If you fail to meet the IRS deadline for filing your taxes, you could potentially be subject to late filing penalties, unless you have filed a request for an extension.
Here’s an overview of what you should know about what could happen after filing taxes late in Union City, NJ.
Getting an extension
In general, it’s best to file your taxes as early as possible, both so you can get your hands on your tax refund and so you can address any issues that might arise in your tax return as you fill it out.
However, should you find yourself up against the deadline, you can always file for an extension. This would push back your tax filing deadline and prevent you from being penalized for late filing.
Failure to file an extension could result in penalties at a rate of five percent of the amount due for each month you’re late. For example, if you owe $2,500 on your taxes and are three months late on submitting them, you can expect to add another $375 to your bill. This money adds up quickly, and only increases the longer you wait. After 60 days, you’ll have a minimum penalty of $100 or 100 percent of tax due with the return, whichever is less.
So long as you file your extension by the deadline for your tax year (usually in mid-April), your tax filing deadline will be extended to a date in mid-October.
If you didn’t get an extension
If you did not ask the IRS for an extension, what happens next will depend on whether you owe money or are owed money.
If you are owed a refund, there will be no penalty for failure to file by the deadline, even if you fail to ask for an extension. However, this only applies to federal taxes, and might not be the case for state taxes. Keep in mind, though, that you won’t be able to get your money back until you actually file your taxes, so it behooves you to file as soon as possible. In addition, the statute of limitations for an audit does not begin until you file your return.
If you owe the IRS money, then you will be subject to the monthly penalties until you finally submit your tax payment. The maximum late penalty will be 25 percent of the total amount due, plus owed interest on anything you failed to pay by the filing deadline. There is no statute of limitations for the IRS to go back and collect your taxes if you fail to file a return, so you can’t expect the problem to just go away if you fail to pay your tax bill.
If you’re unable to pay the IRS in a lump sum payment, you can create an installment agreement to pay off your tax debt over time. The IRS is generally quite amenable to such arrangements, but you must take the initiative to ask.
For more information about what happens if you file taxes late in Union City, NJ, contact Kedean’s Generation to speak with an accountant.
Categorised in: Tax Preparation