Taxes are due Wednesday, April 15, 2020. This means you need to submit your 1040 form by this date and should pay what you owe to the IRS by the deadline.
Sometimes, however, you may find you owe more money to the IRS than you can afford to pay when April 15 rolls around. If this happens to you, it may seem like the easiest solution is to just wait and file your returns when you can afford to pay the bill. Unfortunately, this approach could end up costing you a whole lot of extra money.
Instead, no matter how much you think you're going to owe the IRS, you should file your tax returns on time in every situation. Here's why.
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The penalty for not filing is way higher than the penalty for not paying
If you file your taxes but can't pay the entire amount you owe, the penalty you'll pay is .5% of the taxes that are unpaid. This penalty is charged for each partial month you're late, up to a maximum of 25% of the unpaid tax balance owed. You'll also owe interest on the amount that goes unpaid.
While this penalty isn't pleasant to pay, you'll owe the IRS far more if you fail to file your return. The failure to file penalty totals 5% of the outstanding balance due on your taxes for each partial month, up to a maximum penalty of 25% of the unpaid tax balance. However, a minimum penalty also applies if you're very late. Once you've passed the 60-day mark without submitting your returns, you'll owe the lesser of $435 or 100% of the unpaid balance that's due.
The penalty for not filing applies only if you owe on your taxes. If you're due a refund, you won't have to pay if you fail to file -- although, if you don't submit your returns then you risk losing the refund and letting the IRS keep your money.
You can get an extension of the time to file
If you're worried you can't get your form submitted on time, you can get an extension. You'll have to request it before April 15, but it's granted automatically if you do.
Filing for an extension means you won't owe a penalty for failure to file as long as you get your returns in by the Oct. 15 deadline. However, if you haven't paid at least 90% of the outstanding tax balance due by April 15, you'll still owe a failure to pay penalty. Your extension gives you more time to file your returns but not more time to pay what you owe.
Don't end up owing the IRS more than you need to
As scary as it may seem to submit a tax return knowing you can't fully pay what you owe, you never want to miss the deadline for filing. Always send in your returns by the April deadline or submit a timely request for an extension and send in your paperwork by October. By doing so, you can keep your penalties to a minimum and avoid paying a small fortune to the IRS.
