If you filed a tax extension, you might have given yourself some much-needed time to get your paperwork in order. But time moves quickly, and the Oct. 16 extension deadline is less than a month away.
To stay on top of your tax situation as the deadline nears, consider the following tips:
1. Filing Your Tax Return Is Different Than Paying Your Taxes
While many people pay their taxes when filing their tax return, these are separate acts. Personal income tax payments are due in April even if you file an extension, though there are some exceptions, such as for disaster relief situations.
So, if you owe taxes for tax-year 2022 and haven’t paid yet, you’ll want to do so as soon as possible to minimize penalties and interest. But even if you can’t pay by the deadline, you should still file by Oct. 16 and then pay as soon as you can to limit additional fees.
2. Missing the Deadline Can Lead to Penalties and Interest Costs
Filing and paying taxes late can cause you to rack up penalties and interest fees that make your tax bill more expensive.
If you owe taxes and don’t file on time, including after an extension, you could be subject to a failure to file penalty. Filing more than 60 days late triggers a minimum failure-to-file penalty of $450 or 100% of the tax required to be reported, whichever is less, according to the IRS.
And if you don’t pay on time, you could be subject to a failure to pay penalty of up to 25% of your unpaid taxes, depending on how long you wait.
Plus, these penalties incur interest charges.
3. You Might Have Qualified for an Automatic Extension
If you missed Tax Day on April 18, you’re not necessarily late for federal taxes. You might have qualified for an automatic extension. For example, dozens of counties in California qualified for an automatic extension due to winter storms. Also, many states grant automatic extensions if you request a federal tax extension, though you should check the specifics for your state.
4. There’s Still Time To E-File
Even though Tax Day was months ago, there’s still time to e-file your taxes. The IRS will accept electronically filed returns through November, with the specific cutoff date to be announced in October. Most people are eligible to e-file for free through IRS Free File, according to the IRS.
5. You Can Still Get a Refund After the Deadline
You have up to three years after the deadline to file a return and still receive any refund you’re due. It’s a good idea to file even if you’re not required to, to confirm that you don’t owe anything and see if you’re due a refund.
Following these tips can help you stay on top of your taxes and avoid financial mistakes. Oct. 16 will be here before you know it, so make sure you’re ready.
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