Have you missed the deadline for taxes, or is it fast approaching? There is still hope. Watch this video to find out about filing your taxes after the deadline.
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Hello, I'm Victoria from TurboTax, with important news about filing your tax return after the April deadline.
Most taxpayers are aware of the April deadline to file their tax returns with the Internal Revenue Service. If you miss the deadline, you still must file your return, but it may end up costing you more because of late-filing interest and penalty charges.
If you are due a refund, the IRS will not penalize you for filing your tax return late.
But keep in mind that you usually cannot collect a refund if you file the return more than three years after the original filing deadline.
But for taxpayers who still owe tax on the April deadline, the consequences of filing late are a bit more severe.
Beginning with the first day your tax return is late, the IRS will increase the amount you owe with monthly interest charges until you pay your tax debt in full.
In addition to interest, the IRS will charge you a monthly failure-to-file penalty that increases the tax you owe by 5 percent each month. The penalty continues to accrue for the shorter of five months or the date you eventually file the return but won’t exceed a maximum of 25 percent of your unpaid taxes.
There is also a failure-to-pay penalty, which increases your outstanding tax bill by .5 percent each month.
However, if you are subject to both penalties at the same time, the maximum penalty that you’ll pay for both is 5 percent.
There is, however, an exception to the failure-to-pay penalty. If the amount of tax you still owe on a return you file late is not more than 10 percent of your total tax bill for the year, the IRS will waive the penalty.
The best way to avoid paying a failure-to-file penalty is to file on time or to file an application for an automatic extension of time on Form 4868 by the original April filing deadline.
When you obtain the extension, you have until October 15 to file your tax return, which means your tax return isn't late.
But keep in mind, an extension only gives you more time to file, not more time to pay.
If you owe taxes, you must send your payment by the April filing deadline, or accrue failure-to-pay penalties.
TurboTax can help you quickly file your taxes and save even more time with e-file. But if you still need extra time, check out TurboTax Easy Extension to file an extension for free.
For more information about income taxes, visit TurboTax.com.