If you requested an extension on your 2017 income tax return, you need to file by October 15th. Just around the corner, this is the absolute last date you can file if you want to avoid serious penalties. Get ready with these tips.
Don’t Worry If You Don’t Owe
If you don’t owe any tax, the IRS can’t really assess any penalties if you don’t file. But, keep in mind you only have three years to claim a refund. If you’re due a refund, file as fast as you can and get that money.
Remember Oct 15 Is the Last Day to E-File
October 15th, the extended filing deadline, is the last day you can file your federal income tax return electronically. If you file after that day, you have to print and mail your return.
File Even If You Can’t Pay
Don’t have money to pay? Then, you should still file. If you don’t file by October 15th, you face a failure-to-file penalty. That’s 5% of your balance. If you owe $10,000, the fee is $500, and the fee hits your account the very next day. Plus, the IRS assesses this fee monthly until you file, and it can climb up to 25% of your tax bill. If you only owe a small amount of tax, the minimum failure-to-file penalty comes into play. If you file at least 60 days late, the minimum penalty is the greater of $135 or 100% of the tax you owe. In contrast, if you file but don’t pay, the penalty is only 0.5%. On a $10,000 bill, that’s only $50. This penalty can also climb to 25% of your balance, but that takes years and by that time, you should easily be able to set up a payment plan or make arrangements.
Be Ready for Some Penalties and Interest
At this point, as long as you requested an extension, there should not be a failure-to-file penalty on your account. But, the 0.5% failure-to-pay penalty and interest have been occurring on your balance since the due date on April 18th, 2018. If your tax bill is a bit more than expected, that’s typically due to penalties and interest.
Remember to Do Your State Income Tax Return
If you haven’t filed your federal return yet, you probably haven’t completed your state return either. Many states offer automatic extensions. So, even if you didn’t apply for an extension, you still have until October 15th for most state returns. See this great list from H&R Block on state tax filing extension deadlines and the details pertaining to each state.
Get a Postmark for Last Minute Mailing
When you mail your return, the IRS uses the date on the postmark to determine if it’s late or not. Rather than putting your return in your mailbox or a post office collection slot, you may want to speak directly to an employee of the post office. Make sure they can postmark your return with the right date. If you put it in a collection box on the 15th but it doesn’t get picked up til the 16th, it will be considered late, and you’ll have to deal with the failure-to-file penalty. Now that you’ve got the basics, it’s time to act. Grab your income statements, your receipts, and any other documents you have and pull up your favorite tax prep software. Or, contact an accountant for help. If you’re worried about a tax debt or if you want help getting penalties removed, contact us. Our tax resolution specialists can help set up payment plans, file old returns, apply for penalty relief, and more.