those tools, you may still need more time. In that case, you can either file for an extension on your own or have your tax preparer do it on your behalf. The extension will grant you until Oct. 15th to prepare and file your return.
You’ll still need to pay your tax bill on time, however, in order to avoid late payment penalties.
There are times when missing the tax deadline is unavoidable. In that case, filing an extension would be to your benefit while you gather your tax paperwork and calculate how much tax you’ll owe.
April 18 is coming sooner than you think. Keep these tips in mind if you won’t be able to file your taxes on time. You lessen the impact of any penalties and still give yourself the extra time you need to file your return.
