Missed the Tax Deadline? Here’s Your Next Step

If you were unable to file your taxes or settle your due payment with the IRS by April 15, the first action to take is to apply for an automatic extension of six months by submitting Form 4868, ideally before the day ends. Additionally, making even a partial payment could mitigate potential penalties.

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 you find yourself unable to file a complete tax return by the deadline, filing Form 4868 will grant you a six-month extension. Remember, this extension only covers the filing of the tax return, not any tax payments due, which are still expected by April 15.

Estimating Your Tax Payment

To estimate the amount you owe, you can reference your previous year’s tax return. Consider changes in your income or significant life events like marriage, divorce, or the addition of a child, which could impact your tax obligations. If you’re unsure of the exact amount, Tom O’Saben from the National Association of Tax Professionals suggests a simple approach: calculate 20% of your 2023 income to see if it matches or exceeds what you’ve already paid in taxes. If it falls short, submit the difference by the deadline.

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.

Call 866-671-0213 for a free, no-obligation consultation with a tax attorney, or fill out the contact form at the bottom of this page.