Filing Taxes Late: What If You Missed Tax Deadline or Have Past Due Returns?

Filing Taxes Late: What If You Missed Tax Deadline or Have Past Due Returns?

If you missed the tax deadline and are wondering what happens now, there’s good news and bad news. The good news is that the IRS is much more reasonable than you might expect when it comes to helping people sort out messy tax situations.

Despite the horror stories you might have heard, they are not looking to indict you for missing the tax deadline or having a past due tax return.

The bad news, however, is that if you file taxes late, you will owe the IRS more than your original tax bill — and the interest and penalties pile up quickly.

Here are the answers to a few of the most common questions about filing taxes late:

What Happens If You File Taxes Late?

If you file your taxes past the tax deadline (either the original date in April or extension date in October), you will get hit with a Failure to File penalty for every month your tax return is late. This penalty for late filing is typically 5 percent of the tax you owe the IRS. You also get charged interest every month you have unpaid taxes.

A common reason individuals give for filing taxes late is that they know they owe the IRS but do not have the money to pay the tax debt. Not filing, however, is costly. The Failure to File penalty adds up quickly and can multiply what you owe the IRS in a hurry, even before they assess interest.

It is better to file your tax return on time and then request an IRS payment plan or submit an Offer in Compromise to the IRS to settle your tax debt.

Better yet, if you know ahead of time that you need a few more months to get your paperwork ready to file your taxes, you should file for a tax extension. Instead of having to file your taxes in April, the IRS will give you an extension until October. Note that if you owe the IRS, you still need to pay the IRS in April even with a tax extension.

A tax deadline extension does not stop interest from being added to your unpaid taxes. It does, however, prevent you from being penalized for filing late if you get your tax return in by the tax extension date.

How Late Can You File Taxes or Past Due Returns?

Theoretically, there is no limit to how late you can file your taxes. But the longer you wait, the faster your tax debt will snowball into something unmanageable.

Although there is a 10-year statute of limitations for the IRS to collect unpaid taxes, waiting 10 years to avoid paying your taxes is not a good strategy. The IRS will make aggressive collections actions, like filing a federal tax lien or garnishing your wages, before the Collection Statute Expiration Date (CSED).

And even if you somehow make it past the finish line, the IRS has creative ways to continue to go after what you owe.

What If You Don’t File Your Taxes Voluntarily?

Simply put, if you do not file your taxes, the IRS will file them for you. They can do this with something called a substitute return. Remember, even if you have not filed your tax return, your employer has reported your W-2 wages, and anyone from whom you have received money as an independent contractor has reported your 1099 income.

That means the IRS certainly knows what money you have made in a tax year and can use that information to file a substitute return on your behalf.

And when they do, you will not get credits for the deductions and exemptions that you would be able to take advantage of by filing taxes on time yourself.

Is There a Penalty for Filing Taxes Late?

Yes. As soon as your taxes are a day late, the tax penalties start getting tacked on. If you file your tax return within 60 days of the tax deadline, the penalty is capped at 25 percent of your outstanding balance. Once you go beyond that date, it can accumulate in a hurry.

Can I Still Get a Tax Refund If I File Taxes Late?

Yes, you can still get a tax refund if you file taxes late. When you file taxes late, the IRS will subtract the Failure to File penalties and interest from your tax refund. So, your IRS refund will be for less than what you are expecting or potentially nothing at all.

Also, once you go past three years late filing your taxes, you forfeit your right to an IRS tax refund.

What If I’m Filing Taxes Late and Owe the IRS but Can’t Pay?

File anyway! The IRS offers several tax relief programs for individuals with tax debt. These tax relief options include income-based monthly IRS payment plans, an Offer in Compromise to settle for less than what you owe the IRS, and Currently Not Collectible status to temporarily delay IRS collections.

Read more on the “Best Ways to Pay IRS Tax Debt.”

How Can Wiztax Help?

Call us today at (866) 568-4593 to learn more about how we can help, or start here to take our free online evaluation. Helping taxpayers with back tax issues and IRS tax debt is all we do at Wiztax!

6 Simple Questions. Free Evaluation.


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