If the applicable filing deadline has passed without a valid extension or postponement, file an accurate return as soon as possible and pay what you can. Form 4868 generally must be requested by the filing deadline and does not extend payment time.
Time Extensions and Special Considerations
Although the standard deadline is April 15, you may have some additional days to file if you reside in Maine, Massachusetts, or Washington, D.C., due to local holidays. Residents in areas officially declared disaster zones may have extended deadlines for both filing and payment as a result of IRS-granted leniencies. This includes extensions provided to those affected by specific events, such as the terrorist attacks on October 7 in Israel.
If the applicable deadline has passed without a valid extension or postponement, file an accurate return as soon as possible and pay what you can. Form 4868 generally must be submitted by the filing deadline; it extends filing time, not the payment deadline.
Estimating Your Tax Payment
Estimate any balance using the applicable IRS forms, income, deductions, credits and payments for the relevant tax year. A fixed percentage of gross income is not a reliable substitute for that calculation.
For those earning less than $200,000, this 20% rule might slightly overestimate your tax liability, providing a buffer against penalties. If your income exceeds $200,000, consider adjusting this percentage to 30% to avoid underpayment.
Penalties for Non-Compliance
If you fail to file by the due date and owe taxes, you’ll face a failure-to-file penalty. This penalty is 5% of the unpaid taxes for each month or part of a month your return is overdue, up to a maximum of 25%. Similarly, a failure-to-pay penalty applies at a rate of 0.5% per month on any unpaid taxes, also capping at 25%.
If both penalties apply in the same month, the total won’t exceed 5%. Additionally, any unpaid amounts will accrue interest, emphasizing the importance of at least making a partial payment to reduce further penalties and interest accumulation.
Options for Those Unable to Pay in Full
It’s worthwhile to explore various IRS repayment plans which could help reduce further penalties and interests. For larger debts, consulting with an enrolled agent, CPA, or tax attorney might be beneficial to ensure you choose the most appropriate payment plan for your situation.
Special Note for Independent Contractors
For gig workers, freelancers, and sole proprietors: timely filing and full payment by April 15 are crucial. If you didn’t pay estimated taxes quarterly, or if the payments were insufficient, you might face an underpayment penalty even if you meet the general tax deadline.
Late Filers Expecting Refunds
If you file late but are due a refund, there’s good news: you won’t incur a failure-to-file penalty. However, ensure you file within three years of the original deadline to claim your refund, after which you’ll forfeit your right to it.
Taking these steps will help you navigate the consequences of missing the tax deadline and put you in a better position for the current and future tax seasons.
Need Help with Filing or Settling Back Taxes?
Please feel free to contact us regarding your back taxes. Every tax matter is unique because every person’s situation is unique. We can quickly and efficiently analyze your circumstances and propose various options of resolution.
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Segal, Cohen & Landis, P.C. — Beverly Hills. Serving clients nationwide.
Samuel Landis, Esq.
LL.M. (Tax) · Selected to Super Lawyers®
Sam Landis is a Beverly Hills IRS tax attorney specializing in IRS collection defense, audit representation, and international tax compliance for foreign nationals and US expats.