If you didn't file IRS Form 4868 on or before the April 18 deadline, and you didn't file your tax return either, your taxes are likely to arrive very, very late in the eyes of the IRS. The IRS can calculate the interest on your outstanding tax bill, as well as the penalties for not filing and for not paying. Generally, if you miss the filing deadline or don't file your application before the tax extension deadline, the IRS may charge you a penalty for not filing your return. The penalty is based on your unpaid taxes, and the IRS charges 5% of your taxes due for each month or part of the month you don't file your tax return.
However, the maximum amount that the IRS can charge you is limited to 25% of the taxes due. Filing an extension automatically delays the tax filing deadline and protects you from potential missed filing and from penalties. Penalties for filing a late return can amount to a rate of 5% of the amount of taxes due for each month that you are late. The late payment penalty is 0.5% of the outstanding balance for each month (or part of a month) in which the tax is not paid.
The rate rises to 1% ten days after the IRS issues a final notice of intent to seize or confiscate assets. However, the penalty is only 0.25% for each month, or part of a month, in which an IRS installment agreement is in effect. In general, the fine can reach 25% of the unpaid tax. As you can see, the longer you wait, the higher the penalties will be.
If you missed the April 18 tax deadline, you can reduce penalties by filing your return right away, according to the IRS. If you are missing any tax documents from a previous year, you can request them from your employer, bank, or other third party, such as an educational institution or student loan provider. In other words, taxpayers who were in line to receive a tax refund once they file their returns will not have any penalties or charges imposed. For example, in the first month of an outstanding tax balance, the IRS would impose a 4.5 percent penalty for not filing the return and a 0.5 percent penalty for not paying.
After you file a valid tax extension, you have until mid-October of the same year to file your tax return. While there is no penalty for filing your taxes late when you expect a refund, the IRS can impose penalties if you owe taxes. If you don't qualify for an online payment plan, you can request an installment agreement from the IRS using Form 9465 (opens in a new tab). The IRS can charge you penalties and interest if you miss the tax deadline, and you can start incurring penalties as soon as the deadline has passed.
They may give you a chance if you have a good reason, such as that your house burned down, you were seriously ill, and so on. If your income is too high for the Free File program and you're comfortable paying your own taxes, you can also use the fillable IRS Free File forms (opens in a new tab) until October 17. This year, the Internal Revenue Service offered a special deadline of July 15, but many people still chose to request an extension on October 15. If you have a history of filing and paying on time, you may be eligible for compensation under the IRS first-time penalty reduction policy (opens in a new tab). If you receive a refund from the IRS, as approximately three out of four taxpayers do each year, there will be no penalty for not filing your tax return before the deadline, even if you don't request an extension. Reap and thrive with the best advice from Kiplinger experts on investing, taxes, retirement, personal finance and more, straight to your email.
Taxpayers have options if they don't meet the deadline, but the longer they wait to determine their game plan, the more expensive those fines and fees will increase. The IRS does not have a set schedule for filing overdue returns; you can file a prior-year tax return at any time. .