What to Do if You Missed the Tax Deadline
Last Monday was Tax Day – the final day you could file your income taxes. Though it typically falls on April 15, the IRS allowed Americans an extra month to complete their taxes this year, due to the pandemic. If it slipped your mind, don’t worry. Tax Day has been a little different the past two years and you might still have some options to complete your 2020 taxes.
Double check your deadline
May 17 is the federal tax deadline for most people, but some taxpayers qualify for special extensions. Due to February’s severe winter storms, the IRS extended the deadline for several states including Texas, Oklahoma, and Louisiana. These states have until June 15 to complete their taxes. Certain places in Kentucky that saw severe flooding near the end of February have until June 30. Other areas in Tennessee and Alabama have until August 2 due to tornadoes and flooding that occurred in March. To double check the tax deadline in your region, visit www.irs.gov/newsroom.
Try to prove reasonable cause
If you’re not located in any of the areas above, you still might be able to avoid late payment penalties if you can show reasonable cause for why you didn’t file your taxes on time. Reasonable cause could include natural disasters, death, severe illness, inability to obtain records, or anything else that might prevent you from being able to pay on time. The IRS will evaluate any sound reasoning you provide.
Pay your late fees
Sometimes life gets busy, and we forget important dates and deadlines. If this happened, and you forgot to file your taxes by May 17, it might not be as bad as you think. You’re not likely to face a penalty unless you owe the government money. If the government owes you money, you shouldn’t have to pay penalty fees for filing late. You just won’t get your money from the government until you file your taxes.
If you owe the government money, you’ll probably pay a small price for missing the tax deadline. Some common penalty payments include failure to file and failure to pay.
- Failure to file – If you don’t file your taxes by the deadline, you will be charged a failure-to-file fee, which is 5% of your unpaid taxes for every month that your tax return is late. The failure-to-file penalty is capped at 25% of your unpaid taxes.
- Failure to pay – If you don’t pay your taxes by the deadline, you’ll be charged a failure-to-pay fee, which is 0.5% of your taxes for every month that they remain unpaid. The failure-to-pay penalty is capped at 25% of your unpaid taxes.
- Failure to both pay and file – If you have neither filed nor paid your taxes by the tax deadline, then you will be charged a combined monthly penalty of 5% (4.5% for late filing and 0.5% for late paying). The combined penalty is capped at 47.5% of the tax.
Though you might have to pay penalty fees, your chances of being audited are very low. In general, less than 1% of all households making less than $500,000 per year are audited. During the 2019 tax year, the IRS only audited 0.4% of all individual tax returns. To decrease your chance of getting audited, make sure you report your income accurately, avoid claiming overly high deductibles, and double check your math.
Did you file for an extension?
Before you beat yourself up for forgetting the deadline, make sure that you didn’t file for an extension. If you filed for an extension, your new deadline is October 15. Remember, this doesn’t mean that you have until October to pay your taxes. The extension just means you have more time to file your taxes.
Filing and paying your taxes on time is important. It can help you avoid unnecessary costs and receive the money the government owes you on time. However, if you miss the tax deadline, it probably won’t be a life-ruining mistake. Just make sure you file and pay your taxes as soon as possible or check to see if you qualified for an extension. If you still need help filing your taxes, we can direct you to a tax professional.