Time is running short for the extended tax deadline. I know how it is – the deadline approaches, and it passes. You don’t file a federal tax return.
Now, what do you do?
Short Summary
- When you do not file your taxes by the original due date, you can file Form 4868 to request an extension of six additional months.
- You must file Form 4868 by the original due date to get your extension.
- You cannot file an extension for additional time to pay taxes owed, only to file your return.
- Filing your taxes late might cause the IRS to charge you interest and late penalties on any unpaid tax.
- If you’re required to file a tax return for the year, even if it’s late, file it as soon as possible.
Are You Filing Late: Due Date and Extension
Most of us file our personal income tax returns on a calendar basis. That means the tax year starts on January 1 and ends on December 31. All of the tax return income and deductions occur during that time frame.
The due date to file your taxes is the middle of April of the following year. This date varies yearly because the 15th sometimes falls on a weekend or holiday.
The good news is that a six-month extension is available if you can’t get your return filed by the due date. To request this extension, you must file Form 4868 by midnight on the original tax filing due date.
Due Dates for your 2022 Federal Tax Return:
- Original due date – April 18, 2023
- Extended due date – October 16, 2023
Unless you qualify for an additional two months for being out of the country, you will file your taxes late if either of the following apply.
- You missed the original due date and did not file Form 4868 on time.
- You filed Form 4868 on time but did not file your tax return by the extended due date.
The big takeaway here is that you will file your tax return late if you do not request that extension by the original April due date. Filing Form 4868 the next day will not get you that extended six months to file. Also, you cannot request another extension in October. That’s your final opportunity to avoid filing your taxes late.
Once again, there may be an exception to those due dates for those out of the country.
Bonus Tip: Form 4868 requests an extension on filing your return but not an extension on paying any taxes you owe. You must pay those taxes or incur interest on any unpaid taxes. You should estimate additional taxes that you owe and pay them when you file your extension.
What Happens When You File Late?
If you’re required to file a tax return for the year, you should file it as soon as possible. Yes, you will file your taxes late, but better late than never.
When you owe taxes on a late return, the IRS will charge you interest and may set a late payment penalty for any tax not paid by the original due date.
Penalty: Late Filing With Tax Owed
The IRS may charge a penalty on any unpaid tax for filing a late tax return.
The penalty for filing your return late is 5% of your monthly unpaid tax balance. That maximum amount is capped at 25%.
For tax returns due in 2023 that are more than 60 days late, the amount will be either 100% of the tax owed or $450, whichever is less.
You may attach a statement to your tax return explaining why you filed late. The IRS might release you from the penalty if it finds your reason acceptable.
No penalty is assessed for a late tax return with a refund due.
Interest and Penalty: Late Payment
Since you can’t request an extension on paying taxes you owe, the IRS will charge you interest and may set a late payment penalty for any tax not paid by the original due date in April.
The penalty for taxes paid after the return due date is 1/2% (.5%) of the monthly unpaid tax balance. The maximum amount is capped at 25%.
The instructions for Form 4868 state that you may be able to avoid the late payment penalty when the following apply.
- You paid 90% of your total tax due by the original due date.
- You pay any remaining balance with your return.
- Attach a statement to your return explaining reasonable cause for your late payment.
Both Penalties: Late Filing and Late Payment
There’s some relief if the IRS charges you both penalties. The penalty for filing late will be reduced by the penalty for paying late.
Filing Taxes Late: It’s Been Years Since You Filed
We’ve addressed filing taxes late for the most recent tax year. What if you haven’t filed your taxes for several years now?
Unless you know you weren’t required to file taxes in past years, consider using a qualified tax professional to help. In this case, a professional can help you look back over those years to determine if you need to file. If you don’t need to file, it may still be beneficial to file because you might have a refund due. A professional would also have the necessary software to file older tax returns.
Conclusion
When filing your taxes late and requesting an extension, Form 4868 can be your lifeline, granting you an additional six months to file your tax return. However, remember that you must submit Form 4868 by the original due date to secure this extension.
Remember that filing an extension doesn’t grant you additional time to pay any taxes owed; it’s merely an extension for filing your return.
Failure to file your taxes by the due date can lead to the IRS charging you interest and late penalties on any unpaid tax. The best course of action when you’re required to file a tax return, even if it’s late, is to file it as soon as possible.
