Tax Day, a day surrounded by stress and often procrastination, has come and gone. If you are one of the many of the Americans who hit the snooze button on filing your personal taxes, but didn’t remember to file an extension, we are sharing IRS guidance on what to do next.
If you haven’t filed your tax return or paid the taxes you owe, if any, it’s time to plan your next steps to avoid any trouble with the IRS.
When it comes to federal income taxes, here is the IRS guidance.
I forgot to file… I don’t owe any taxes
The good news is that you won’t be penalized for filing your return late. However, if you are expecting a refund, you are delaying it by not filing your tax return. Remember, the IRS has a huge number of refunds to distribute, the sooner your tax return is filed and accepted by the IRS, the sooner you can expect that refund.
I forgot to file… I owe the IRS taxes
Unfortunately, the same can not be said for those who owe the IRS a tax payment. If you owe the IRS a tax payment, you can be charged penalty and interest by the IRS. The longer you wait to make your payment and complete your tax return, the more penalties and interest will accrue.
The penalty for failure to file is 5% of the amount you owe, this is charged each month, up to five months or until the balance is paid.
The penalty for failure to pay taxes is .5% of the owed amount, this charge will accrue monthly until the balance is paid or 25% of the amount is reached.
For more information on IRS penalties for individuals, click here.
What is First Time Penalty Abatement?
If you generally file your personal tax return on time and make payments on-time, you may qualify for administrative relief. There are certain criteria you must meet. For example, if you file immediately and have no record of IRS penalties for the past three tax years and you are now paid up with the IRS, you may be eligible for a penalty waiver.
For more information on the First Time Penalty Abatement, click here.
Are there any exceptions to the deadline?
Yes, if you are a resident of one of the following states that have been granted automatic extensions from the IRS due to natural disasters, the deadline doesn’t apply to you.
If you are a resident of Texas, Oklahoma, or Louisiana, you have until June 15, 2021 to file your personal income taxes. These taxpayers get a pass due to the intense and devastating winter storms that they have faced throughout the winter. This extension also applies to certain business tax returns and tax returns for tax exempt organizations.
Here at TaxBandits, we can’t turn back the clock on the IRS deadline, but we are here to help business owners and tax professionals alike file their crucial tax returns. Some of these forms include W-2s, 1099s, 1095s, and 941.