Whether you missed the tax filing date due to being busy or having concerns about paying taxes, you can end up owing even more money depending on your situation. Since April 18 was the national IRS deadline both for tax payments and tax filing, having any unpaid taxes can trigger interest charges and penalties. However, you can alleviate some of the negative effects if you filed a federal tax extension on time. In addition, you might qualify not to have to pay any penalties or to receive some tax relief in some circumstances.
Consider also: How to Know if an IRS Extension Is Approved
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What Happens With Late Filing?
You can face failure to file and failure to pay penalties for not meeting the 2022 federal tax deadline of April 18 (or April 19 in Massachusetts and Maine). For example, the failure to file penalty tops out at 25 percent of your tax liability and is charged at a rate of 5 percent of your remaining taxes due monthly. On the other hand, the failure to pay penalty is 0.5 percent per month and tops out at 25 percent of your tax liability. The IRS cautions that penalties also come with interest charges.
Since these penalties are based on taxes owed, they usually won't apply if you didn't file on time but don't owe the IRS. For example, you might not have earned enough to meet filing requirements, or you might have paid all taxes due in advance. In addition, the failure to file penalty won't apply if you got an extension through Oct. 17, 2022, as long as you don't miss that new deadline. If the penalties do apply to you, the IRS will send you a letter.
If this is your first time filing late, the IRS might relieve you of the interest and penalties if you call them upon getting the notification letter. In addition, if you're a disaster-area victim, you can avoid tax penalties and interest and have an automatic extension. Other provisions exist for those in the military and overseas taxpayers where you might avoid the failure to file penalty for a few extra months without having to ask for an extension.
Consider also: Are Tax Penalties & Interest Deductible?
File Your Tax Return Promptly
Unless you did it ahead of time or you're in one of the special categories of taxpayers who got automatic extensions, it's now too late to file Form 4868 electronically and get your six-month extension to avoid the failure to file penalty. However, you can check with your state to see if there's at least an extension opportunity available for your state tax return so you can avoid any additional late filing penalty charged there.
In any case, you'll want to file your federal and state tax returns to at least reduce the failure-to-file penalty charged. This is also a good idea for those without a tax obligation since a refund may still be due.
If you're concerned about costs and have an adjusted gross income not exceeding $73,000, look into the IRS Free File program. It can grant you access to popular online filing services for filing your federal return and possibly your state return for free. You can also find other commercial tax filing providers online or work with a professional.
Consider also: How to File Taxes From Previous Years
Pay Taxes or Seek Help
Paying off your tax debt as soon as possible will stop the penalties and interest accruing. You can pay the taxes and any interest and penalties due at the time of filing through online services. In addition, you can use the IRS Direct Pay service, send the IRS a check, pay at an affiliated retail partner or use a wire transfer, among other options.
If you owe more than you can pay right now, the IRS has different options that give you anywhere from six months to several years to fulfill your tax obligation. For example, you can get a short-term plan that still comes with the normal interest and penalties or a long-term installment agreement that has a lower interest rate. You might also consider settlement options like the offer in compromise for significant tax debt.
Consider also: IRS Definition of Financial Hardship
- IRS: What Someone Should Do if They Missed the April Deadline to File and Pay Taxes
- IRS: Failure to File Penalty
- IRS: Failure to Pay Penalty
- IRS: Penalty Relief Due to First Time Penalty Abatement or Other Administrative Waiver
- IRS: Tax Relief: Presidentially-Declared Disaster Areas
- IRS: Extension of Time To File Your Tax Return
- State of California Franchise Tax Board: Extension to File
- IRS: IRS Free File: Do your Taxes for Free
- IRS: Pay Online
- IRS: Topic No. 202 Tax Payment Options