Missed the Tax Deadline? Here’s What To Do
It happens in normal years, so during one with a global pandemic, it’s understandable — you didn’t file your taxes on time.
First things first, if you owe the IRS money, the deadline to pay that tax was yesterday and your bill is now overdue. It may seem counterintuitive that you would need to pay before you file, but the rule is that you must pay any tax owed by the 17th, even though you have until October 15 to file.
Don’t know if you owe the IRS or not? If you typically get a refund, then you likely don’t need to worry.
If you’re not sure if you owe money, you can check your tax account at irs.gov to see if there is a balance due. If you do owe and missed yesterday’s deadline, each day you fail to pay you accrue a small penalty, so pay as soon as possible. Interest builds daily, equal to the federal short-term rate plus 3%.
The penalty you will pay for not filing on time is 5% of your unpaid taxes for each month your return is late, with a maximum penalty of 25%. For each month you don’t pay, the IRS charges .5%, and up to 25%. Penalties can add up to almost 50% of your tax bill.
For those expecting a refund, if you missed the deadline and did not file for an extension, you will not be hit with late filing penalties, according to TurboTax. It is a little known secret, but those who are expecting a refund can file late without penalties — you will have to naturally wait longer for your money. Three in four Americans receive a refund every year TurboTax adds, so for the majority of tax filers this is the case.
So, if you are one of the 75% of Americans expecting to get a refund, fret not: there is still plenty of time to file your taxes and receive your refund.
Important to note: this does not apply for state taxes. You will need to check with your state’s particular requirements for penalties/deadlines.
That being said, this year the IRS has faced unprecedented delays and has stated several times that they are still processing backlogs of returns from last year. If you are a late filer, expect considerable delays in receiving your refund.
It would still be in your best interest to file as soon as possible, in order to receive as much as possible of any stimulus relief benefits granted to taxpayers. The expanded child tax credit, for example, will begin doling out monthly payments to taxpayers in July. You could miss out on some of these payments if you haven’t filed yet or file even later on in the year.
More From GOBankingRates